Security and Exchange Commission of Pakistan (SECP) has reviewed the Companies Issue of Capital Rules, 1996 (CI Rules) and approved various amendments for efficient raising of funds against issue of shares.
According to SECP here on Thursday, the key amendments to the revised draft CI Rules include introduction of one “uniform criterion” for loan-based projects and equity-based projects and removal of restriction on the sponsors of companies to retain at least 25% of the capital at all times.
After the amendment, sponsors will be required to retain at least 25% of the capital for a period of just three financial years. Similarly, the requirement of project appraisal from a financial institution has been removed and verification of the installation and shipment of the last consignment of the plant and machinery is also no more required to be verified by the stock exchange.
The issuing company shall obtain a report verifying the implementation status of the project from a valuer. In addition, exemption from certain requirements for charging premium in case the issue/offer of shares is made through book building process.
The draft amended CI Rules require underwriting of all new issues of capital and approval of the SECP for issue of shares against intangible assets. The main objective of the amendments to the CI Rules is to streamline the process of capital issue. The proposed amendments will also streamline the book building process of companies for issue of shares.
Published in The Express Tribune, July 22nd, 2011.
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