SECP unveils new regulations for listed companies

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Monday unveiled the new regulations to govern the buy-back of own shares by listed companies. The listed companies (buy-back of shares) regulations, 2016 provide for either cancellation of the purchased shares or retaining the same as treasury shares.

“The earlier framework for buy-back did not provide for retaining the purchased shares as treasury shares, rather the purchased shares had to be cancelled,” said the Securities and Exchange Commission of Pakistan in a statement. “Buy-back of own shares by listed companies is normally undertaken for stabilising the market price of their shares particularly when the market is passing through a bearish phase.” 

The commission said the regulations have been finalizsed after obtaining comments and holding consultation sessions with key stakeholders. The regulations encompass the eligibility criteria for buy-back, like maintaining the minimum paid-up capital and free float, authorisation of the purchase with the approval by the members of the purchasing company by way of special resolution and the purchase methods.

 The regulations further also govern the appointment of the manager to purchase, procedure for setting the purchase price, restrictions, rights and privileges of the treasury shares, limitation on treasury shares, compliance with the applicable international financial reporting standards relating to the treasury shares, disposal of treasury shares and maintaining record thereof.

“The regulations will help the listed companies to buy-back their own shares in a transparent manner to achieve the desired purpose in the best interest of the purchasing company, the shareholders and the capital market,” said the Securities and Exchange Commission of Pakistan.