PSX unveils tough regulations for fresh listing applications

KARACHI: Pakistan Stocks Exchange (PSX) on Friday unveiled a new set of stringent regulations to approve or reject listing application filed by a company, a statement said.

The announcement came ahead of the PSX’s planned initial public offering (IPO) in June.  Under the ‘listing of companies and securities regulations’, a listing committee – comprising of at least seven members, including three external members – was constituted. The committee would review and approve prospectus and listing application. A meeting quorum will be considered full even when there are four members; half of them should at least be external members.

Currently, there more than 900 companies listed on the PSX. Last year, a Chinese consortium bought 40 percent stake of the bourse in a deal valued at more than eight billion rupees for 320 million shares. The PSX is expected to float its 20 percent shares through an IPO in June. 

From now onwards, the PSX will maintain a panel of the external experts, representing each sector of the economy and at least two experts will be retained on the panel from each sector.

“The listing committee will be the sole authority to grant, defer or refuse application subject only to two-third majority of the members present at such meeting of the committee or the board,” the statement said. “…In case of refusal by the listing committee, the applicant company may file an appeal before the board of the exchange against the decision of the committee.”

It said the companies, having liabilities towards financial institutions and affiliate/subsidiary of companies in the defaulters segment, will be denied listing. “Moreover, the applicant company would have to declare in its prospectus if any loan of Rs0.5 million or above were written off by any financial institution.”

The statement further said the committee will examine the proposed issue from various aspects, including eligibility requirements and suitability of the issuer or the security for listing, “considering the interest of the general public and its benefits to the capital market.”

“In order to assess the suitably aspect, the exchange may ask for any additional information from the issuer and the consultant to the issue, including financial projections, future strategies of the issuer, experts report, etc,” it added.

The new regulations provide the exchange with an option to visit an applicant company’s head office, factory, plant, and/or premises to get knowledge of the business. The new requirements allow shares to be allotted to any individual, including sponsor or employee under the Public Offering Regulations, 2016. But, if a company issues shares through book building, it needs to comply with the same regulations. 

“In case of over-subscription, the issuer will immediately submit to the exchange copies of the ballot register of successful applications and dispatch all shares certificates, in marketable lots, within 10 days of the closing of subscription list to all the successful applicants under intimation to the exchange,” said the fresh regulations.