SECP nominates six directors on bourses’ boards
ISLAMABAD: The Securities and Exchange Commission has approved a number of documents, including the names of six SECP-nominated directors on each stock exchange to act as the first directors, for the demutualisation of the country’s three stock exchanges.
The Stock Exchanges (Corporatisation, Demutualisation and Integration) Act 2012, which was promulgated on May 7, 2012, provides a framework for the corporatisation, demutualisation and integration of the stock exchanges.
Under this act, new nominee directors are to be incorporated in the stock markets and the Commission sent the final names to the respective stock exchanges.
For the Lahore Stock Exchange, SECP nominated Mujeeb Ahmed, Masood Afzal and Aftab Mehmood Butt.
A LSE official said that Mr Butt was also tipped to be the next chairman of the exchange following the resignation of Aftab Ahmed Khan.
Shahid Gulzar, a Chartered Accountant, and Malik Qamar Afzal, an advocate, have been nominated as directors for Islamabad Stock Exchange (ISE).
For the country’s main stock exchange, Karachi Stock Exchange, tax expert Shabbar Zaidi and former bureaucrat Kamal Asfar have been nominated.
SECP sources said the directors had been nominated based on their qualifications and how that would help with the process of demutualisation.
“Baskets containing experts from various fields have been created so that the stock exchanges do not have to rely on external consultants to meet the demutualisation requirements,” the SECP official said.
Apart from the names of directors, the SECP has also approved the documents submitted by the stocks exchanges which include revaluation of assets and liabilities of the stock exchanges, plans for the segregation of commercial and regulatory functions and memorandums and articles of association of the exchanges.
The SECP has also approved the authorised and paid-up capital of the exchanges with the number of shares to be issued, names of initial shareholders of the exchanges and the number and value of shares to be allotted to each member.
The detailed five-year development plans, together with the capital expenditure estimate and sources of finance along with SECP’s observations on the same in the interest of the market, have also been approved.
The stock exchanges will now have to take action on the approved documents by August 20, 2012.
These actions include getting the relevant approvals from the members, allot shares to initial shareholders in the approved numbers, deposit 60 percent shares in ‘blocked account’, issue certificates to initial shareholders certifying their number of shares in ‘Block Account’ and issue trading rights (TRE certificate) to each initial shareholder.
The date for the implementation of demutualisation Act is September 3, 2012 and it is expected to bring the country’s capital market at par with other international jurisdictions and also result in enhanced governance and transparency.
Further more, it is expected to attract strategic investors which will not only provide equity and technical expertise but will also result in increased visibility of these exchanges on international capital market forums.