SECP Revises Share Issuance Rules to Protect Minority Shareholders

The Securities and Exchange Commission of Pakistan (SECP) on Monday notified amendments to the Companies (Further Issue of Shares) Regulations, 2020 (the “Regulations”), pertaining to the issuance of shares with different rights and privileges by listed companies. The amendments aim to safeguard the interests of minority shareholders and ensure robust corporate governance practices, transparency, and effective price discovery, the news release said. “Major amendments include that ordinary shares carrying voting rights shall be entitled to receive the same percentage or ratio of dividend per share; the aggregate voting power of all ordinary shares, under the principle of ‘one share, one vote,’ shall not be less than 75 percent of the total voting power of all shares issued by a company; shares with varied voting rights shall carry a maximum of five voting rights per share; and ordinary shares with varied rights shall be issued as listed securities,” it added. The amendments ensure the alignment of economic benefits, preserve the fundamental significance of ordinary shares, minimize potential conflicts of interest, safeguard against undue concentration of control, and promote equitable governance. These amendments, the SECP said, have been notified following an extensive consultation process with key stakeholders, including the Pakistan Stock Exchange (PSX), Central Depository Company (CDC), National Clearing Company of Pakistan Limited (NCCPL), listed companies, consultants, professional associations, and law firms.