LAHORE - Although the Karachi Stock Exchange had come to the rescue of shareholders during delisting of the companies from KSE, the investors, especially some foreign groups, are eagerly waiting for improvement in the regulations to safeguard the interest of minority shareholders in such instances.
During many delistings in the recent times it has been learnt that stock exchanges of the country always had to intervene to get the shareholders a fair price for their investment in absence of relevant rules and regulations from the SECP, which has formed a task force to protect the interest of minority shareholders a few months back but nothing concrete has been done on that ground.
On the other hand, for example, Karachi Stock Exchange always helped minority shareholders in de-listings by increasing per share buy-back prices. This can be ascertained by some examples when KSE increased share prices to help minority shareholders. However, this has been done on ad hoc basis and no set of rules is in place to determine this price which experts believe should be discussed or bargained between the buyers and sellers and not the management of stock exchanges.
In the case of de-listing of Regent Textile Industries in 2011, the KSE increased the initial buyback offer price of Rs 18 per share to Rs 92.71. ‘This shows how important role KSE has played to help the minority shareholders as per regulations of the exchange, but this was also done without any precedence’ said a source in the stock exchange.
Moreover, in the delisting process of Atlas Engineering in 2011, the KSE set the buyback price of Rs 58 per share to the initial offer of Rs 40.40 per share.
In another case, Wazir Ali Industries offered the price of Rs 8.55 per share when it applied for delisting from KSE in 2011. But the KSE set the purchase price at Rs 14.50 per share.
Similarly, Southern Network Limited offered Rs 1 per share when it applied for buying minority shares during delisting last year. This time too KSE resolved the price and fixed the buyback price of one share as Rs 3.
It is quite clear from the above mentioned examples that there is a strong need that SECP being the regulator should show its active involvement to devise regulations that can protect minority shareholders in Pakistan.
“Fixation of final payback should be in result of a fair consultation between minority shareholders and the company interested in delisting; however in absence of such forum the KSE is the only hope for minority shareholders,” a corporate lawyer, Intazar Mahdi, said.