The Securities and Exchange Commission of Pakistan (SECP) has issued the first-ever merger, acquisition, and consolidation guidelines for registered companies.
As the number of mergers and share sales by companies to other entities increased, the guidelines were issued.
The mergers and acquisitions of banking companies, however, are governed by the Banking Companies Ordinance of 1962, which is administered by the State Bank of Pakistan.
According to a senior official of the SECP, all mergers and amalgamations are technically referred to as “arrangements”; therefore, the guidelines have been formulated with the intention of streamlining all the procedures that have already been followed by entities, despite the fact that the relevant rules were dispersed across numerous sets of rules.
“As the number of registered companies in the country has increased significantly, the number of mergers and acquisitions is on the rise,” the official said, adding that the guidelines may not cover every issue or circumstance that may arise during the review of a scheme of arrangement. The guidelines include a list of 27 general principles that provide the framework within which all merger schemes must be finalised.
All schemes must be submitted to the SECP, and the Commission will evaluate each scheme on its own merits, taking into account the nature of the transaction, the industry, and the potential impact in each case.
The guidelines state that the proposed scheme must not be designed to engage in monopolistic trade practises and must not violate any law, be in conflict with the economic interests of the country, or be in any way contrary to public policy or the general public’s best interests.