SECP proposes rule change to allow partnerships access to capital markets

Pakistan’s securities regulator has proposed changes to open capital markets to partnership-based businesses, allowing them to raise funds through public offerings.

The Securities and Exchange Commission of Pakistan said it has issued draft amendments to the Public Offering Regulations, 2017 to enable companies that previously operated as Associations of Persons (AoPs), partnerships and Limited Liability Partnerships (LLPs) to access the market.

The move aims to reduce entry barriers for established businesses and support the development of Pakistan’s capital markets.

Easing listing requirements

Under the current framework, companies must demonstrate a profitable operating record of at least two preceding financial years before making a public offer of securities.

The proposed amendments would allow businesses that convert into companies to use their historical financial and operational track record from the period when they operated as partnership entities, subject to certain conditions.

This would enable such businesses to qualify for listing without restarting their financial history under a corporate structure.

The SECP said the changes include safeguards to ensure transparency and protect investors.

Financial statements of such entities must comply with accounting and disclosure standards applicable to companies and must be audited by a Quality Control Review-rated audit firm, the regulator said.

Broadening market participation

The regulator said the proposed changes are expected to encourage partnership-based businesses to adopt a corporate structure and enter the formal capital market framework.

The move would help broaden the issuer base, strengthen investor confidence and support long-term economic growth.

The draft amendments have been placed on the SECP website for public consultation, and the regulator has invited stakeholders and the public to submit feedback.