SECP converts bourses into public entities

Stock exchanges to operate as for-profit, demutualised bodies.

ISLAMABAD: The registrar of companies, Securities and Exchange Commission of Pakistan (SECP), on Monday issued certificates of re-registration to the stock exchanges under the Stock Exchanges (Corporatisation, Demutualisation and Integration) Act, 2012, as an evidence of their change in status from companies limited by guarantees to public companies limited by shares, according to a press statement.

The bourses will now operate as for-profit, demutualised entities thereby ensuring a clear segregation of ownership rights from trading rights. Brokers/Trading Rights Entitlement (TRE) certificate holders, who previously predominantly controlled the affairs of the stock exchanges, will as a result of this demutualisation now unable to hold majority on the board of directors and be entitled to a maximum 40% voting shares of the stock exchange.

The SECP while approving the plans for segregation of commercial and regulatory functions of the exchanges has ensured that the demutualised entities exhibit enhanced governance and transparency and greater balance between interests of various stakeholders while supporting independent management.

This conversion of the stock exchanges reflects a significant transformation of the Pakistan capital market and marks the successful completion of corporatisation process under the Act which was promulgated on May 7, 2012.

As envisaged in the Act, the next phase of the exercise will entail the sale of shares of the stock exchanges to the strategic investors, general public and financial institutions. Participation of strategic investors shall result in making the country’s capital market more accessible for the international community while ensuring strategic alliances, influx of state of the art technologies and making the stock exchanges more competitive investment destinations.

Published in The Express Tribune, August 28^th, 2012.