Tag: SECP

ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has imposed a heavy penalty of Rs4 billion on B4U group for raising deposits illegally and operating pyramid schemes.

In a tweet message on Sunday, the SECP said that it had concluded adjudication proceedings against B4U Group and its sponsors for raising illegal deposits from the public and operating pyramid schemes, in violation of the Companies Act, 2017.

The B4U Group comprises of 18 companies incorporated under the Act, as well as five unincorporated business setups. All the 18 companies were registered during the last two years. The main sponsor of B4U Group is Saif-ur-Rehman, along with his immediate family member.

The SEC Pakistan, after completing the due process of law, has disqualified the sponsors of B4U Group becoming a director of any company for a period of five years and has also imposed a penalty of Rs100 million on each of its sponsors. Further, the sponsors shall not be allowed to incorporate any new company under the Act.

“In addition the SECP has granted sanction for winding up of all 18 companies of B4U Group and imposed a penalty of Rs200 million on each company. Aggregate penalties amounting to Rs4 billion have been imposed on B4U Group.”

ISLAMABAD: Total number of companies registered with the Securities and Exchange Commission of Pakistan (SECP) has increased to 143,416 with new incorporation of 1,597 in May 2021, a statement said on Friday.

According to the statement SECP registered 1,597 new companies in May 2021, witnessing a growth of 107 percent as compared to corresponding period last year. The total number of registered companies increased to 143,416.

This is for the second consistent month that over 100 percent growth in incorporation of new companies is being witnessed.

The trend of growth is attributed to digitalization/automation, introduction of simplified combined processes for name reservation and incorporation, and facilitation extended by the SECP’s newly established Business Centre.

In May, around 99 percent companies were registered online, 36 percent of applicants completed the incorporation process same day while 175 foreign users were also registered from overseas.

During the month of May, 68 percent companies had been private limited, 28 percent single member and remaining 4 percent comprise public unlisted companies, not for profit associations, trade organizations and limited liability partnerships (LLP).

The construction & real estate sector took the lead with incorporation of 252 companies, while companies in other sectors include: trading 247, I.T 216, services 149, e-commerce 64, food & beverages 59, education 51,  corporate agricultural farming 50, market & development 39, textile 37, tourism  34, chemical 33, healthcare 31, engineering 29, auto & allied 27, logging 25, pharmaceutical 24, mining & quarrying 21, broadcasting & telecasting, and fuel and energy 19 each, cables & electric goods, paper & board, and transport 16 each, cosmetics & toiletries 14, power generation 12, communication 11 and remining 67 companies were registered in other sectors.

Foreign investment has been reported in 48 new companies from Azerbaijan, China, Denmark, Germany, Korea South, Kuwait, Malta, the Netherlands, Norway, Russia, Singapore, Turkey, UAE, the UK and the US.

The highest numbers of companies, i.e. 519 were registered in Islamabad, followed by 513 and 250 companies registered in Lahore and Karachi respectively. The CROs in Peshawar, Multan, Faisalabad, Gilgit-Baltistan, Quetta and Sukkur registered 116, 88, 62, 36, 11 and 02 companies respectively.

ISLAMABAD: The total number of registered companies with the Securities and Exchange Commission of Pakistan (SECP) with addition of 2,185 new company registration in April 2021, a statement said on Wednesday.

The SECP said that the company registration has been increased by 186 percent in April 2021 as compared with the same month of the last year.

In April 2021, around 99 percent companies were registered online, 29 percent of applicants completed the incorporation process the same day while 220 foreign users were also registered from overseas.

SECP chairman Amir Khan attributed the trend of growth to digitalization and automation, introduction of simplified combined process for name reservation and incorporation, very low level of fees, and assistance provided for incorporation by the newly established business center.

The SECP said that the April incorporation including 67 percent private limited companies, 29 percent single member companies and the remaining 4 percent were public unlisted companies, not for profit associations, trade organizations, foreign companies and limited liability partnership (LLPs).

The IT sector, for the first time, took lead with the registration of 194 new companies in a month. The IT sector was followed by the trading sector with registration of 180 new companies, construction with 117, import and export with 115, and consultancy services with 110 companies.

Foreign investment has been reported in 47 new companies. These companies have foreign investors from USA, China, Saudi Arabia, Germany, UAE, Greece, Turkey, Norway, Canada, Netherlands, Syria, UK, Hong Kong and Australia.

The highest numbers of companies i.e. 736 were registered in Islamabad, followed by 667, 378 and 151 companies registered in Lahore, Karachi and Peshawar, respectively. The CRO in Multan, Faisalabad, Gilgit-Baltistan, Quetta and Sukkur registered 131, 48, 48, 23 and 3 companies respectively.

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has proposed amendments to introduce concept of Special Purpose Acquisition Company (SPAC).

A statement issued on Thursday stated that to introduce the SPAC, the SECP has proposed amendments to the Public Offering Regulations, 2017 to solicit public comments.

SPAC is a new concept for Pakistan’s capital market and is prevailing in many jurisdictions, including USA, Canada, Malaysia etc. Under the SPAC structure, a company comprises of group of persons/professionals raise funds from the general public and those funds are utilized for the purpose of merger or acquisition transaction within a permitted time frame.

A SPAC’s life begins with its initial formation (in the form of a company), followed by its IPO, its search for a target, a shareholder approval for merger/acquisition and finally, the close of an acquisition or else return of the SPAC’s proceeds back to its investors.

Under proposed regulatory framework, SPAC shall be a company or body corporate registered with the SECP, which shall be formed by a group of persons meeting the fit and proper criteria.

Paid up-capital requirement for SPAC shall be Rs1 million and it shall raise at least Rs200 million through public offering.

The Acquisition/merger has to be completed within permitted timeframe of two years. At least 90 percent of the funds raised shall be kept in escrow account managed by a custodian.

The proceeds in the escrow account may be invested in permitted investments. Each merger or acquisition transaction shall be approved by the shareholders by way of special resolution.

Upon merger, the merged entity shall be automatically listed and in case of acquisition the SPAC shall list the acquired entity. Shareholder/(s) disapproving the merger or acquisitions are entitled for refund of their money out of Escrow account as per specified procedure.

The aforesaid mentioned amendments are expected to provide a more conducive regulatory environment for capital formation in the economy through primary market.

ISLAMABAD: Securities and Exchange Commission (SECP) on Wednesday notified guidelines for issuance of convertible debt securities in Pakistan through both private placement and public offering mode.

The SECP issued the following guidelines:

Steps involved in Private Placement:

i. Requisite approval under section 83 of the Companies Act, 2017 for further issue of share capital in relation to Issuance of CDS. (Since conversion of CDS into shares would enhance the share capital of the Company, therefore approval of section 83 (1) b is required, whereby a public Limited company can enhance share capital by the way of other than right offer through special resolution and Commission’s approval.

ii. Structuring of CDS as per the Structuring of Debt Securities Regulations, 2020. As per the said Regulations, the Issuer can issue the CDS either through execution of Issuance agreement or Trust Deed. Provisions relating to Trust Deed and Issuance agreement are specified at regulation 11 and 15 of the Structuring of Debt Securities Regulations, 2020, respectively.

iii. Appointment of Investment agent or Debt Securities Trustee depending upon the structure opted by the Issuer. (Investment agent is required in case of Issuance agreement and Debt Securities Trustee in case of Trust structure.)

Entity holding a valid Consultant to the Issue license can act as Investment Agent, list of licensed Consultant to the Issue and Debt Securities Trustee is available at SECP’s website and can be accessed through:

https://www.secp.gov.pk/data-and-statistics/capital-markets/

iv. Drafting of Information memorandum by the Issuer for private placement. (Content of Information memorandum is prescribed in the Private Placement Rules, 2017)

v. After complying with aforesaid requirements, Issuer can directly place convertible debt securities to the eligible investors as per Private Placement Rules, 2017. Only eligible investors can invest in privately placed convertible debt securities. (Eligible investors are specified by Commission vide SRO dated April 19, 2021 under section 66 of the Companies Act, 2017).

vi. No regulatory approval is required for placement of CDS. (Since, the issue is privately placed and general public is not involved, therefore PSX and SECP approval is not required)

vii. After placement, Issuer can list the CDS at Pakistan Stock Exchange as per Chapter 5C of the PSX Rule Book. (Listing requirements are specified in Chapter 5C).

viii. Subsequent to listing, only eligible investors notified by the Commission can invest in these securities in secondary debt market.

ix. Secondary market trading of privately placed listed debt securities is visible at BNB trading board of PSX and can be accessed through:

https://dps.psx.com.pk/trading-panel

Steps involved in Public Offering:

i. Appointment of Consultant to the Issue (CTI), Underwriter(s) and Shareregsitar by the Issuer as per Public Offering Regulations, 2017.

List of licensed Consultant to the Issue, Underwriters and Share Registrars is available at SECP’s website and can be accessed through:

https://www.secp.gov.pk/data-and-statistics/capital-markets/

(Role of Consultant to the Issue is to (i) draft listing application, prospectus and related documents; (ii) seek approval of PSX and SECP on the behalf of the Issuer; (iii) ensure publication of prospectus in accordance with relevant law; (iv)conduct roadshows to sell the issue; (v) guide issuer throughout the public offering process etc.

(Role of Underwriter: Underwriter provides commitment to subscribe the unsubscribed portion of the issue. Underwriting helps the Issuer to get desired amount of the funds required for the implementation of the Project, which the Issuer would not be able to get in case of undersubscription of securities. Moreover, underwriting provide confidence to the investors that an independent third party has conducted proper due- diligence of the issue including the price before underwriting the issue.)

ii. Structuring of CDS as per the Structuring of Debt Securities Regulations, 2020. As per the said Regulations, the Issuer can issue the CDS either through execution of Issuance agreement or Trust Deed. Provisions relating to Trust Deed and Issuance agreement are specified at regulation 11 and 15 of the Structuring of Debt Securities Regulations, 2020, respectively.

iii. Appointment of Investment agent or Debt Securities Trustee depending upon the structure opted by the Issuer. (Investment agent is required in case of Issuance agreement and Debt Securities Trustee in case of Trust structure.)

Entity holding a valid Consultant to the Issue license can act as Investment Agent, list of licensed Consultant to the Issue and Debt Securities Trustee is available at SECP’s website and can be accessed through:

https://www.secp.gov.pk/data-and-statistics/capital-markets/

iv. Preparation of Prospectus and listing documents by the CTI. (Content of Prospectus is prescribed in First Schedule of the Public Offering Regulations, 2017)

v. Submission of listing documents along with the prospectus to the PSX for approval. (Listing documents are specified at Annexure -I of Chapter 5B of the PSX rule book) PSX rule book can be accessed through:

https://www.psx.com.pk/psx/themes/psx/uploads/PSX_Rulebook_%28updated_on_March_31%2C_2021%29.pdf

vi. Approval under section 83 of the Companies Act, 2017 for further issue of share capital. Since Conversion of CDS into shares would enhance the share capital of the Company, therefore approval of section 83 (1) b is required, whereby a public Limited company can enhance share capital by the way of other than right offer through special resolution and Commission’s approval. (It is advisable to obtain approval(s) after structuring of the CDS, however approval can be obtained before placement)

vii. Placement of prospectus by PSX on its website for seeking public comments. (seven working days)

viii. Pursuant to PSX approval, submission of prospectus to the Commission for approval under section 87 (2) read with section 88(1) of the Securities Act, 2015.

ix. Subsequent to Commission approval, seeking dates from PSX for publication of prospectus and public subscription. (To save cost, abridged version of prospectus can be published)

x. Prospectus has to be published in at least one English Newspaper and Urdu version of the prospectus in at least one Urdu Newspaper.

xi. Prospectus has to be published not less than seven days and not more than thirty days before the commencement of the subscription period.

xii. Publication of prospectus after obtaining dates from PSX.

xiii. Placement of CDS to the general public during the public subscription period.

xiv. Listing of CDS at Pakistan Stock Exchange as per Chapter 5B of the PSX Rule book (Listing requirements are specified in Chapter 5B).

xv. Subsequent to listing, general public including both institutional and individual investors can invest in these securities in secondary debt market.

xvi. Secondary market trading of publicly listed debt securities is visible at BNB trading board of PSX and can be accessed through:

https://dps.psx.com.pk/trading-panel

ISLAMABAD: Securities and Exchange Commission (SECP) on Tuesday issued a notification to revise previous SRO regarding list of persons to whom any instrument in the nature of ‘redeemable capital’ may be issued by a company.

The SECP notified the following persons to whom any instrument in the nature of “redeemable capital” may be issued by a company, subject to the terms and conditions as provided under section 66 of the Act, namely:-

(i) mutual funds, Voluntary Pension Schemes and Private fund being managed by NBFC;

(ii) insurer registered under the Insurance Ordinance, 2000 (XXXIX of 2000);

(iii) a Securities Broker;

(iv) a Fund and Trust as defined in the Employees Contributory Funds (Investment in Listed Securities) Regulations, 2018;

(v) a company and body corporate as defined in the Companies Act, 2017(XlX of 2017);

(vi) all individual investors including accredited individual investors, in case of Government Debt Securities, and debt securities whose debt servicing is guaranteed by the Government;

(vii) accredited individual investors, in case of corporate debt instruments: Provided that the company shall ensure the following:

(a) instrument is not placed to more than fifty (50) accredited individual investors;

(b) information memorandum contains all applicable information/disclosures as prescribed under the Public Offering regulations, 2017; and

(c) instrument is not sold to non-accredited investors in secondary market.

Explanation: – for the purposes of this notification the expressions, –

(a) “accredited individual investor” means an individual investor registered with National Clearing Company of Pakistan Limited and having net assets of Rs. 5 million or more; and

(b) “Government Debt Securities” means a debt security such as Treasury Bill (T-Bill), Pakistan Investment Bond (PIB), Government of Pakistan (GoP) Ijarah Sukuk and any other debt instrument issued by the Federal Government, Provisional Government, Local Government/Authority, and any other statutory body.