The Securities and Exchange Commission of Pakistan (SECP) has issued a consultation paper seeking public comments on the existing requirements under the Companies (Further Issue of Shares) Regulations, 2020. These regulations require a listed company to have no overdues or defaults—irrespective of the amount—in its Credit Information Bureau (CIB) report before announcing a right issue.
Under the Companies Act, 2017, companies may increase their share capital through a rights issue, which grants existing shareholders the right to subscribe for additional shares in proportion to their current holdings. The current regulations mandate that the issuing company, along with its sponsors, promoters, substantial shareholders, and directors, must have a clean CIB report (i.e., no overdues or defaults).
This requirement means that even a minor overdue liability can prevent a company from raising essential capital through a rights issue. However, in situations of financial distress, shareholders may be willing to bail out a company by providing necessary financing that may not be available through conventional channels. The clean CIB requirement can therefore inhibit a company’s potential revival, restructuring, or resumption of operations, ultimately challenging its survival even when shareholders are committed to supporting it.
The consultation paper provides a detailed analysis of the implications of removing the clean CIB requirement for the issuing company, examining potential risks and expected benefits. A comparative study of similar regulations in other jurisdictions is also included to help stakeholders formulate their feedback.
The SECP encourages all stakeholders to submit their comments on the consultation paper by October 07, 2025, via email at [email protected]
