In this alert, we examine the implications of SECP’s S.R.O. 328(I)/2026, which expands the circumstances in which unlisted companies are required to maintain their shares in book entry form through the Central Depository System operated by the Central Depository Company of Pakistan Limited (CDC). The regulatory changes are particularly relevant for unlisted companies intending to undertake share related transactions and complete statutory filings in view of the approaching annual Form A filing cycle.
Under S.R.O. 328(I)/2026, an unlisted company proposing to undertake any share related transaction, including a transfer, gift, allotment, rights issue, bonus issue, buy back or any other transaction affecting its shareholding, membership or voting rights, must first replace its entire issued physical share capital with shares maintained in book entry form.
The requirement applies to the company’s entire issued share capital and is not limited to the shares involved in the proposed transaction. Accordingly, even where only one share is proposed to be transferred or gifted, the entire issued share capital must first be inducted into the CDC system. The relevant transferor, transferee, allottee or other concerned person must also ensure that the shares held by them are maintained in book entry form before completion of the transaction.
Separately, S.R.O. 246(I)/2025 requires unlisted companies incorporated on or after 3 March 2025 to hold and issue their shares exclusively in book entry form from the date of incorporation.
Implications for Form 3 and Form A
Following conversion into book entry form, CDC generated records are required to accompany the relevant statutory filings. For Form 3, the company must provide the applicable CDS statement of allotment or list of allottees, or, in the case of a transfer, the corresponding statement of transfer or CDS Account Activity Report. For Form A, the company is required to provide the complete CDS list of beneficial owners and, where applicable, the CDS record of transfers.
This requirement assumes particular significance because, for many companies, the annual Form A filing cycle falls in or around October following the AGM season. Companies should therefore assess their CDC position before Form A becomes due or before a share related transaction is proposed. Any mismatch between the register of members, physical share certificates, historic Form A and Form 3 filings, and the eventual CDC records may delay the submission, processing or approval of the relevant statutory returns.
CDC Induction Process
CDC induction involves several interconnected steps rather than a single filing. These may include obtaining approval for the company’s shares to become a CDS Eligible Security, appointment or confirmation of a Registrar and Transfer Agent, completion of RTA training and operational requirements, reconciliation of the register of members and historic allotment and transfer records, and opening the appropriate Investor Accounts for shareholders.
The process may also require surrender, verification and cancellation of physical share certificates, crediting of shares into the relevant CDC accounts, execution of transfer instruments, payment of applicable stamp duty, and completion of related corporate and regulatory documentation. The timeline may be extended where inconsistencies exist in historic records or where CDC, the RTA or SECP raises objections or seeks additional information.
Practical Implications
Companies that have not yet commenced CDC induction should assess their position at an early stage, particularly where a transfer, gift, allotment, restructuring or other share related transaction is proposed, where Form 3 may need to be filed in the coming months, or where Form A is expected to fall due in or around October.
Early commencement of the CDC induction process may reduce the risk of delays to proposed transactions and related Form 3 or Form A filings.
How ABS & Co Can Assist
ABS & Co can assist with the complete CDC induction and related compliance process, including review and reconciliation of statutory and shareholding records, preparation of Board and shareholder documentation, coordination with CDC and the RTA, assistance with Investor Accounts, surrender and deposit of physical share certificates, transfer and stamp duty formalities, and related Form 3 and Form A filings.
In view of the approaching annual filing cycle and the time required to complete induction under the developing CDC framework, unlisted companies that have not yet reviewed their CDC readiness should do so at the earliest opportunity.
The ABS & Co team advising on corporate compliance matters included Partner Ahmed Reza Mirza, Partner Bakhtawar Bilal Soofi, Partner Samar Masood, and Associate Ena Murakami.
