ISLAMABAD:
The Securities and Exchange Commission of Pakistan (SECP) has released a consultation paper seeking public feedback on a proposed policy framework for companies issuing ordinary shares with varying rights and privileges.
This initiative aims to strengthen corporate governance, safeguard shareholder interests, and promote transparency in the capital market by introducing clear regulatory guidelines for shares with differential rights. These rights may include differences in voting power, dividend entitlements, and liquidation preferences, as outlined in an official statement by the SECP.
The consultation paper highlights critical regulatory and compliance considerations, addressing governance challenges such as concentration of control, shareholder activism, and equitable decision-making processes. It also underscores the need for market transparency and fair price discovery to ensure that investors holding shares with differing rights have access to clear valuation mechanisms and viable exit strategies.
The SECP has conducted a comparative analysis of international best practices to evaluate global regulatory approaches and develop a framework tailored to Pakistan’s financial environment.
Additionally, the consultation paper identifies potential risks linked to differential share structures, such as governance imbalances and diminished influence for minority shareholders. To address these concerns, the SECP is proposing reasonable limits to ensure fairness and maintain investor confidence in the market.
