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Markets

PSX eases eligibility requirements for investors of GEM Board Cos

  • As per new definition, accredited investors include those individual investors who have assets of at least Rs5 million
Published April 12, 2022

In a bid to increase participation of investors and improve operational efficiency in the GEM Board, the Pakistan Stock Exchange (PSX), with the approval of the Securities and Exchange Commission of Pakistan (SECP), has eased eligibility requirements for accredited individual investors investing in companies on the GEM Board.

As per the new definition, accredited investors include those individual investors who have assets of at least Rs5 million which include but are not limited to the value of securities held by these investors in their respective CDC investor account or sub-account, read a statement on Tuesday.

Real estate properties, vehicles and other assets can also be included to define the assets of the accredited investors

As per PSX, under the revised eligibility criterion, the total assets of investors are to be considered to assess their eligibility to invest in GEM Board companies. “To elaborate, real estate properties, vehicles and other assets can also be included to define the assets of the accredited investors,” read the statement, adding that the said amendment will allow more investors to participate in the pre-listing process of companies to be listed on the GEM Board.

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“This amendment will also lead to broadening the investor base in trading of shares of GEM Board companies at PSX, generating increased liquidity and higher share volumes,” it said.

The GEM Board is a listing platform created to facilitate growth enterprises whether small, medium or Greenfield businesses for their capital raising needs.

The PSX informed that the accredited investors will now self-declare to the securities brokers that they hold assets of at least Rs5 million in order to be eligible to participate in the listing of GEM Board companies or in their post-listing trading activity and also understand the risks associated with GEM Board and GEM companies.

Apart from the regulatory change, the stock exchange has also notified the modes of acceptance of self-declaration by the securities brokers.

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Auto-marking of individual investors taking part through e-IPO in the GEM primary market has been announced as well, under which individual investors having securities worth at least 40% higher than the minimum requirement of Rs5 million will be auto marked as accredited individual investors in NCSS of NCCPL.

Moreover, the PSX informed that the securities brokers can unmark an investor in NCSS of the National Clearing Company of Pakistan Limited (NCCPL) if they have reason to believe that the investor is ineligible to trade on GEM, based on their KYC/ CDD checks. “The securities brokers will allow such ineligible investors to liquidate their GEM shares with no bearing on the Securities Brokers,” it said.

The stock exchange was of the view that these will ease the operational practices of securities brokers. “With this amendment, it is expected that advisors will now take the lead and facilitate issuers and investors towards increased listings and investments in the GEM Board,” said the bourse.

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