Capital Market Policy

PRIVATISATION THROUGH CAPITAL MARKET TRANSACTIONS: POLICY GUIDELINES

(AS APPROVED BY CABINET COMMITTEE ON PRIVATISATION ON 3RD FEBRUARY 2011)

In terms of the Privatisation Commission Ordinance 2000, Privatisation includes a transaction by virtue of which any property, right, interest, concession or management thereof is transferred to any person from the Federal Government or any enterprise owned or controlled, wholly or partially, directly or indirectly, by the Federal Government. The Privatisation Commission is, therefore, mandated to divest title, interests, rights, ownership and control in the SOEs by means of various modes of privatisation. Section 25 of the PC Ordinance stipulates that the Commission shall carry out privatisation, in accordance with the prescribed procedure, through any of the following modes:-

(a)	sale of assets and business;
(b)	sale of shares through public auction or tender;
(c)	public offering of shares through a stock exchange;
(d)	management or employee buyouts by management or employees of a SOE
(e)	lease, management or concession contracts; or
(f)	any other method as may be prescribed.

2. Pursuant to section 25(c) stated above , Privatisation Commission has been proactively pursuing a policy of supporting capital market development through the sequenced divestment of shares in state owned companies through stock exchanges in both domestic and international markets, taking into account stock market conditions and investor demand.

3. In view of the foregoing the following policy outlines were approved by the Cabinet Committee on Privatisation (CCoP) on 3rd February, 2011:-

i. The privatisation policy of supporting capital market through the sequenced divestment of shares in SOEs through domestic and international stock exchanges. Divestment of SOE’s through capital market transactions will add depth to the local capital market and will provide shared ownership to both retail and institutional investors.

ii. The public offerings through Stock Exchanges and International listings (GDRs) will be done on case to case basis tailored to the circumstances of each enterprise. It is emphasized that only careful packaging, timing and sequencing can give best results.

iii. The public offerings through Stock Exchanges and International listings (GDRs) will be done on mode to benefit, from amongst others, capital market price discovery mechanism.