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Central Depository Company cuts 50 percent security deposit levied on issuers of securities

KARACHI (February 25 2003) : Central Depository Company (CDC) has reduced the security deposit levied on issuers of securities by 50 percent pursuant to the order passed by the Securities and Exchange Commission of Pakistan.

According to the release of CDC this action has taken to encourage the issuers of securities to reap the benefits of the Central Depository System as SECP is of the firm opinion that joining of CDS by the issuers of listed securities is not only in the interest of the issuers but also in the overall interest of the capital market including small investors.

In line with this, companies joining after the issuance of order are now required to pay only 50 percent of the security deposit for joining the central depository system.

As far as security deposit already taken by CDC from issuers (who have already joined the central depository system) is concerned, the Order has asked CDC to make an appropriate plan to refund 50 percent of the security deposit levied on such issuers.

CDC Board in a meeting dated February 24, 2003 has decided to refund the security deposit charged from issuers already live in CDS with immediate effect.

As it is apparent that CDC provides a service to the investors, issuers and members of the stock exchanges and the benefits under CDS clearly outweigh the fee/charges/deposit imposed under CDC Regulations, the SECP's order also directs all the listed companies who have not joined CDS so far to join CDS by July 31, 2003.

This significant tariff relief to the issuers, which comes in the wake of the booming Pakistani capital market, promises to encourage securities of listed companies on the stock exchanges to join the CDS thereby bringing more transparency and efficiency in the workings of the Pakistani capital market.

In this regard, CDC plans to approach these companies (which were already declared eligible by CDC for CDS purposes) for completion of induction formalities enabling smooth transition of their physical securities into the electronic book entry form.

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