SECP, PSX seek stakeholder comments on new listing framework

April 09, 2025 (MLN): The Securities and Exchange Commission of Pakistan (SECP), in collaboration with the Pakistan Stock Exchange (PSX), is seeking comments from stakeholders regarding a proposed regulatory framework for listing companies through the sanction of schemes of arrangements.

This initiative comes in response to a recent trend where unlisted companies have attained listing status by entering into schemes of arrangement with listed companies.

Through such schemes, unlisted entities have bypassed the public offering regime and standard PSX listing requirements, as per the press release issued today.

To address this, SECP and PSX have proposed amendments to the PSX regulations that would provide a clear framework and listing procedures for this alternative route.

The proposed changes aim to ensure greater transparency, enhanced disclosures, and an efficient price discovery mechanism, enabling existing and potential investors to make better informed decisions based on adequate information.

According to the draft regulatory regime, an unlisted company would only be allowed to attain listing status through a scheme of arrangement that involves the demerger of an “Operating Business Segment” from a listed company into the unlisted company.

The proposed amendments define classification criteria for such operating business segments.

These include: (i) the segment must be a business unit of a listed company that earns revenue and incurs expenses; (ii) it must have been profitable in the last financial year; and (iii) its revenue or assets must account for at least 10% of the total revenue or assets of the listed company.

The draft also outlines complete procedures for these listings.

These include the requirement of obtaining a prior “No Objection Certificate” from PSX before entering into a scheme of arrangement, maintaining a clean track record of sponsors and directors, ensuring a minimum free float, and making key disclosures.

Additionally, the regulatory framework empowers PSX to reject a listing application if the unlisted company fails to comply with the stipulated listing requirements.

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