ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued a draft about procedures of purchase of shares issued by unlisted public and private companies, a statement said on Thursday.
The proposed regulations would facilitate startups, and boost investor confidence by providing an easy exit option to the shareholders, the SECP said. Regulations in the draft ‘Unlisted Companies (Buy-Back of Shares) Regulations, 2022’, the regulator stated, would provide eligibility criteria, and a procedure and mechanism to be adopted by unlisted companies to buy-back their issued shares.
As per the draft, the unlisted companies will have to cancel the number of bought-back shares from total issued shares. The regulations also require submission of final report to the registrar after completion of the process of buy-back of shares.
The draft regulations propose the board of directors of a purchasing company to make a declaration to the effect that the company is capable of meeting its liabilities and will not be rendered insolvent for twelve (12) months from the date of declaration, according to the SECP.
The Companies (Amendment) Act, 2021 has enabled all companies, including unlisted public and private companies to buy-back their shares. Previously only the listed companies were allowed to buy-back their issued shares.
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