The Securities and Exchange Commission of Pakistan (SECP) has introduced significant reforms to simplify the Initial Public Offering (IPO) process, enabling more established businesses to raise capital through the Pakistan Stock Exchange (PSX).
Under amendments to the Public Offering Regulations, 2017, businesses operating as partnerships, Limited Liability Partnerships (LLPs), and carved-out business divisions will now be allowed to use their historical profitability records to meet IPO eligibility requirements.
Previously, firms were required to demonstrate profitability only after incorporation as a company before qualifying for a public offering. Under the revised framework, eligible businesses can count profitability achieved before incorporation toward the mandatory two-year profitability threshold.
According to SECP, the reforms are aimed at reducing listing barriers, promoting corporatization, improving the ease of doing business, and expanding access to capital markets for growing enterprises.
The regulator believes the amendments will encourage more established businesses to enter the corporate sector, secure growth financing, and contribute to economic growth, investment, and job creation.
To protect investors, the revised regulations also introduce additional compliance measures. Eligible firms will be required to prepare revised financial statements covering at least the previous two financial years, audited by a Quality Control Review (QCR)-rated audit firm.
Additionally, companies must submit audited financial statements for the period during which they have operated as public limited companies. Sponsors’ entire shareholding will also remain subject to a two-year lock-in period following listing to ensure long-term commitment and investor confidence.
SECP has formally notified the amended regulations, which are now available through its official regulatory framework.
