SECP unveils guidelines for companies to issue gender bonds

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Wednesday released guidelines for companies to tap capital market funds through gender bonds for financing projects related to women economic empowerment.

The SECP said all issuers who are eligible to issue debt securities, including sukuk bonds, either by way of public offer or private placement are eligible to issue gender bonds, as long as ensuring compliance with the applicable regulatory framework.

The amount of funds raised from the issuance of gender bonds shall be utilized to finance projects related to women uplift and economic empowerment such as, access to finance/credit; micro, small and medium-sized enterprise development; agriculture development; financial literacy and entrepreneurship training, disaster risk management; housing for low income segment of women etc. Like other debt instruments, such as green, social and sustainability bonds, a gender bond can have any type of financial structure as a general bond, a project bond or a securitisation scheme.

Gender bonds are a relatively recent development and still a nascent in the field of finance. Internationally gender-labelled bonds have been issued by a variety of entities, ranging from large commercial banks, to non-government organisations, to multilateral development banks. Most gender bonds issued have relied on the Institute of Capital Market Association's social bond principles, the UN's Sustainable Development Goals or the UN women's empowerment principles as reference standards.

Under the guidelines, issued in pursuant to section 172 of the Securities Act, 2015, the issuance of gender bonds to increase financial inclusion of women and encourage female entrepreneurship.

The guidelines aim to facilitate companies and issuers of debt securities to diversify their source of financing and provide an additional financial instrument to a particular class of investors. As a step towards promotion of gender equality – the issuance of gender bonds will improve women access to leadership positions and gender-positive corporate policies.

Any type of bonds or sukuks including gender bonds can be issued under the section 66 of the Companies Act, 2017 read with the Public Offering Regulations, 2017 and Private placement of Securities Rules, 2017.

“The gender bond shall be rated by a rating agency licenced by the commission from a rating agency providing credit ratings and social impact ratings. The ratings obtained by an issuer of gender bonds shall be disclosed in the offering document,” said the SECP. “The issuer may appoint an independent third-party reviewer/certifier, for reviewing /certifying the processes including project evaluation and selection criteria, project categories eligible for financing by the gender bonds.”

Under the guidelines, the issuer of public offer of gender bonds will disclose all that information in the prospectus as required under the public offering regulations.