SECP to Convert Physical Shares of Unlisted Companies into Digital Form

The Securities and Exchange Commission of Pakistan has approved full digitization of share ownership for unlisted companies, making electronic shares mandatory to enhance transparency and protect investors. This move requires companies to replace physical share certificates with a centralized electronic system managed through the Central Depository System, reducing the risk of fraud and modernizing corporate structures.

Under the new framework, existing unlisted companies must convert all physical shares into electronic form before conducting any share-related transactions, and all future transfers, allotments, or ownership changes will need to be executed digitally. This shift will create secure, tamper-proof records, minimize disputes, and streamline administrative processes. Electronic shares can also be used as collateral, improving businesses’ access to financing.

The SECP had already mandated electronic share issuance for newly registered companies, and the latest reform extends this requirement to existing companies through a phased transition. Procedures for joining the Central Depository System, including documentation, verification, and compliance requirements, have been approved. This initiative is expected to strengthen corporate governance, enhance regulatory oversight, and bring Pakistan’s business practices closer to international standards.