SECP to conduct pre-ballot scrutiny of all ‘issue of shares’

The Securities and Exchange Commission of Pakistan (SECP) has decided to conduct a pre-ballot scrutiny of all “issue of shares” to curtail the menace of making fictitious and multiple applications for subscription of shares, officials told The News on Monday.

Efforts are afoot to rationalise the cost of issue of corporate bonds, especially the cost relating to stamp duties paid on the issue and transfer of corporate bonds, they said. The year 2010 has so far proved to be better than the previous year, as five initial public offerings (IPOs) surfaced in just four months. Amtex Limited, Agritec Limited, Fatima Fertilizer and Safe Mix launched their IPOs, while Wateen Telecomís offering is scheduled on April 20. A cumulative of 397.67 million shares was offered in these offerings.

The year 2009 remained lacklustre, as only three initial public offerings were made, the officials said. Since the commencement of the current year, the capital market has started performing well, following significant improvement on the political front, passage of 18th Amendment, addressing chronicle issues of the provinces, said Khurram Schehzad, Head of Research at Invest Capital.

During the previous regime, analysts said, emphasis was laid on participation of general public in the stock market with the issuance of initial public offerings of various government entities to expand investor base in the stock market.

As the privatisation programme is almost shelved by the present regime, no initial public offering of the government entity came to the limelight. Now, when the government is planning to privatise some of its entities, especially power distribution companies, issuance of fresh initial public offerings cannot be ruled out, market players said.

The new tax treatment issue, additional issues in the form of liquidity crunch, unavailability of the financing product, the lack of confidence and the overall risk perception of investors block the way of fresh initial public offerings, they added.

Source The News