Shares buyback: SECP revises eligibility requirements for listed cos

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has revised the eligibility requirements for the listed companies that buy back their own shares.

The SECP has issued an SRO on Tuesday to amend the Listed Companies (Buy-Back of Shares) Regulations, 2019.

According to the amended regulations, the purchasing company shall not be on the default counter and has not defaulted on any debt instrument supported by the auditors’ certificate.

Under the amended regulations, a company shall be eligible to purchase if it fulfills the following conditions: First, it is listed on the securities exchange for a period of not less than three years.

Second, it is compliant with the minimum capital or equity requirements or minimum free float requirement of the securities exchange, as set out in listing regulations or licensing requirements, if any, after the purchase.

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Third, it has obtained approval of its members for purchase through a special resolution.

The SECP has also revised the procedure for purchase of the buy-back of the shares.

The general meeting in which the special resolution is to be passed shall be held not later than 45 of the date of the meeting of the board of directors in which the purchase is recommended.

Earlier, the period was 30 days under the previous regulations.

Second, the purchasing company shall make a public announcement as per Schedule-II within two working days of passing of the special resolution.

The SECP has also amended the procedure for the purchase through securities exchange. The purchase shall be made through securities exchange subject to the following procedure: The purchasing company shall open an Investor Account Service (IAS) at Central Depository Company (CDC) for the purpose of the purchase and shall intimate all related details to CDC.

The authorized officer shall open a subaccount of the purchasing company with any licensed brokerage house which can only be utilized for the purchase of shares during the purchase period.

The purchasing company shall ensure that sufficient funds are available for settlement in the designated clearing bank account of the company and the purchasing company shall intimate to the securities exchange, the number of shares purchased, along with the purchase price on a daily basis for public dissemination.

The shares purchased on a daily basis shall be placed in the blocked IAS account of the purchasing company maintained with CDC; and CDC shall ensure that the shares shall remain in a blocked account until the company decides to sell the treasury shares or cancel the shares in accordance with these regulations.

The purchase period for purchase through securities exchange shall start not later than seven days from the date of public announcement and shall close within 180 days from the date of passing of special resolution, wherein, members have given approval of the Purchase or till such date that the purchase is completed, whichever is earlier, new regulations added.

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