Regulations for shares buy-back notified ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) notified the Listed Companies (Buy-Back of Shares) Regulations, 2016 on Monday.
The regulations relate to the repurchasing of shares by listed companies. The new instructions will reform the ‘The Companies (Buy-Back of Shares) Rules, 1999’.
The previous framework for buying-back or ‘repurchasing’ shares did not provide for the retention of purchased shares as treasury shares, rather the repurchased shares had to be cancelled. Companies normally perform buy-backs to stabilize market prices, particularly when stocks are going through a bearish phase.
The new regulations were finalised after consulting key stakeholders and considering public comments.
The guidelines address the eligibility criteria for a buy-back, like maintaining the minimum paid-up capital and free float, authorisation of the purchase through a special resolution, purchase methods, appointment of the manager to purchase the shares, procedure for setting the price, restrictions, rights, privileges and limitations of the treasury shares, compliance with the applicable international financial reporting standards, disposal of treasury shares and maintaining records thereof.
It is expected that the regulations will assist listed companies to buy-back their own shares in a transparent manner while keeping the interests of the company, shareholders and the capital market in mind.