The Securities and Exchange Commission of Pakistan (SECP) has announced that it will introduce the concept of e-IPO in upcoming Initial Public Offerings (IPOs) of shares and corporate bonds by companies.
“The concept will enable investors to file application for subscription of shares and corporate bonds through internet from their computers and mobile phones without going to their banks and wait in long queues,” the SECP said in a press release issued on Friday.
Giving the reason, it said the e-IPO would facilitate both the companies that intend to raise funds from the capital market and the general public applying for subscription of shares and bonds.
In order to seek views and discuss technical, legal and operational modalities of the initiative, the SECP has met with various stakeholders including representatives from the State Bank, Karachi Stock Exchange, Central Depository Company, share and bond issuers, banks, stock brokerage companies, share registrars and ballotters to the issue.
The corporate regulator believed that the e-IPO would help reduce time and efforts required for subscription of shares and bonds as well as help the issuer to efficiently raise funds from the market. It is also expected to contribute to reduction in the issue cost and improvement in turnover.
Under the existing manual system, investors are facing problems while applying for subscription of shares and bonds. They are required to go to their banks, manually fill in the subscription form, attach a cheque or pay order and photocopies of CNIC, etc, wait in long queues to submit application and within certain hours.
Other problems associated with the existing system includes unnecessary blockage of funds and increased cost of issue.
The SECP, however, made it clear that the manual system would also remain in place and run parallel to the e-IPO facility. The e-IPO will replace the manual system when investors are completely familiar with the new mechanism.
Published In The Express Tribune, June 23rd, 2012.