The Securities and Exchange Commission of Pakistan (SECP) has introduced substantial amendments to the Public Offering Regulations, signaling a major step toward modernizing the country’s capital markets. These proposed changes are aimed at streamlining the public offering process, enhancing efficiency, and enabling broader access to capital through innovative regulatory frameworks.
The SECP has officially issued draft amendments to the Public Offering Regulations, 2017, as well as the Public Offering (Regulated Securities Activities Licensing) Regulations, 2017, to initiate a final round of public consultation. These proposals come after an extensive, multi-stakeholder dialogue that involved key capital market entities such as the Pakistan Stock Exchange (PSX), Central Depository Company (CDC), National Clearing Company of Pakistan Limited (NCCPL), listed issuers, securities brokers, banks, consultants, Development Finance Institutions (DFIs), REIT Management Companies, Shariah advisors, credit rating agencies, and investor associations including the Pakistan Stock Brokers Association and MUFAP.
The regulatory overhaul is designed to resolve demand and supply-side challenges in the Initial Public Offering (IPO) space. Central to the proposed reforms is the goal of reducing the IPO processing time to 14 working days, eliminating duplication between listing and prospectus applications, and improving issuers’ access to capital markets in a cost-effective and timely manner. The SECP also aims to refine price discovery mechanisms, bolster disclosure standards, and ensure broader investor outreach by leveraging technology and existing market infrastructure.
A key highlight of the draft amendments is the democratization of the book building process. The SECP proposes to phase out the current book runner concept, allowing all eligible investors to place bids directly during the book building stage. Additionally, the 100% book building mechanism will be discontinued to enable greater underwriter participation, particularly for the retail segment. Notably, the minimum bid amount is set to increase from PKR 1 million to PKR 5 million, and the price band for book building is to be narrowed from 40% to 20%, enhancing pricing discipline and predictability.
To encourage retail participation, a new clawback provision is being introduced, which will allow allocation to the retail segment to be increased up to 25% in the event of IPO oversubscription. This move is expected to balance institutional and retail investor interest more equitably.
In a structural shift, Scheduled Banks are being allowed to act as Consultants to the Issue (CTI) for public equity offerings, with the stipulation that they establish a separate subsidiary within five years. The role of the CTI will be significantly enhanced to ensure more rigorous evaluation of issuers and offering documents. Similar licensing and operational conditions apply to DFIs and Investment Finance Companies, particularly for debt securities and listings on the Growth Enterprise Market (GEM).
The revised regulations also introduce customized procedures for a broader range of capital market instruments, including REIT units, GEM companies, short-term debt securities, and listings of local firms on foreign exchanges. To further promote shelf registration arrangements and ease issuance of short-term corporate debt, a streamlined review process for prospectus supplements is being proposed.
In line with digital transformation goals, the SECP has recommended several tech-driven enhancements, including the mandatory use of QR codes for accessing prospectuses and financial statements, full transition to electronic IPO applications starting July 1, 2025, acceptance of e-signatures, and submission of documents through PRIDE, the SECP’s online application portal.
These reforms underscore the SECP’s commitment to modernizing Pakistan’s capital markets by encouraging transparency, reducing regulatory friction, and supporting innovation. If finalized, the new Public Offering Regulations are expected to make the IPO journey smoother for issuers while empowering a broader base of investors with easier access and improved safeguards.