Former FBR Chief Explains Amendments By SECP in Listed Companies’ Regulations

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The primary objective of amendments in the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2017 is to provide equity and protect the interest of minorities in acquirer and acquiree entities.

In a technical release issued by the former Chairman Federal Board of Revenue (FBR), Shabbar Zaidi said that the acquisition of control of a listed company by another person or company is an important subject of corporate regulations. In Pakistan, these regulations are governed under the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2017.

Shabbar Zaidi said that major amendments have been made to these regulations by the Securities and Exchange Commission of Pakistan in January 2024.

Technical Release 2/2024, which deals with the major amendment in Takeover Law, said that two important subjects of takeover laws are the ‘determination of minimum offer price ’ and ‘mode of payment’. The regulations have been substantially amended to bring these in line with best practices. Shabbar Zaidi stated it requires a minimum price to be paid under the public offer.

In amended regulations, a concept of frequently traded shares or otherwise has been retained, however, the term “frequently traded shares” has been defined with modifications.

The purpose of this amendment is that the minority shareholders are paid the correct price for the shares. The net assets value determined by a Chartered Accountant firm based on audited financial data not older than six months from the date of the public announcement of the offer has been dispensed with in case of frequently traded shares.

This effectively means that in the case of frequently traded shares, the minimum price has two criteria; being the price in the stock exchange and the price paid by the acquirer, Shabbar Zaidi added.

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