ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has permitted listed companies to transfer amount from revenue reserve to capital reserve for the issuance of bonus shares.
In this regard, the SECP has issued a circular here on Friday to the listed companies.
According to the commission’s circular, the Securities and Exchange Commission of Pakistan in the exercise of the powers conferred under Section 510 of the Companies Act, 2017, hereby, clarifies that except otherwise provided in the applicable legal framework, the board of directors of the company in accordance with and to the extent permitted in the articles of association: may transfer amount from revenue reserve to capital reserve, being a reserve not regarded free for distribution by way of dividend as per the guidance provided in clause 73 of Table A, First Schedule to the Act.
SECP issues consolidated ‘Companies Regulations, 2024’
The amount so transferred in the capital reserve may be utilized for issuance of bonus shares.
In rare circumstances, when such capital reserve is no longer required, the amount may be transferred back to revenue reserve, the SECP added.
The company, in each year of transfer to or from revenue reserve and capital reserve, must disclose in its annual audited financial statements complete information about the reserves, including but not limited to the amount transferred during the year and background and rationale of the transfer including brief of any strategy or plan approved by the board of directors.
Copyright Business Recorder, 2024