SECP suspends 40 companies from trading

The SECP has suspended trading in the shares of 40 listed companies with effect from Monday.

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has suspended trading in the shares of 40 listed companies with effect from Monday, August 16.

An official notification issued by the SECP to all three local exchanges highlighted that trading had been witnessed in shares of a number of companies that are non-compliant with the listing regulations and other laws administered by the commission.

The notification said that the SECP has conducted a comprehensive review of companies on the default counter and those businesses that have not been compliant. Following the review, all three stock exchanges have been ordered to suspend trading in the shares of 31 companies.

Additionally, the Lahore Stock Exchange (LSE) has been instructed to suspend trading in the shares of two textile mills.

Similarly, the Islamabad Stock Exchange has been told to halt trading in the shares of seven more companies.

“SECP issues such notices from time to time but usually they concern only one or two companies,” commented Khurram Schezad, Research Head at InvestCap. “It is not often that so many companies are suspended together,” he added.

He explained that this action would help present a better picture of the depth of local equity markets by removing companies that were inactive or in some cases, non-existent.

According to the SECP, many of these companies have failed to hold annual general meetings for several years and in other cases liquidators have already been appointed for finalising winding up processes.

In some cases, trading had been suspended at the KSE but had continued at other bourses.

All three bourses have also been asked to ensure that there are no off-market transactions in the shares of these companies.

“Companies in continuous default of the listing regulations of the stock exchanges and other laws administered by the SECP not only pose a serious threat to the development of a robust capital market but also inhibit investor confidence through lack of transparency,” read the notification issued by the SECP.

Published in The Express Tribune, August 15^th, 2010.