The Securities and Exchange Commission of Pakistan (SECP) has proposed amendments to the Public Offering Regulations, 2017, to unlock access to the capital markets for companies that previously operated as Associations of Persons (AoPs), partnerships, and Limited Liability Partnerships (LLPs), read a statement on Wednesday.
SECP believes that the proposed amendments would reduce entry barriers and help established businesses raise capital for expansion. It will also support the development of Pakistan’s capital markets.
Under the proposal, AoPs, partnerships and LLPs will be able to use their historical business track record when seeking listing as a company.
Under the existing framework, a company must show a profitable operating record of at least two preceding financial years before making a public offer of securities. The proposed amendments will allow businesses that convert into a company to rely on their financial and operational records from the period when they operated as a partnership entity, subject to certain conditions.
To protect investors and ensure transparency, the financial statements of such entities must comply with the accounting and disclosure requirements applicable to companies. These financial statements must also be audited by a Quality Control Review rated audit firm, SECP stated.
The commission was of the view that the proposed changes would encourage partnership-based businesses to adopt the corporate structure and enter the formal capital market framework. The proposal is expected to broaden the issuer base, strengthen investor confidence and support long-term economic growth.
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