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 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.
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