April 7, 2025 – The Securities and Exchange Commission of Pakistan (SECP) has taken a significant step toward improving the corporate share issuance process by proposing reforms to expedite the issuance of bonus and right shares. In a move aimed at enhancing operational efficiency, the SECP has released a consultation paper seeking public feedback on proposed amendments to the regulatory framework governing these processes.
The primary goal of these proposed reforms is to drastically reduce the time it takes for bonus and right shares to be credited to shareholders’ accounts after their announcement. Currently, there is a substantial delay in the execution of these corporate actions, leaving shareholders waiting for extended periods before they receive their due entitlements. The SECP’s initiative is designed to address these delays, thereby improving transparency and efficiency in Pakistan’s capital markets.
The consultation paper outlines the existing regulatory provisions surrounding the issuance of bonus and right shares. It provides a detailed comparative analysis of the current timelines for each procedural step involved in the issuance process and presents the proposed adjustments. According to the SECP, several aspects of the current framework contribute to unnecessary delays, particularly the lack of defined timelines and the failure to fully utilize technological advancements that could help expedite the process.
In the current system, the total time from the board’s announcement of a bonus or right issue to the actual crediting of shares can extend up to 181 days for right issues, 85 days for interim bonus shares, and 51 days for final bonus shares. These extended timelines are seen as a major hindrance to efficient market operations, and the SECP believes that with the right changes, these processes could be expedited by more than 50%.
One of the critical issues identified in the SECP’s analysis is that the existing regulatory framework does not account for the rapid technological advancements and digitalization of the country’s capital markets. As technology continues to evolve, the capital markets have become more digitally integrated, yet the regulations have not fully adapted to these changes. This disconnect has led to inefficiencies, including delayed crediting of shares to shareholders’ accounts even after companies have completed the necessary procedures and obtained board approval.
The SECP’s proposed reforms aim to address these shortcomings by leveraging modern technology and streamlining the regulatory framework to ensure that the issuance of bonus and right shares is both timely and efficient. By introducing more specific timelines and embracing digital tools, the SECP hopes to minimize delays, making the process smoother for both companies and shareholders.
The consultation paper also invites public input, allowing stakeholders, including market participants and industry experts, to provide their feedback and suggestions. This open dialogue is expected to lead to the development of a more effective regulatory environment that aligns with international best practices and the evolving nature of Pakistan’s financial markets.
The SECP’s move to expedite the process of issuing bonus and right shares is seen as part of a broader effort to modernize and optimize Pakistan’s capital markets. These reforms are expected to improve market liquidity, increase investor confidence, and support the growth of the country’s financial ecosystem. As the SECP continues to seek feedback, it is clear that the modernization of capital market processes is a key focus, ensuring that Pakistan’s financial markets remain competitive and efficient in the global economy.