The Securities and Exchange Commission of Pakistan has introduced a major reform by ending the use of physical share certificates for unlisted companies. The new policy marks a significant step toward digitization in Pakistan’s financial system.
Under the latest rules, the SECP has made it mandatory for companies to shift to digital or book-entry form. This means that physical share certificates will no longer be recognized for market transactions. Shares must now be recorded in the Central Depository System (CDS) to remain valid.
Officials said that companies which fail to adopt the digital system will face strict restrictions. They will not be allowed to issue, transfer, or sell shares. Even bonus shares cannot be processed until the transition is complete. The SECP emphasized that this move is necessary to improve transparency and efficiency.
For shareholders, this change is also important. Those who still hold paper-based shares must convert them into digital form. If they do not complete the process, they may lose access to their investments. The SECP has warned that such shares will remain inactive until they are properly digitized.
Authorities believe this reform will reduce fraud and legal disputes. Physical certificates have often been linked to issues like loss, theft, and forgery. By moving to a digital system, the SECP aims to eliminate these risks and create a more secure environment.
Companies are also required to follow new documentation procedures. They must submit forms such as Form 3, Form A, and Form 27, along with additional digital records. These requirements ensure that all transactions are properly documented and verified.
The Central Depository Company (CDC) will play a key role in managing the new system. All share transactions will now be monitored electronically. This allows faster processing and real-time tracking of ownership records.
Experts say the decision will modernize Pakistan’s corporate sector. Digital records will reduce delays and improve investor confidence. Transactions that previously took weeks can now be completed quickly.
At the same time, companies must carefully manage the transition. Old physical certificates must be canceled and preserved for up to 10 years. This ensures proper record-keeping while moving toward a fully digital system.
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Overall, the SECP reform signals a shift toward a more transparent and efficient financial market. Authorities have made it clear that digital transformation is now essential. Stakeholders are encouraged to comply with the new rules to avoid disruptions in their business activities.
