ISLAMABAD   -   The Security and Exchange Commission of Pakistan (SECP) Policy Board reviewed the regulatory regime for Initial Public Offerings (IPOs) and appreciated the newly introduced reforms in the Public Offering regulatory framework. Especially the newly implemented e-IPO system, which allows for an efficient, easy and hassle free mechanism for making applications for subscription of shares in IPOs by the general public, said a statement issued by SECP here on Sunday. The SECP , Policy Board met in Islamabad at the SECP Headquarters yesterday under the Chairmanship of Professor Khalid Mirza.

The Board took decisions in connection with several matters pertaining to the development and growth of the primary market for issuance of securities, and gave other significant directions to improve the working of the Commission, inter alia, directions with respect to the Commission’s dealings with law enforcement agencies.

The Commission apprised the Policy Board that in order to make available long-term funding for expansion and growth of businesses and promote capital formation through capital markets a proposal has already been forwarded to PSX that seeks to broaden the scope of the existing SME Board through amendments in the PSXs’ regulatory framework.

The SME Board, renamed Growth Companies Board (GC Board),would facilitate listing by companies that do not meet the prescribed criteria of the main Board of PSX but are aspiring to raise funds through capital markets.

In this connection, SECP staff made a presentation that, among other matters, showed that a track record of profitability and/or other aspects of corporate viability were essential listing requirements in certain jurisdictions. 

It was pointed out by Policy Board members that other than the jurisdictions “selected” by staff, there were several other jurisdictions that did not have profitability as a listing criteria. As long as the disclosure requirements were adequately fulfilled, profitability or not would be duly reflected in the price.

The Policy Board Chairman observed that in line with accepted global practice,  SECP should engage in disclosure based regulation rather than merit based regulation and that this would enormously facilitate the growth of the capital market. It was brought to the attention of the Board that licenses of six brokers had not been renewed this year.