The Securities and Exchange Commission of Pakistan (SECP) has sought public opinion on the draft Issue of Commercial Papers Regulations, 2013, which are aimed at promoting corporate debt market and to facilitate corporate to raise fund from capital market through the issue of Commercial Papers (CPs).

CP is a short-term debt instrument normally issued by highly rated corporate to meet their short-term financial needs like working capital etc. A total of 33 CPs have been issued so far in aggregate amounting to Rs16 billion. These CPs were issued under the Guidelines for the Issue of Commercial Papers issued by the SECP on October 28, 2002. The CPs can be issued through private placement to persons mentioned in Section 120 of the Companies Ordinance, 1984, and notified there under or may be issued to the general public through prospectus.

In case of offer through private placement approval of the SECP is not required; however, in case of offer to the general public, the prospectus has to be approved by the SECP under Section 57 of the Ordinance before issue, circulation and publication.

The CP regulations stipulates the minimum conditions for issue of CPs, minimum and maximum maturity (between 30 to 365 days), size, denomination, mode and procedure for issue of CPs. The regulations allow an issuer to issue the CPs under the shelf registration process wherein an issuer can issue CPs in tranches over a period of time as soon as it needs fund provided that full Shelf Registration Plan is disseminated among the investors. Under the CP regulations an issuer may opt for early redemption or role-over of the issue but subject to the conditions set in the CP regulations.

The regulations also define the duties and responsibilities of the issuer, issuing and paying agent (IPA) and the credit rating company. The IPAs which may be a scheduled bank, an investment finance company or a development financial institution plays an important role in the issue of the CP. Its role includes adherence to the requirements of the CP Regulations by the issuer, marketing/placement/distribution of CPs, redemption of CP and reporting of the CP issue to the SECP.

The CP regulations will repeal the existing Guidelines for the Issue of Commercial Papers issued by the SECP on October 28, 2002. Comments/suggestions, if any, received from any person on the said draft CP Regulations within a period of 30 days of the publication of the same in the official gazette shall be taken into consideration by the SECP.In addition to its publication in the official gazette, the CP Regulations have also been placed on the SECP’s website for public comments.