SECP revises framework for public offering regime
The SECP has approved amendments to the public offering regime. The revised framework, finalized after wide-ranging stakeholder consultations.
The public offering regime—comprising the Public Offering Regulations, 2017 and the Public Offering (Regulated Securities Activities Licensing) Regulations, 2017, governs the public offering of equity securities, debt instruments, and units of Real Estate Investment Trust (REIT) Schemes. The amendments aim to address both demand- and supply-side challenges for initial public offerings (IPOs), eliminate duplication in listing and prospectus applications, and facilitate issuers in achieving faster and more cost-efficient access to capital markets.
Key changes include the introduction of a more transparent price discovery mechanism through wider investor participation by replacing the single book runner with the concept of 'Eligible Participant.' This allows securities brokers, mutual funds, and banks to submit bids directly during book building. The minimum bid amount has been increased from Rs. 1 million to Rs. 2 million. The Consultant to the Issue (CTI) is now empowered to determine the price band using appropriate valuation models, with justification to be disclosed in the Prospectus. The requirement for 100 percent book building has been withdrawn to encourage independent underwriters' participation in the retail IPO portion. A new clawback provision permits up to a 10% increase in retail allocation in case of oversubscription by retail investors.
The role of CTI has been strengthened to ensure more rigorous evaluation of issuers and offering documents. Banks and DFIs are permitted to act as CTIs for equity offerings. If a bank/DFI fails to establish a separate subsidiary for the CTI function within five years, it may only act as CTI in consortium with another securities broker licensed as a CTI. Secondary offerings and public issuance of debt are facilitated through rationalized disclosures and optional CTI appointments. A standardized due diligence certificate format has also been introduced.
To broaden the investible universe, a separate chapter has been added for REIT offerings and a framework introduced for general public participation in GEM Board listings. Amendments also include a revised process for approval of supplement to the prospectus in shelf registration and provide a framework for issuance and listing of equity securities outside Pakistan.
To promote transparency and improve digital access, amendments have been made to strengthen disclosure requirements, mandate the use of QR codes, allow electronic signatures, facilitate online filings through the PRIDE portal and discontinue physical applications from September 1, 2025
These amendments reaffirm SECP's commitment to strengthening capital markets, fostering capital formation, and promoting a more efficient, inclusive, and technology-driven public offering regime in Pakistan.
Copyright Business Recorder, 2025
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