SMD Subordinate Laws and Regulations Flashcards

These vocabulary flashcards cover the primary regulatory requirements for takeovers, public offerings, SPACs, brokerage duties, and collateral management based on the provided lecture transcript.

Mandatory Disclosures (Section 109)

The requirement for an acquirer of voting shares to make a disclosure within $2$ working days to the target company, Stock Exchange (SE), and commission with information specified in Schedule II.

Public Announcement of Intention (PAI)

An announcement made in a newspaper via the manager to the offer before an acquirer can enter into negotiations, raise funds, or commence due diligence for acquisitions beyond Section 111 limits.

Manager to the Offer

A consultant to the issue licensed by the commission who must be appointed to assist in an acquisition beyond Section 111 limits.

Public Announcement of Public Offer (PAO)

An announcement that must be made through the manager to the offer within $180$ days of the PAI (extendable by $90$ days max) and published in English and Urdu daily newspapers.

Greenfield Projects

Projects where sponsors must retain at least $51\%$ equity until the commencement of commercial production and must report NPAT for $2$ consecutive financial years before reducing shareholding.

PRIDE

The digital system used by issuers or consultants to submit listing and prospectus applications signed by the CEO for approval by the SE and commission.

Shelf Registration

A process involving a draft supplement to a prospectus (Schedule Fourth or Fourth A) used for debt securities or other specific offerings involving multiple tranches.

Fixed Price Method

A method of public offering where the offer price is set by the issuer in consultation with the consultant and must be justified in the prospectus using models like DCF, DDF, or GGM.

Book Building Method

A price discovery mechanism where bidders make bids at a floor price or within a price band, and the strike price is arrived at via the Dutch auction method.

Strike Price

The price determined through the Dutch auction method in book building where bids at or above this price are eligible for allotment.

Block Sale

The sale of at least $5\%$ or $50$ million shares, whichever is lower, during the lock-in period, subject to SE approval.

Designated Institution

An entity (often alongside NCCPL) that registers bidders, creates bidding accounts, and manages the electronic system for the book building process.

Special Purpose Acquisition Company (SPAC)

A Public Limited Company registered with a minimum PUC of $10$ million, dedicated to utilizing funds for merger/acquisition transactions within $36$ months of listing.

Escrow Account (SPAC)

A custodial account where $90\%$ of funds raised by a SPAC must be kept and used only for a qualifying acquisition or refunds to dissenting shareholders.

Qualifying Acquisition (SPAC)

A merger or acquisition by a SPAC where the Fair Market Value (FMV) of the target company must be at least $80\%$ of the aggregate amount in the escrow account.

Central Depository Shareholding Limit

A regulation stating that a single shareholder cannot hold more than $15\%$ (other than the SE) and collective foreign shareholding cannot exceed $$20\%$..

TRE Certificate

A Trading Right Entitlement certificate; entities that have had this cancelled or forfeited by the SE restrict associated persons from sponsoring or being substantial shareholders in an issuer.

Customer Asset Segregation

The regulatory requirement for brokers to keep customer assets distinct from the broker's own assets and maintain reconciliations to be reported to the SE/commission.

Collateral Management Company (CMC)

An entity with a minimum PUC of $200$ million that provides warehousing, issuance of warehouse receipts, and stock audit services for agricultural commodities.

Electronic Warehouse Receipt (EWR)

An assignable and transferable electronic document issued by a warehouse operator that allows for agricultural commodity financing through the CMC system.