guidelines for Preparation
of Prospectus
The Securities Market Division of the Securities and
Exchange Commission of Pakistan had initiated a review of the prospectus
and supporting documents to improve the level of quality of disclosure
and rationalize the supporting documents that are submitted to the
Commission. After consultation with the stakeholders viz. issuers
of securities, advisers & arrangers, and stock exchanges, the
Commission has made the following guidelines to help the issuers
in providing a full, true, and fair disclosure of all material information
to a common investor.
Language & Sequencing
The language of the prospectus should
be simple, clear, and brief. Relative emphasis on and sequencing
of different information in a prospectus should be from the perspective
of a common investor.
Risk Factors
The risk factors and management perception of
these factors should be adequately disclosed. Risk factors should
include macro-economic risks, industry risks, company specific risks,
security specific risks etc. In addition, the issuer should make
a clear statement that all material risk factors have been disclosed.
Where a security is credit rated, the credit rating report shall
be reported in full including the disclaimer, if any.
Primary Purpose
The primary purpose of the issue should
be explained in appropriate detail specifying the use of the subscription
proceeds.
Dividend Policy
The disclosure of dividend policy should
be meaningful. It should be made explicit whether the company intends
to follow a consistent dividend payout policy or policy of retention
of profit etc.
Material and Immaterial Information
All material information such as change in key
personnel, statement on capital structure before and after the issue,
management profile, etc. should be reported. Immaterial information
such as voting rights of TFCs, dividend policy of other associated
companies in which there is cross-directorship etc should not be
reported.
Publication of Prospectus in Urdu
Language
In order to further facilitate the investors,
broaden the circulation and readability, SEC would encourage publication
of the abridged prospectus in Urdu language in addition to English.
The translation should be functional and words from English may
be borrowed, where necessary.
Use of Photos and Formatting
The prospectus being a legal document
should not be used as a marketing tool. Its layout should be simple
and plain. Photos and fancy formatting are not to be used.
Expenses to the Issue
All material expenses to the issue should be
disclosed in full including advisory & arrangement fees, trustee
fee, stamp duties, listing fee, SEC fee etc.
Elimination or Substitution of Supporting
Documents
The list of supporting documents for approval
of the Prospectus has been revised. Therefore, the Issuers/Advisors
need to provide only those documents, given in the prescribed checklists,
now available at www.secp.gov.pk.
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