SECP Seeks Feedback on Policy Framework for Issuance of Ordinary Shares with Varied Rights and Privileges by Companies

The Securities and Exchange Commission of Pakistan (SECP) has issued a consultation paper eliciting public input on a proposed policy framework for the issuance of ordinary shares with varied rights and privileges by companies. The initiative aims to enhance corporate governance, protect shareholder interests, and foster a transparent capital market by establishing clear regulatory guidelines for companies issuing shares with differential rights, including variations in voting power, dividend entitlements, and liquidation preferences. The consultation paper outlines key regulatory and compliance considerations, addressing governance challenges such as control concentration, shareholder activism, and equitable decision-making. It also emphasizes the importance of market transparency and fair price discovery to ensure that investors holding shares with varied rights have clear valuation mechanisms and viable exit options. A comparative analysis of international best practices has been conducted to assess global regulatory approaches and develop a framework suited to Pakistan’s financial ecosystem. SECP has highlighted potential risks associated with differential share structures, including governance imbalances and reduced minority shareholder influence, and is proposing reasonable limits to maintain fairness and uphold investor confidence. The Commission encourages stakeholders, including investors, corporate entities, and legal experts, to provide feedback to help refine the proposed framework.