SECP Requires Book-Entry Conversion Before Share-Related Transactions by Unlisted Companies

Before participating in the applicable transaction, the relevant allottee, transferor, transferee or other concerned person must ensure that all shares held by them are maintained in book-entry form.

Newly Incorporated Unlisted Companies

S.R.O. 246(I)/2025 applies to unlisted companies having share capital incorporated on or after 3 March 2025.

Such companies must hold and issue their shares exclusively in book-entry form from the date of incorporation. They may not maintain their shares in physical form, and replacement of shares from book-entry form to physical form is not permitted.

Documents Required with Statutory Returns

Following replacement of physical shares with shares in book-entry form, S.R.O. 328(I)/2026 requires the company to attach the additional documents specified in the notification with the relevant applicable returns or forms.

The notification specifies the following documents:

• For an allotment reported through Form 3: statement of allotment of shares/CDS list of allottees.
• For a transfer reported through Form 3: statement of transfer of shares/CDS Account Activity Report.
• With Form A: complete list of shareholding/CDS list of beneficial owners’ report and, where applicable, the complete CDS list of transfers of shares.
• With Form 27: statement of buy-back of shares/CDS account balance statement showing where the bought-back shares are parked.

The Central Depository is required to provide the latest statements specified in the notification to companies to enable their compliance with regulation 44 of the Companies Regulations, 2024.

Retention of Physical Documents

After replacement of physical shares with shares in book-entry form, the company must retain the cancelled physical share certificates and the Form for transfer of shares for ten years.

These documents must be preserved for a longer period where directed by the SECP, a court or another competent authority, or where they are likely to be required in connection with pending proceedings before a court or authority of which the SECP or the company has notice.

Impediments to Conversion

Where a company, allottee, transferor, transferee or other concerned person is unable to proceed with replacement of the shares because of an impediment—including a shareholding dispute, pending litigation or another reasonable cause—the relevant circumstances must be reported to the SECP.

Upon receipt of such report, the Commissioner (LRD) may relax the requirements to the extent considered appropriate in the circumstances.

Any person who contravenes or fails to comply with the notification is liable to a penalty under section 510(2) of the Companies Act, 2017.