The Securities and Exchange Commission of Pakistan (SECP) has relaxed Initial Public Offering (IPO) requirements, allowing more established businesses to raise funds through the Pakistan Stock Exchange (PSX).
Under amendments to the Public Offering Regulations, 2017, businesses operating as partnerships, Limited Liability Partnerships (LLPs), and carved-out business divisions can now use their historical profitability records to meet IPO eligibility requirements.
The reforms are designed to reduce listing barriers, encourage corporatization, improve the ease of doing business, and broaden access to capital markets.
Previously, businesses were required to demonstrate profitability after incorporation as a company to qualify for an IPO. Under the revised framework, eligible firms can count their profitable track record from before incorporation toward the mandatory two-year profitability requirement.
The SECP said the change removes a key obstacle for established businesses seeking to access growth capital through the stock market.
The regulator expects the amendments to encourage more businesses to enter the corporate sector, improve access to financing, and support economic growth and employment generation.
To safeguard investors, the revised regulations introduce several compliance requirements. Eligible businesses must prepare revised financial statements for at least the previous two financial years, audited by a Quality Control Review (QCR)-rated audit firm.
Companies will also be required to submit audited financial statements covering the period during which they have operated as public limited companies. In addition, sponsors’ entire shareholding will remain subject to a two-year lock-in period following listing.
The amended regulations have been notified and are available on the SECP’s official website.
