Pakistan Stock Exchange Limited (PSX) signed a Memorandum of Understanding (MoU) with Small and Medium Enterprises Development Authority (SMEDA) and Islamabad Chamber of Commerce and Industry (ICCI) on Friday, for mutual cooperation and collaboration to facilitate access to equity financing for Small and Medium Enterprises (SMEs).
General Manager of SMEDA, Javed Iqbal Khattak and Managing Director of PSX, Nadeem Naqvi signed the MoU. Member of the Board of PSX Abid Ali Habib and Provincial Chief of SMEDA (Punjab) Raja Hassanien Javed were also present on the occasion. In the Islamabad Chamber of Commerce, Khalid Iqbal Malik, President ICCI signed the MoU while Khalid Malik, SVP, and Tahir Ayub, VC, ICCI were also present.
PSX is finalising the launch of its Small and Medium Enterprises (SME) Board – a platform for SMEs to raise equity capital to fund their growth and expansion needs. A public company with post issue paid-up capital of not less than Rs 25 million and not more than Rs 200 million is eligible to get listed on the SME board. To promote the SME sector and to encourage SMEs to get listed on the SME board, the PSX has endeavoured to make the listing procedure a simple and easy one. To reduce listing cost, listing fees of the Exchange have been capped at Rs 50,000.
During the MoU signing ceremony, both SMEDA and PSX representatives agreed that there is a dire need to promote small and medium businesses’ growth in Pakistan, as these account for 80 per cent of the non-agricultural labour force while their ability to access bank financing is usually very limited, primarily due to high collateral requirements.
A core objective of the MoU is to generate awareness amongst SME’s regarding the benefits of listing in terms of not just obtaining financing for growth but also to create a proper corporate structure for long-term business sustainability, improved branding, have greater credibility with buyers and suppliers and importantly, managing and growing family wealth in a manner that avoids conflict within families.
At the same time, to protect investors, a number of steps have been taken by the PSX. For the SME board, there will be a lock-in period on the shares of the sponsors, i.e. sponsors would have to retain their entire shareholding in the listed SME for one year and, for the next two years, would have to retain at least 25 per cent of the paid-up capital of the SME. The SME would have to prepare periodic financial statements and have them audited by a QCR rated chartered accountant firm and should conform to simplified corporate governance requirements.
By signing the MoUs, the PSX agreed with SMEDA and ICCI to conduct joint awareness sessions, workshops and training for SMEs to promote equity listings on the SME board of PSX. For SMEs listed on PSX or are in the listing process, SMEDA will assist SMEs in the development of their business plan, provide SMEDA’s accounting software which can serve to help SMEs in preparing their accounts and financial statements and provide guidance w.r.t legal and regulatory matters like registration of SMEs at the SECP as public limited companies.
The team designated by the PSX to promote mutual collaboration includes DMD PSX Haroon Askari, Regional Head Islamabad Asghar Abbas Naqvi, Regional Head Lahore Sarmad Hussain, Head of Special Projects Muhammad Abdullah, Manager Operations Asmaa Saleem Malik, and Officer Special Projects Imran Lakhani.
