Karachi(The COW News Digital) The Securities and Exchange Commission of Pakistan (SECP) has announced a major initiative to convert physical shares of non-listed companies into electronic form, aiming to modernize the country’s capital market infrastructure and enhance transparency.
Under the new directive, physical share certificates of non-listed companies will be digitized through the Central Depository System (CDS). Following this transition, all transactions involving shares of non-listed companies will be conducted electronically, eliminating the need for physical certificates.
The SECP highlighted that rights issues, bonus shares, buybacks, and transfers will now require shares to be converted into digital format before execution. This shift is expected to reduce risks associated with physical shares, such as forgery, theft, and loss.
“Electronic shares will ensure secure ownership records and provide an effective framework for resolving share-related disputes,” the SECP said. The move also promises faster, safer, and more efficient settlement processes, making share transfers almost instantaneous.
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In addition, electronic shares can now be used as collateral for bank loans, opening new avenues for businesses to leverage their equity holdings for financing. This development is expected to significantly improve liquidity and market participation among shareholders.
Companies holding physical shares will be required to digitize their share certificates prior to any transaction. Once converted, all subsequent transfers, allotments, or corporate actions will be processed through the CDS, standardizing operations across non-listed companies.
The SECP emphasized that digitization will strengthen investor protection and corporate governance. By maintaining secure, accurate, and transparent ownership records, the regulator aims to reduce legal and operational challenges associated with physical shares.
Market analysts view this decision as a key step in aligning Pakistan’s financial markets with global best practices. The transition to electronic shares is likely to enhance investor confidence, encourage greater participation in the capital market, and reduce administrative burdens for companies and regulators alike.
This initiative also complements ongoing efforts to digitize financial services in Pakistan, supporting broader economic modernization and improving access to financial tools for businesses and investors.
The SECP has called upon all non-listed companies and their shareholders to comply with the digitization process to ensure smooth implementation and maximize the benefits of electronic shareholding.
