Debt and equity securities: SECP approves framework for public offering
Says it has reduced number of regulations to ensure ease of doing business
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. PHOTO: secp.gov.pk
KARACHI:
The Securities and Exchange Commission of Pakistan (SECP) on Friday said that it has approved a comprehensive regulatory framework under the Securities Act, 2015, for public offering of debt and equity securities.
Prior to its approval, the SECP held consultative sessions with industry participants in March and September 2016, according to a press release.
In order to promote ease of doing business and streamline the entire public offering process, the number of regulations had been reduced to two. The public offering regulations have been divided into three parts; process for public offering, methods of public offering and functions and responsibilities of intermediaries.
In the new public offering regulatory framework, an issuer would be ineligible to make a public offer, if the issuer or its directors, sponsors or substantial shareholders have overdue/ defaults or have been declared defaulter by the exchange.
Securities brokers appointed by companies as consultants to their public offering play a pivotal role in promoting quality listing and development of capital markets. Therefore, their role as 'Consultants to the Issue' is being notified as a regulated securities activity.
The SECP has drafted regulations for licencing of consultant to the issue and only licenced securities brokers would be eligible to undertake consultant to the issue activity.
The role of consultants to the issue has been enhanced by requiring them to carry out due diligence encompassing eligibility and suitability aspects of the proposed issue in order to protect the interest of the general public.
Furthermore, a requirement of separate valuation section has been introduced where the consultant to the issue shall provide justifications for the price set by the issuer taking into account the track record of the issuer, management expertise, inherent risks, past financial performance and financial projections.
The role of securities exchange has also been enhanced, requiring it to examine the proposed issue from various aspects including eligibility requirements and suitability of the issue considering the interest of general public.
The conflict of interest has been reduced through appointment of independent consultant to the issue, underwriter, book runner and banker to the issue.
Published in The Express Tribune, October 29th, 2016.
The Securities and Exchange Commission of Pakistan (SECP) on Friday said that it has approved a comprehensive regulatory framework under the Securities Act, 2015, for public offering of debt and equity securities.
Prior to its approval, the SECP held consultative sessions with industry participants in March and September 2016, according to a press release.
In order to promote ease of doing business and streamline the entire public offering process, the number of regulations had been reduced to two. The public offering regulations have been divided into three parts; process for public offering, methods of public offering and functions and responsibilities of intermediaries.
In the new public offering regulatory framework, an issuer would be ineligible to make a public offer, if the issuer or its directors, sponsors or substantial shareholders have overdue/ defaults or have been declared defaulter by the exchange.
Securities brokers appointed by companies as consultants to their public offering play a pivotal role in promoting quality listing and development of capital markets. Therefore, their role as 'Consultants to the Issue' is being notified as a regulated securities activity.
The SECP has drafted regulations for licencing of consultant to the issue and only licenced securities brokers would be eligible to undertake consultant to the issue activity.
The role of consultants to the issue has been enhanced by requiring them to carry out due diligence encompassing eligibility and suitability aspects of the proposed issue in order to protect the interest of the general public.
Furthermore, a requirement of separate valuation section has been introduced where the consultant to the issue shall provide justifications for the price set by the issuer taking into account the track record of the issuer, management expertise, inherent risks, past financial performance and financial projections.
The role of securities exchange has also been enhanced, requiring it to examine the proposed issue from various aspects including eligibility requirements and suitability of the issue considering the interest of general public.
The conflict of interest has been reduced through appointment of independent consultant to the issue, underwriter, book runner and banker to the issue.
Published in The Express Tribune, October 29th, 2016.