The Securities and Exchange Commission of Pakistan (SECP) has released draft amendments to the Companies (Further Issue of Shares) Regulations, 2020, inviting public comments from stakeholders across the corporate and financial sectors. The proposed changes are intended to streamline the issuance of shares with varying rights and privileges by listed companies, while ensuring transparency, accountability, and the protection of minority shareholders.
According to the SECP notification, the amendments seek to strike a balance between enabling companies to raise capital efficiently and preserving the core principle of equitable governance. By placing stricter safeguards on the issuance of shares with differential rights, the regulator aims to minimize potential conflicts of interest and reinforce the integrity of Pakistan’s corporate framework.
One of the key proposals is the stipulation that all shares carrying voting rights must also be entitled to dividends. This provision is designed to align economic benefits with voting powers, preserving the significance of ordinary shares and reducing the likelihood of disputes between different classes of shareholders. By linking dividends directly to voting rights, SECP aims to create a fairer and more transparent system that respects the interests of all investors.
In addition, the draft amendments mandate that the combined voting power of ordinary shares, based on the principle of one share equaling one vote, must not be less than 75 percent of the total voting power of all issued shares. This safeguard is intended to prevent undue concentration of control within a small group of shareholders, ensuring that ordinary shareholders continue to hold meaningful influence over corporate decisions.
To further regulate varied rights, the amendments propose that shares with different rights be capped at a maximum of five voting rights per share. Moreover, any issuance of ordinary shares with varied rights must be made as a listed security, ensuring greater transparency and regulatory oversight through capital markets.
These changes come after an extensive consultation process initiated earlier this year. SECP engaged with a broad spectrum of stakeholders, including the Pakistan Stock Exchange (PSX), Central Depository Company (CDC), National Clearing Company of Pakistan Limited (NCCPL), listed companies, consultants, law firms, professional associations, and financial experts. The regulator reviewed both written submissions and insights gathered through online and in-person sessions, carefully analyzing the feedback before finalizing the draft for public review.
Industry observers note that these amendments, if implemented, could bring Pakistan’s corporate governance practices closer in line with global standards, where shareholder rights and transparency remain central pillars of market development. The move also reflects SECP’s broader strategy to enhance investor confidence, promote capital market growth, and encourage sustainable business practices across listed companies.
The SECP has called for final feedback on the draft regulations by October 2, 2025, which can be submitted to capitalissuefeedback@secp.gov.pk. Once finalized, the regulations are expected to significantly influence how companies structure their share issuances and manage governance responsibilities.
For investors, particularly minority shareholders, the proposed amendments represent a step forward in ensuring that their rights are not diluted through complex share structures. For companies, the framework offers clarity on permissible practices while maintaining flexibility for raising capital through innovative financial instruments.
As Pakistan continues to strengthen its corporate governance regime, the SECP’s proposed reforms underline the regulator’s commitment to balancing business needs with the protection of shareholder rights, ultimately paving the way for healthier and more transparent capital markets.
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