By Salahudin AbbasiRegulatory Alert | S.R.O. 328(I)/2026
On 19 February 2026, the Securities and Exchange Commission of Pakistan (“SECP”) issued S.R.O. 328(I)/2026 under section 510 read with section 72 of the Companies Act, 2017 and regulation 44 of the Companies Regulations, 2024.
The notification was issued in continuation of S.R.O. 246(I)/2025 dated 27 February 2025. It requires unlisted companies having share capital to replace their physical shares with shares in book-entry form before giving effect to a share-related transaction, in the manner specified in the notification.
Conversion Before a Share-Related Transaction
After thirty days from the issuance of S.R.O. 328(I)/2026, an unlisted company intending to undertake a transaction involving a transfer of shares, an allotment of shares—including bonus shares, rights issues or shares issued otherwise than by way of rights—or a buy-back of shares must replace all its physical shares with shares in book-entry form before undertaking the transaction.
The notification refers to these transactions as “share related transactions” and includes “etc.” after the specified categories.
All such share-related transactions must be executed exclusively in book-entry form through the Central Depository System (“CDS”).
Before reporting a share-related transaction to the Registrar, the company must apply to the Central Depository for CDS Eligible Security status and for replacement of its physical shares, in accordance with regulation 44 of the Companies Regulations, 2024. The company must ensure that all its shares are inducted into the CDS.
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.
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Request a ConsultationS.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:
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.
Author Insight
Salahuddin Abbasi is a dedicated legal professional and founder of a modern law office with extensive expertise in litigation, legal research, and document drafting. Holding a law degree from Quaid-e-Azam University, Pakistan's top-ranking law school, he brings both local and international experience, having collaborated with prestigious law firms in the USA and Pakistan across civil, criminal, family, labor, tax, and corporate law. Beyond his legal practice, Salahuddin is a passionate educator and content creator, actively sharing legal insights on social media and assisting clients with high-quality legal writing, essays, and research papers.
