ISLAMABAD:

The Securities and Exchange Commission of Pakistan (SECP) has given approval to Pakistan Stock Exchange Limited (PSX) for issuing guidelines on stock split by listed companies.

The guidelines are aimed at promoting stock splits as a viable financial strategy in Pakistan’s capital market, especially for companies with high share prices, according to a press release issued on Friday. The guidelines include detailed information on legal and procedural aspects of stock splits, real-world case studies, costs, tax implications and accounting treatments.

Stock split involves dividing a company’s existing shares into multiple new shares, reducing share price while increasing the number of outstanding shares. This, in turn, is expected to improve liquidity, facilitate more accurate price discovery and broaden access for retail investors. As shares become more affordable and better priced, it is also getting easier for a listed company to seek further investment through capital market via secondary public offering or issuance of more shares.