Amendments in the Companies Regulations, 2020
Reform ID F155
Reform Description Before: Earlier, companies were required to seek Commission’s approval while issuing shares with different rights (under section 6(iv) of the regulations). Only preference shares were permitted to convert into ordinary shares (section 6 (ii)(g) of the Regulations). Mechanism for valuation of immovable property, intangible assets or services was absent since the promulgation of the Companies Act, 2017.

After: Now, requirement for seeking commission’s approval for issuance of shares with different rights has been abolished (under section 6(iv) of the regulations). Similarly, the conversion of one class or kind of shares into another class or kind e.g. ordinary into preference shares etc. is permitted (section 6(2) of the Regulations). A comprehensive mechanism for valuation of immovable property, intangible assets or services is provided in regulation 8(a) of the regulations read with section 460 of the Companies Act, 2017.

Sector All Sectors
Beneficiaries All companies registered with the SECP
Jurisdiction/ Location Federal (Entire Pakistan)
Department Securities and Exchange Commission of Pakistan
Date of Implementation 10.11.2021
Details Difficulty The companies were required to seek Commission’s approval while issuing shares with different rights (under section 6(iv) of the regulations). Only preference shares were permitted to convert into ordinary shares (section 6 (ii)(g) of the Regulations). Mechanism for valuation of immovable property, intangible assets or services was absent since the promulgation of the Companies Act, 2017.
Analysis It was realized that an amendment in the Companies Regulations, 2020 was required and the same was done to resolve the issues related to shares and their categorization conversion.
Solution The requirement for seeking commission’s approval for issuance of shares with different rights has been abolished (under section 6(iv) of the regulations). Similarly, the conversion of one class or kind of shares into another class or kind e.g. ordinary into preference shares etc. is permitted (section 6(2) of the Regulations). A comprehensive mechanism for valuation of immovable property, intangible assets or services is provided in regulation 8(a) of the regulations read with section 460 of the Companies Act, 2017.
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