TPL Properties and TPL Corp Limited placed on Non-Compliant Segment

The Pakistan Stock Exchange placed TPL Properties and TPL Corp limited on the non-compliant segment on the morning of the 5th of December. The placement in the non-compliant segment means that TPL Properties will now be excluded from the Margin Eligible Securities (MES), Margin Financing System (MF), Securities Lending & Borrowing (SLB), Margin Trading System (MTS) and Murabaha Share Financing (MSF) while TPL Corp has been excluded from list of securities eligible for SLB and MF. The placement will become effective from the 5th December for the foreseeable future. 

The step has been taken by Pakistan Stock Exchange after both these companies failed to hold their Annual General Meeting within the stipulated time. The PSX rulebook mandates an Annual General Meeting to be held within 120 days from the close of the financial year. The purpose of the AGM is to present the annual financial statements of the company which show how the company has performed in the last financial year. Both these companies were found in non-compliance with this regulation. 

The purpose of these regulations is to protect the investors by requiring companies to fulfil different obligations over a period of a year which will allow investors to evaluate the performance of the companies and allow them to gauge how well it is performing.

Placement of the non-compliant segment is considered to be a severe warning against the company. If this non-compliance persists for six months after placement on the Non-compliant segment, the next step is to place it on a Risk Warning Alert. If the non-compliance persists for two consecutive AGMs, the trading in the shares is suspended. 

The placement will prove to be detrimental for both of the scrips as it would mean investors will not be able to use these scrips against margin financing and margin trading system. This will lead to a decrease in the volume of trading that can be carried out. As the quantum of trading falls, certain investors might also look to refrain from trading in the shares as they will get spooked by the warning being placed against it.

It is pertinent to note here that this seems like the Pakistan Stock Exchange has followed the letter of the law as it is meant to be followed. 

On the 26th of September, TPL Corp and TPL Properties had applied for an extension to hold their AGM. The SECP allows for companies to file for an extension if the management feels that they will not be able to meet the deadline. Both the companies asked for an extension to be granted as they felt that they would not be able to finalize its accounts and present them in the AGM. The company has to finalize their accounts and then distribute them to the shareholders for 28 days before they can fix the AGM. In this case, SECP allowed TPL Properties and TPL Corp to have an extension but mandated them to hold their AGM by 27th of November.

TPL Corp was able to finalize their accounts by the 20th of November and then announced an AGM to be held on the 30th of December 2025. Their hands were tied to some extent as they had to release the accounts for 28 days before an AGM could be called. The fact that they failed to finalize the accounts was the reason they had fallen foul. A remedy in this situation could have been to file for another extension as the PSX has to enforce their regulations. In the case of TPL Properties, the accounts had been presented on the 14th of November and the AGM had been called for December 29th. 

Applying the rules and regulations, the PSX had little choice but to place these companies in the non-compliant segment. The best course of action for the company now is to hold these meetings at their respective days and they will be taken out of this placement by January of 2026.