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The Securities and Exchange Commission of Pakistan (SECP) has issued draft amendments to the Companies (Further Issue of Shares) Regulations, 2020, in a bid to strengthen transparency, protect minority shareholders, and ensure sound corporate governance. Stakeholders have been asked to submit feedback by October 2, 2025.
For years, Pakistan’s capital market has faced criticism over unequal distribution of voting rights and dividend entitlements, leading to concerns about the dominance of majority shareholders. To address these issues, the SECP engaged with the Pakistan Stock Exchange (PSX), Central Depository Company (CDC), National Clearing Company (NCCPL), law firms, financial consultants, and other stakeholders before finalizing the proposed changes for public consultation.
Under the draft, all shares carrying voting rights will also be entitled to dividends, reducing potential conflicts of interest and preserving the significance of ordinary shares. SECP has further proposed that 75 percent of total voting power must remain with ordinary shares based on the “one share, one vote” principle. To prevent undue concentration, shares with varied rights will be limited to a maximum of five votes per share, and such shares must be issued only as listed securities for greater market oversight.
Proposed Changes at a Glance
| No. | Proposed Change | Objective |
| 1 | Dividend rights tied to voting rights | Aligns economic benefits with decision-making power |
| 2 | Minimum 75% voting power reserved for ordinary shares | Protects shareholder democracy and reduces the concentration of power |
| 3 | Maximum 5 voting rights allowed on special shares | Ensures fairness and avoids excessive influence |
| 4 | Mandatory listing of varied rights shares | Enhances transparency and strengthens regulatory oversight |
These reforms are positioned as a landmark move to modernize corporate governance in Pakistan. Experts believe that aligning dividend rights with voting rights will help reduce shareholder disputes and promote long-term investor confidence.
As one corporate consultant observed, “By making shareholder rights more balanced, SECP is taking a step closer to international best practices in capital markets.”
The question now is whether these reforms will be sufficient to strike a balance between attracting investment and protecting small investors. Stakeholders have until October 2, 2025, to share their views at [email protected].
