The Securities and Exchange Commission of Pakistan (SECP) has issued a consultation paper seeking public feedback on a proposed policy framework for the issuance of ordinary shares with varied rights and privileges. The initiative aims to strengthen corporate governance, safeguard shareholder interests, and promote transparency in the capital market, according to a press release issued Wednesday.
The proposed framework outlines regulatory and compliance guidelines for companies issuing shares with differential rights, such as variations in voting power, dividend entitlements, and liquidation preferences. It addresses governance challenges related to control concentration, shareholder activism, and equitable decision-making. The consultation paper also highlights the need for market transparency and fair price discovery, ensuring investors holding shares with varied rights have clear valuation mechanisms and viable exit options.
SECP has conducted a comparative analysis of international best practices to assess global regulatory approaches and tailor a framework suitable for Pakistan’s financial ecosystem. The commission has also identified potential risks associated with differential share structures, including governance imbalances and reduced minority shareholder influence, and is proposing limits to maintain fairness and investor confidence.
The SECP has invited stakeholders, including investors, corporate entities, and legal experts, to provide feedback on the consultation paper to help refine the proposed policy framework.
