Karachi, April 10, 2025 – The Securities and Exchange Commission of Pakistan (SECP) has issued draft amendments to the Public Offering Regulations, 2017, and the Public Offering (Regulated Securities Activities Licensing) Regulations, 2017, as part of its ongoing efforts to streamline the public offering process in Pakistan. The proposed changes aim to address key issues in the initial public offering (IPO) landscape, including increasing efficiency, reducing costs, and expanding market participation. This move follows an extensive consultation with various stakeholders in the financial and capital markets.
In a press release issued on Thursday, the SECP stated that the amendments aim to make the IPO process more efficient by reducing processing time, eliminating redundancies, and facilitating faster, cheaper access to capital for issuers. These changes will cover public offerings of shares, debt securities, and units of Real Estate Investment Trusts (REITs), which are vital components of Pakistan’s capital markets.
The draft amendments are the culmination of a series of discussions involving multiple stakeholders, including the Pakistan Stock Exchange (PSX), Central Depository Company (CDC), National Clearing Company of Pakistan Limited (NCCPL), as well as listed issuers, securities brokers, banks, development finance institutions (DFIs), potential IPO candidates, REIT management companies, and others. This collaborative approach is designed to ensure that the amendments reflect the practical needs and challenges faced by all market participants.
Among the key proposals in the draft amendments is the reduction of the IPO processing time to just 14 working days, down from the previous, more time-consuming procedures. This will significantly expedite the process of bringing companies to market, which is expected to be a major boon for businesses seeking to raise capital.
The SECP is also proposing to simplify and strengthen the disclosure requirements for IPOs, making it easier for companies to present their financials and plans to potential investors. In addition, the amendments will introduce an improved price discovery mechanism and utilize technology more effectively to enhance market infrastructure.
One of the major shifts proposed in the draft amendments is the overhaul of the book-building process. Under the new rules, the book runner concept will be eliminated, allowing all eligible participants to directly place bids during the book building phase. This change is expected to democratize the process, making it more inclusive and transparent. Additionally, the 100% book building mechanism will be discontinued, encouraging the participation of underwriters for the retail portion of IPOs at the strike price.
Another significant adjustment is the increase of the minimum bid amount from Rs. 1 million to Rs. 5 million. Along with this, the book-building price band will be reduced from 40% to 20%, promoting broader participation from retail investors. To further boost retail involvement, a clawback provision is being introduced, allowing for increased allocations to the retail segment in the event of oversubscription.
The draft amendments also include provisions to allow banks to act as the Centralized Trading Interface (CTI) for public offerings of equity securities. However, banks will be required to establish a separate subsidiary for this purpose within five years. Additionally, the CTI’s role will be enhanced to ensure more robust assessments of issuers and public offering documents.
The SECP has also proposed new procedures and disclosure requirements for the public offering of REIT units, short-term debt securities, and the listing of shares of local companies outside Pakistan. These changes aim to broaden the range of available capital market assets, increasing opportunities for investors and businesses alike.
Furthermore, to simplify the process of issuing short-term corporate debt securities, the SECP has introduced a simplified regulatory review process for supplements to the prospectus. Secondary offerings by already listed companies will also be facilitated by streamlining the disclosure process and making the appointment of CTIs voluntary for these transactions.
As part of the broader drive towards modernization, the SECP is also advocating for a greater reliance on technology. Starting from July 1, 2025, the SECP plans to fully transition to electronic IPO applications, including the use of QR codes for accessing prospectuses and financial statements. The submission of listing and prospectus applications will be conducted through the online PRIDE platform, which will also accept electronic signatures, further enhancing the efficiency and transparency of the process.
The SECP’s latest proposed amendments represent a significant step toward improving Pakistan’s capital markets by addressing both regulatory inefficiencies and market demands. If implemented, these changes are expected to attract greater participation from investors, make the IPO process smoother for issuers, and ultimately contribute to the growth of Pakistan’s financial markets.