The Securities and Exchange Commission of Pakistan (SECP) has issued new regulations for buyback of shares of companies listed on the securities exchange. According to the draft of the Listed Companies (Buy-Back of Shares) Regulations, 2019 issued by the SECP here on Saturday, a company shall be eligible to purchase if it fulfils laid down conditions. One of the conditions is that it is listed on the securities exchange for a period of not less than three years. The SECP will repeal the Listed Companies (Buy-back of shares) Regulations, 2016.
The purchasing company means a listed company that buyback its own shares under these regulations. Under the regulations, the general meeting in which the special resolution is to be passed shall be held not later than thirty days of the date of the meeting of the board of directors in which the purchase is recommended. The purchasing company shall make a public announcement on the next working day of passing of the special resolution.
About the obligations of the purchasing company, the SECP has specified that the purchasing company shall communicate to the Commission and the securities exchange simultaneously, the decision of the board of directors regarding recommendation of the purchase on the day the decision is made and make public announcement on the format specified. The purchasing company shall not apply for voluntary delisting or voluntary winding up within a period of twelve months of the close of the purchase period, the SECP said.
Except where the recommendation for the purchase is not approved by the members in the general meeting, the recommendation for the purchase by the board of directors shall not be withdrawn. The sponsors, directors, officers, associated companies and undertakings, shareholders holding ten percent or more of the voting shares of the purchasing company, manager to the offer appointed by the purchasing company shall not disclose inside information as defined in section 129 of the Securities Act about the purchase or sale to any person and shall not misuse their positions to gain any benefit for themselves directly or indirectly or for any other person, the SECP said.
The sponsors, directors, officers, associated companies and undertakings and shareholders holding more than ten percent of the voting shares of the purchasing company shall not directly or indirectly trade in shares of the purchasing company during the specified periods.
The treasury shares shall not be sold, transferred or otherwise disposed of by the purchasing company within a period of six months from the closure of the purchase period, the SECP said.
In case of purchase through tender offer, the purchase price shall be the price as recommended by the board of directors and approved by the members through special resolution. Provided that it shall not be less than thirty days weighted average price of the shares. Purchase through securities exchange shall not be more than five percent above the weighted average market price of the share of the purchasing company for the last ninety days immediately prior to the date on which the shares are purchased.