Right shares SECP invites feedback on CIB report for companies

ISLAMABAD: Companies would now be required to include in the “rights offer document” details of any existing over dues or defaults.

The Securities and Exchange Commission of Pakistan (SECP) has issued a notification to initiate public consultation on draft amendments to the Companies (Further Issue of Shares) Regulations, 2020 (Regulations).

Under the Companies Act, 2017, companies may increase their share capital through a rights issue, which grants existing shareholders the right to subscribe for additional shares in proportion to their current holdings. The proposed amendments review an existing provision that restricts a listed company from proceeding with a rights issue if its Credit Information Bureau (CIB) report reflects any over dues or defaults.

This draft notification follows a detailed evaluation of stakeholder feedback on an earlier consultation paper. That paper comprehensively examined the implications of removing the CIB report requirement for listed companies undertaking rights issues, analyzing both potential risks and benefits.

A majority of stakeholders expressed that the current requirement limits the ability of financially distressed listed companies to raise funds for revival, restructuring, or resumption of operations—even when existing shareholders are willing to support the company. They emphasized that such companies should be permitted to undertake rights issues, provided enhanced disclosures are made to ensure transparency and investor protection.

In line with this feedback, the proposed amendments strengthen disclosure obligations.

Companies would now be required to include in the rights offer document details of any existing over dues or defaults, as well as those from the past three years, along with information on any ongoing recovery proceedings.

The SECP invites all stakeholders to review the draft amendments available on its website and share their written feedback by November 19, 2025, at [email protected].

Copyright Business Recorder, 2025