Islamabad: The Securities and Exchange Commission of Pakistan (SECP) has adjusted regulations to ease the path for established businesses seeking to raise capital through the Pakistan Stock Exchange (PSX). According to the Securities and Exchange Commission of Pakistan, businesses structured as partnerships, Limited Liability Partnerships (LLPs), and carved-out business divisions can now utilize their historical profitability records to qualify for an Initial Public Offering (IPO).

The adjustments have been implemented through amendments to the Public Offering Regulations, 2017, with the intent of lowering barriers to listing, fostering corporatization, enhancing the ease of doing business, and expanding access to capital markets. Under the new framework, eligible businesses can count their historical profitable track record prior to incorporation as a company towards meeting the two-year profitability requirement for an IPO, thereby removing a significant obstacle for established enterprises aiming to enter capital markets and secure growth funding.

The SECP anticipates that these amendments will incentivize more businesses to transition into the corporate sector, utilize the stock market for financing, and contribute to economic progress and job creation. In a bid to protect investor interests, the revised regulations mandate several safeguards. Eligible firms are required to prepare revised financial statements for at least the two preceding financial years, audited by a Quality Control Review (QCR)-rated audit firm. Additionally, they must provide audited financial statements for the period during which they have operated as a public limited company, and the entire shareholding of sponsors will be subjected to a two-year post-listing lock-in requirement.

The notification detailing the amendments to the Public Offering Regulations, 2017 is available on the SECP website.