Pakistan’s regulator, the Securities and Exmodify Commission of Pakistan, has notified legislative amfinishments to facilitate capital raising by listed companies, while maintaining adequate disclosure requirements for investors.
The amfinishments to the Companies (Further Issue of Shares) Regulations, 2020, address a challenge faced by listed companies when raising further capital from existing shareholders through a rights issue.
Under the previous framework, listed companies were prohibited from announcing a rights issue if the company, its sponsors, promoters, substantial shareholders, or directors had any overdue amounts or defaults appearing in their Credit Information Bureau (CIB) report.
Under the amfinished framework, the requirement for a clean CIB report will not apply if the relevant persons provide a No Objection Certificate regarding the proposed rights issue from the concerned financial institution.
To ensure transparency and protect investors’ interests, companies in such cases must build comprehensive disclosures in the rights offer document. Disclosures must include details of any defaults or overdue amounts, ongoing recovery proceedings and the status of any debt restructuring.
At present, more than 20 insurance companies are listed on the Pakistan Stock Exmodify.
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