May 7, 2021: In order to minimize shareholding disputes and make the entire process of holding, monitoring and transferring of shares much easier, cost-efficient and transparent, the SECP is considering a proposal requiring all the public listed, public unlisted, public interest and private limited companies to have their shares in book-entry form in compliance with Section 72 of the Companies Act, 2017.
Shares held in the book-entry form shall have the same rights and privileges as shares held in physical certificate form. Once notified, all companies, required to replace their physical shares with book-entry form, shall apply to a depository, licensed by the SECP for conversion of physical shares and further issuance of shares in the book-entry form. The depository shall prescribe procedures for such conversion and issuance of shares including documentation required, process to be followed and applicable fee/ charges.
Handling of shares in case of corporate actions i.e. issue of bonus/right shares and transfer or selling of shares would be much easier if shares are converted into book-entry form. Book-entry securities can be pledged to a bank to obtain financing against them. Furthermore, it would help to reduce the risks and costs associated with storing of physical share certificates, which are susceptible to be lost, stolen and /or damaged.
All stakeholders are invited to provide their feedback/opinion at https://forum2.secp.gov.pk on the proposal of conversion of physical shares into book entry, before May 20, 2021.
