ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has introduced amendments to the Companies (Further Issue of Shares) Regulations, 2020. The amendments have been carried out after thorough consultation with key stakeholders and general public. Through these amendments, the right issuance process has been simplified with single, standardized disclosure and reporting requirements made applicable for all right issues regardless of the issue size. Issuers shall solicit comments from both the Pakistan Stock Exchange (PSX) and SECP on the draft offer document, irrespective of the size of the right issue. 

To enable investors to make informed decisions, disclosures in the right issue offer document have been strengthened so investors get access to vital information regarding the issuer, risk factors specific to the issue or the issuer, and impact of such risks on the operations and performance of the company.

The requirement for directors and substantial shareholders to mandatorily undertake that they shall subscribe to the right issue or arrange for subscription of their entitled shares has been streamlined. This requirement was previously applicable for all directors/substantial shareholders including the directors/substantial shareholders who do not agree to the decision to proceed with the right issue. Now the dissenting directors/substantial shareholders need not submit an undertaking and their portion of the right entitlement can be underwritten along with the portion offered to the general public.

In further issue of shares by way of other than right offer, where issuance of shares is contingent upon a future event, it was not practically possible for applicants to ensure compliance with certain requirements at the time of seeking approval under section 83(1)(b) of the Companies Act, 2017. In order to resolve this issue, specific exceptions have been introduced to facilitate the share issuance process. To curtail any discretionary interpretation in deciding the applicability of the exceptions, the future contingent event that would attract such exceptions has been clearly explained in the regulations.  

For sponsors and associated companies/associated undertakings, restrictions on sale of shares after the issuance is now made two years and for persons other than sponsors/associates, it is reduced to six months instead of the existing requirements based on shareholding percentage. As a result of the amendments, the Companies (Further Issue of Shares) Regulations, 2020 will now be applicable only for listed companies, since the SECP has already specified requirements relating to further issuance of shares by unlisted public and private limited companies under a separate set of regulations notified in February this year.

The amendments mark a significant step forward in strengthening capital markets and ensuring investor protection. By enhancing transparency and accountability, SECP aims to foster confidence among investors and promote sustainable growth.

The amendments to the regulations are available at