The Securities and Exchange Commission of Pakistan (SECP) has ordered all unlisted companies to convert their physical share certificates into electronic form. From now on, any share transfers, allotments, buybacks, or rights and bonus issues must be done through the Central Depository System (CDS).
The move aims to make shareholding safer and more transparent. Physical certificates are prone to loss, theft, damage, or forgery, and disputes over ownership often take years to resolve in court. Keeping shares in electronic form will help prevent these problems and make records easier to check.
Electronic shares will also speed up transactions and reduce paperwork. Companies can use them as collateral to get financing, and regulators can more easily monitor ownership.
Newly incorporated unlisted companies already issue shares electronically. Now, existing companies must complete the conversion before carrying out any share-related activity. Cancelled physical certificates will be kept for ten years unless otherwise directed.
The SECP has said that companies facing legal or other genuine obstacles can apply for exemptions. Those who fail to comply may face penalties under the Companies Act, 2017.
