SECP proposes disclosure-based regime for right shares – Newspaper

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ISLAMABAD: With a view to improving and ensuring transparency in the capitalization process, the Pakistan Securities and Exchange Commission (SECP) has recommended a Companies Review (Additional Shares Regulations) 2020.

Advising on innovative ways and technologies through the mind paper, the regulator has recommended companies to adopt an additional advertising-based system to exclude rights allocations by companies listed to raise capital.

In this management, the emphasis is on providing adequate information to investors, enabling them to make informed decisions, increasing investor protection.

Lacuna in the current law as identified by the SECP is that the size of the correct case is unusually high up to 1,000 percent, with a small risk definition and incomplete insufficiency for investors to make informed decisions.

Reduces event size to 50pc of fees

Outside the current system does not allow the cancellation, cancellation, separation or postponement of the relevant event when it is announced.

However, in the event that the matter is not registered, the subordinates fail to register the unregistered part and the board fails to allocate shares, there is no assistance available in the administrative framework and apparently, it remains open indefinitely.

It is therefore proposed in the annexure that to strengthen transparency and fair dissemination of information, the exact amount received by a listed company must be less than Rs500 million or 50pc of the listed provider’s minimum fees.

In the case of a direct operation by a listed company in excess of Rs500m or 50pc of the listed provider’s payment of any minimum, the requirements are strict and broad.

The proposed advertising-based process will include, editing a supply chain and expanded advertising; seeking public opinion on key governance and publishing the final provisioning document after the same involvement, leading to the finalization of the relevant matter.

There is an additional requirement, regardless of the size of the case such as the “Minimum Enrollment Level” (MLS) concept and the extent of the issue.

Published Parhlo, May 3, 2022

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