SECP mandates book-entry shares for new companies

March 04, 2025 (MLN): The Securities and Exchange Commission of Pakistan (SECP) has mandated that all newly incorporated unlisted companies must issue shares exclusively in book-entry form, effectively eliminating the use of physical share certificates.

The SECP has issued S.R.O. 246(I)/2025 to notify a new procedure for newly incorporated unlisted companies with share capital.

Companies incorporated on or after March 3, 2025, must have their shares directly credited and maintained in book-entry form from the date of incorporation.

The regulation strictly prohibits the conversion of book-entry shares into physical form.

As per the directive, subscribers at incorporation are required to provide consent to contractual arrangements with the Central Depository, agreeing to the terms and conditions for electronic share maintenance and ensuring the payment of annual fees and security deposits.

Furthermore, all unlisted companies must adhere to the Central Depository’s regulations for issuing book-entry shares and submit the necessary documents and returns under the Companies Act, 2017, as required.

The SECP has cautioned that non-compliance with these requirements will lead to penal action under Section 510(2) of the Companies Act, 2017.

Any person, who contravenes or does not comply with the requirements of this notification shall be liable for penal action as provided under sub-section (2) of section 510 of the Companies Act, 2017, SECP added.

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