The SECP has issued a circular clearly permitting private companies to raise capital through receiving of real estate, intangible assets, and investor services.
SECP has issued guidelines With the main objective of supporting entrepreneurship and improving the business climate for small businesses, especially start-ups and potential investors.
Pakistan’s Securities and Exchange Commission also clarified that private companies can now raise funds from investors other than current shareholders to finance their potential working capital needs and products and services related to technological progress and growth.
This will broaden the network of financing and general access to startups, allowing them to attract investments from a wide range of investors in the form of assets other than just cash. It will also be beneficial to bring the people or companies that form the company together to transfer their assets to the company and increase the capital.
The circular was issued to provide the required clarity with respect to Section 83 of the Companies Law of 2017, which allows all companies, public and private, to issue shares in the form of rights, either in cash or in exchange, but not in cash, provided that Article 70 of the law is complied with and private companies are allowed to collect head Money outside of its current members.
The move was taken in light of the best practises around the globe.
The Securities and Exchange Commission of Pakistan (SECP) is committed to creating a business environment that helps drive business growth and expansion, and continues to remove regulatory barriers to facilitate doing business in the country.
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