KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has approved the full digitisation of share ownership for unlisted companies, replacing physical share certificates with electronic records to improve transparency and investor protection.
Under the reform’s second phase, shares of unlisted firms will be converted into book-entry form and maintained through the Central Depository System operated by Central Depository Company. The shift aims to reduce risks linked to paper certificates, including loss, forgery, and ownership disputes, many of which are currently subject to litigation.
The regulator said electronic records would allow faster and more secure transfer of shares, lower administrative costs, and provide real-time ownership data. Digital shares may also be used as collateral for financing, potentially improving companies’ access to credit.
All existing unlisted companies with physical certificates will be required to convert them into electronic form before carrying out transactions such as transfers, rights issues, bonus issues or changes in shareholding. Newly incorporated unlisted companies are already required to issue shares only in electronic form. The SECP has also approved procedures covering eligibility, documentation, verification, and tariffs to facilitate a smooth transition to the centralised system.
