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SECP amends rules to facilitate SMEs, startups

SECP amends rules to facilitate SMEs, startups

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has introduced amendments in the Companies (Further Issue of Shares) Regulations, 2020, to address the impediments being faced by the corporate sector, particularly startups and small companies, in raising equity through conventional modes.

According to a statement, key changes include permission to convert one class of shares into another, issuance of shares with differential rights without the approval of the commission, and specification of mechanism for valuation of non-cash assets.

As per the law, the companies can have more than one kind of shares, conferring varying rights of dividend, voting and participation depending upon the needs of its capital providers.

The requirement of prior approval of the SECP has now been abolished. This measure will considerably help reduce administrative burden and will also contribute towards the growth of the corporate world by removing a layer of regulatory approval.

Another vital amendment is to permit conversion of one class or kind of shares into another class or kind e.g. ordinary into preference shares.