ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has introduced a proposal for major reforms aimed at expediting the issuance of bonus and right shares.
To this effect, the SECP has released a consultation paper inviting public input on suggested changes to the current regulatory framework governing bonus and right share issuance. The objective of the reforms is to substantially cut down the time lag between the announcement of corporate actions and the actual transfer of shares to shareholders’ accounts.
The document highlights current regulatory procedures, comparing the existing and proposed timelines for each step in the process. It points out areas within the present framework that may be causing unnecessary delays. Based on SECP’s findings, the current process—from board announcement to share credit—can take as long as 181 days for right shares, 85 days for interim bonus shares, and 51 days for final bonus shares. The proposed amendments aim to reduce these durations by more than half.
SECP observed that the current regulations do not sufficiently incorporate technological advancements or the increasing digitalization in Pakistan’s capital market. In some cases, a lack of defined timelines under the existing setup has led to extended delays even after board approvals, resulting in shareholders waiting considerably for their entitlements, despite compliance with rules by companies.
To tackle these issues, SECP intends to revise the framework to make the issuance process faster and more efficient through the use of technology.
The commission has also been actively consulting with major stakeholders including the Pakistan Stock Exchange (PSX), Central Depository Company (CDC), and National Clearing Company of Pakistan Limited (NCCPL), to find effective solutions and identify necessary reforms. Introducing clear timelines at every stage can notably increase efficiency, offer faster access to capital, and build greater trust in the capital markets. SECP stated that these changes will help align the issuance of right and bonus shares with the evolving demands of the business environment while ensuring regulatory control.
