The SECP has amended its Public Offering Regulations 2017. These new changes provide further relaxation in the initial public offering conditions for small businesses.
The Securities and Exchange Commission of Pakistan (SECP) has further modified its corporate listing rules. Now, companies do not need to be registered as a corporation for years to join the stock market.
The commission approved sweeping changes to the Public Offering Regulations, 2017 through an official statutory notification (S.R.O. 903(I)/2026). It was issued under the Securities Act 2015.
The main goal is to lower entry barriers for established small and medium scale companies. Now, these businesses have an official avenue to raise equity capital directly from the Pakistan Stock Exchange (PSX).
New Eligibility Rules for Past Financial Records
Under this updated framework, partnerships and Limited Liability Partnerships (LLPs) are now eligible for an Initial Public Offering (IPO).
The new criteria:
- Past Track Record – A company may lack a two year profitable track record as a public limited entity. In this case, it can use the verified financial performance of its prior partnership or LLP operations.
- Three-Year History – Companies must share their financial details and ratios for the last three years in their documents.
- Clear Risk Warnings – Changing businesses must tell about risks to investors. It includes management or performance changes or customer or supplier dependencies. It may also include delays in transferring operating licenses.
Rules to Protect Investors
The SECP has kept strict rules to safeguard market transparency and protect public investors.
- All pre-incorporation financial statements must conform to the accounting framework and disclosure requirements prescribed for companies under the Third Schedule to the Companies Act.
- Furthermore, these historical records must be duly audited by a Quality Control Review (QCR) rated audit firm.
- These documents must be submitted along with the audited financial statements of the period during which the issuer operated as a public limited company.
- The sponsors of the issuer must retain their entire shareholding in the company. These shares will remain locked in for a minimum period of two years from the last date of public subscription.
