The Securities and Exchange Commission of Pakistan (SECP) has greenlit a historic shift toward full digitalization of shareholding for unlisted companies, making electronic shares mandatory. The move aims to enhance transparency, safeguard investors, and modernize the corporate sector.

Under the new rules, unlisted companies must replace physical share certificates with electronic records maintained through the Central Depository System. This requirement applies to all current companies, which must convert existing paper shares into digital format before conducting any share-related transactions.

From now on, every transfer, allotment, or ownership change will be carried out electronically. Traditionally, unlisted companies have relied on paper-based share certificates, which are prone to theft, loss, and forgery. Officials say moving to digital shares will ensure tamper-proof ownership records and help minimize disputes that often end up in courts.

The digital framework will also accelerate share transfers, cut administrative expenses, and provide real-time data on ownership. Moreover, electronic shares can be used as collateral, improving businesses’ access to credit.

While newly registered companies have already been issuing electronic shares, the SECP’s latest move extends this obligation to all existing companies through a phased implementation. Authorities have also laid out clear procedures for joining the Central Depository System, including verification, documentation, and compliance steps.

Experts believe this reform will strengthen corporate governance, boost regulatory oversight, and bring Pakistan’s business practices closer to global standards.