Islamabad—The Securities and Exchange Commission of Pakistan (SECP) Monday notified the Listed Companies (Buy-Back of Shares) Regulations, 2016. The regulations shall be applicable to buy-back of own shares by listed companies, said a press statement issued by the commission here.
The regulations provide for either cancellation of the purchased shares or retaining the same as treasury shares, it said. The earlier framework for buy-back did not provide for retaining the purchased shares as treasury shares, rather the purchased shares had to be cancelled. Buy-back of own shares by listed companies is normally undertaken for stabilizing the market price of their shares particularly when the market is passing through a bearish phase.
The regulations have been finalized after obtaining public comments and holding consultation sessions with key stakeholders.
The regulations encompass the eligibility criteria for buy- back, like maintaining the minimum paid-up capital and free float, authorization of the purchase with the approval by the members of the purchasing company by way of special resolution, the purchase methods, appointment of the manager to purchase and procedure for setting the purchase price.
It also includes restrictions, rights and privileges of the treasury shares, limitation on treasury shares, compliance with the applicable international financial reporting standards relating to the treasury shares, disposal of treasury shares and maintaining record thereof. It is expected that the regulations will help the listed companies to buy-back their own shares in a transparent manner to achieve the desired purpose in the best interest of the purchasing company, the shareholders and the capital market, the statement added.