ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has notified a regulatory framework for issuance of convertible debt securities (CDS) through right offer, allowing listed companies to achieve their growth objectives by raising finance in a timely and cost-effective manner, a statement said on Friday.
The framework introduced a new product and way for raising capital and it provides detailed mechanics for the same, SECP said.
Presently, convertible debt is issued either by public offering or by private placement mode. Under the said regulations, the listed firms could also raise funds by issuing convertible debt to existing shareholders by way of right offer, the regulator stated.
It would provide an additional investment avenue for the shareholders and allow them to earn interest/profit, while also retaining the option to convert debt instrument into share capital, according to the SECP.
Rights of CDS can also be renounced through Securities Exchange trading platform and be traded in the same manner as letter of right (LOR) of shares are presently traded.
SECP said the regulatory framework was designed in line with the disclosure-based regime being followed globally. Special focus was placed on achieving a balance between investor protection and facilitation for the issuer(s), it stated.