04-15-2010, 08:50 PM
Star
The incidents of selling such a huge holding of listed company (owned by a single person) to general public are very rare in Pakistan. I am not sure due to lack of insight, yet, there may be no case at all like this, in practical terms.
Since the Companies (Issue of Capital) Rules, 1996 do not specifically mention as to which company the Rule 9 is applicable; there is an outright need to get the clarification from SECP regarding the nature of the company that falls under this rule.
For example the Rule 9 uses the words "A PERSON WHO HOLDS MORE THAN 10 PERCENT SHARES OF A COMPANY MAY OFFER SUCH SHARES TO PUBLIC". Now the nature of the company is undefined. As per my apprehension the shareholders of Private companies cannot sell their shares to public unless the private company has been converted to the public company by making necessary changes in memorandum and articles of association and obtaining various approvals, before such offering. Therefore, the term âCOMPANYâ appears to be vague and needs to be elaborated by the regulators.
The listed public companies presumably are already held with public even if there is substantial concentration of holding/owning some where. It is deemed to have already been issued to public. Further, there is a secondary market (stock exchanges) available for selling such shares (say in trenches of less than 10 percent) and one will rarely need to offer such shares to PUBLIC ONCE AGAIN unless the scrip is so poor that no body is wishing to buy it at the stock exchanges.
If the market is active, any one can sell such holding in the stock exchanges in trenches of lesser than 10 percent and no rule will apply on him at all. So, the purpose of rule dies at once and no one will even have any authority to make an inquiry.
Further to above, if the owner of such shares wishes to change hands with some one (an identified party) else specifically interested to get into the buying deal, there will be no PUBLIC OFFER FOR SALE at all. It would simply be one-to-one deal between a buyer and a seller and will not be construed as a public offer. However, in such cases there will be invoked the requirements of Listed Companies (Substantial Acquisition of Voting Shares and Take-overs) Ordinance, 2002 on the buyer (and not on the seller).
In my view, the person owning 65% stake of a listed company and wishing to sell it should concentrate on How he wishes to sell the scrip; either in stock exchange or to some one else through a deal or to a larger public following the Rule 9 of Companies (Issue of Capital) Rules, 1996. This will provide a base point to take further decision. He can sell his stake over a period on stock exchanges through smaller trenches and one off sale transactions to avoid all confusions. He can also get into deal with single investor and there will probably be no applicability of Rule 9 on him.
However, if Offer to Public is aimed at (of which I am not sure), he should first obtain clarification from SECP regarding the applicability of this rule to listed companies; then contact some brokerage house of a good repute and put the transaction forward trough the modalities that may be advised.
If you get to know details or some specific advice, please do share with us since it would be quite informative for all.
Regards,
KAMRAN.
The incidents of selling such a huge holding of listed company (owned by a single person) to general public are very rare in Pakistan. I am not sure due to lack of insight, yet, there may be no case at all like this, in practical terms.
Since the Companies (Issue of Capital) Rules, 1996 do not specifically mention as to which company the Rule 9 is applicable; there is an outright need to get the clarification from SECP regarding the nature of the company that falls under this rule.
For example the Rule 9 uses the words "A PERSON WHO HOLDS MORE THAN 10 PERCENT SHARES OF A COMPANY MAY OFFER SUCH SHARES TO PUBLIC". Now the nature of the company is undefined. As per my apprehension the shareholders of Private companies cannot sell their shares to public unless the private company has been converted to the public company by making necessary changes in memorandum and articles of association and obtaining various approvals, before such offering. Therefore, the term âCOMPANYâ appears to be vague and needs to be elaborated by the regulators.
The listed public companies presumably are already held with public even if there is substantial concentration of holding/owning some where. It is deemed to have already been issued to public. Further, there is a secondary market (stock exchanges) available for selling such shares (say in trenches of less than 10 percent) and one will rarely need to offer such shares to PUBLIC ONCE AGAIN unless the scrip is so poor that no body is wishing to buy it at the stock exchanges.
If the market is active, any one can sell such holding in the stock exchanges in trenches of lesser than 10 percent and no rule will apply on him at all. So, the purpose of rule dies at once and no one will even have any authority to make an inquiry.
Further to above, if the owner of such shares wishes to change hands with some one (an identified party) else specifically interested to get into the buying deal, there will be no PUBLIC OFFER FOR SALE at all. It would simply be one-to-one deal between a buyer and a seller and will not be construed as a public offer. However, in such cases there will be invoked the requirements of Listed Companies (Substantial Acquisition of Voting Shares and Take-overs) Ordinance, 2002 on the buyer (and not on the seller).
In my view, the person owning 65% stake of a listed company and wishing to sell it should concentrate on How he wishes to sell the scrip; either in stock exchange or to some one else through a deal or to a larger public following the Rule 9 of Companies (Issue of Capital) Rules, 1996. This will provide a base point to take further decision. He can sell his stake over a period on stock exchanges through smaller trenches and one off sale transactions to avoid all confusions. He can also get into deal with single investor and there will probably be no applicability of Rule 9 on him.
However, if Offer to Public is aimed at (of which I am not sure), he should first obtain clarification from SECP regarding the applicability of this rule to listed companies; then contact some brokerage house of a good repute and put the transaction forward trough the modalities that may be advised.
If you get to know details or some specific advice, please do share with us since it would be quite informative for all.
Regards,
KAMRAN.
