ISLAMABAD-The Securities and Exchange Commission of Pakistan (SECP) has notified the regulatory framework for issuance of Convertible Debt Securities (CDS) through right offer. This new framework will allow listed companies to achieve their growth objectives by raising finance in a timely and cost-effective manner.
This regulatory framework introduces a new product and way for raising capital. It also provides detailed mechanics for the same. Presently, convertible debt is issued either by public offering or by private placement mode. Under the said Regulations, now the listed companies can also raise funds by issuing convertible debt to existing shareholders by way of Right offer.
It would provide an additional investment avenue for the shareholders and allow them to earn interest/profit, while also retaining the option to convert debt instrument into share capital. Rights of CDS can also be renounced through Securities Exchange trading platform and can also be traded in the same manner as Letter of Right (LOR) of shares are presently traded.
Regulatory framework has been designed in line with the disclosure-based regime being followed globally. Special focus is placed on achieving a balance between investor protection and facilitation for the issuer(s). The said Regulations can be accessed at SECP’s website.