THE REGULATIONS GOVERNING

LISTING AND TRADING OF SHARES OF SMALL AND MEDIUM

ENTERPRISES (SMES)
OF

ISLAMABAD STOCK EXCHANGE LIMITED

(As approved by SECP and Notified in Gazette dated January 29, 2014)

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PREAMBLE
WHEREAS it is expedient to facilitate listing of Small and Medium Enterprises (SMEs) in order to
encourage them to raise fund through the capital market in a cost-effective way through offer of their
equity securities to Qualified Institutional Investors (QIBs) for setting up new business or expanding
their existing business and listing thereof on the SME Board of the Exchange and to provide QIBs a
diversified, efficient and transparent avenue of investment.
AND WHEREAS in order to properly regulate the listing and trading of equity securities of SMEs, it
is desirable to make Regulations in this regard.
NOW, THEREFORE, the Board of Directors of the Islamabad Stock Exchange Limited, in exercise
of the powers conferred by sub-section (1) of Section 34 of the Securities & Exchange Ordinance,
1969 (XVII of 1969) with prior approval of the Securities and Exchange Commission of Pakistan,
makes these Regulations.
1. Short Title, Applicability and Commencement:
(1)
These Regulations shall be called The Regulations Governing Listing and Trading of Small
and Medium Enterprises (SMEs).
(2)
These Regulations shall apply to the listing of equity securities of the SMEs to be offered to
QIBs.
(3)

These Regulations shall come into force immediately on publication of the same in the
Gazette of Pakistan.

2.

Definitions:

In these Regulations, unless the subject or context otherwise requires:

a) Bid Price means the price a Market Maker is willing to pay for the purchase of equity
securities of an SME Company.
b) Blank Sale means a sale by a Broker either on his proprietary account or on his clients
account when the Broker or client does not own shares or the sale does not constitute a sale with
pre-existing interest or sale without enter into a contractual borrowing arrangement to meet
delivery requirements on settlement date.
c) Board means Board of Directors of the Islamabad Stock Exchange Limited.
d) Commission means The Securities & Exchange Commission of Pakistan.
e) Exchange means The Islamabad Stock Exchange Limited.
f) Fund Management Company or FMC means the same as defined in the Private Equity and
Venture Capital Fund Regulations, 2008.
g) Information Memorandum means a document outlining the salient features, risks and terms of
equity securities offered/issued to QIBs.
h) Market Maker has the same meaning as defined in the Regulations Governing Market Makers
of the Islamabad Stock Exchange Limited.
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i) Market Making means the display of two-way quotes i.e. Bid Price and Offer Price on daily
basis by the Market Maker for the purchase and sale of the equity securities of an SME
Company.
j) Medium-Sized Enterprise means a company with minimum post issue paid up capital of above
Rs.100 million and maximum post issue paid up capital of Rs.300 million.
k) Offer Price means the price a Market Maker is willing to receive for the sale of the equity
securities of an SME Company.
l) Qualified Institutional Buyers or QIBs means Qualified Institutional Buyers (QIBs) as defined
in The Regulations Governing Over-The-Counter (OTC) Market of the Exchange and include a
Fund Management Company.
m) Short Sale means a sale by a Broker either on his proprietary account or on his clients account
that does not own shares or the sale does not constitute a sale with pre-existing interest but is a
sale by a party that has entered into a contractual borrowing arrangement to meet delivery
requirements on settlement date.
n) Small-Sized Enterprise means a company with a minimum post issue paid up capital of Rs. 25
million and maximum post issue paid up capital of Rs. 100 million.
o) SME means Small and Medium Sized Enterprise.
p) SME Board means the board developed by the Exchange for listing and trading of SME
Companies.
q) SME Company means an SME which is a public company registered under the Companies
Ordinance, 1984, applying for listing or an SME company whose equity securities are being
traded under these Regulations.
r) Spread means the difference between the Offer Price and the Bid Price to be quoted by a
Market Maker.
(2)
Words and expressions used but not defined in these Regulations shall, unless there is
anything repugnant in the subject or context, have the same meanings as are assigned to them in the
Companies Ordinance, 1984 and the Securities and Exchange Ordinance, 1969.

3. Eligibility Criteria for Listing of Equity Securities of SMEs:

An SME Company shall be eligible to apply for listing of its equity securities to be issued/offered to
QIBs under these Regulations if it satisfies the following criteria:
1) The Memorandum and Articles of Association of the SME authorize it to list its equity
securities/raise capital on/through stock exchanges.
2) The post issue paid up capital of the SME is not less than Rs. 25 million.
3) The equity securities shall be offered only to QIBs entirely through private placement by
circulation of Information Memorandum.
4) The offer shall be made through fixed price method, the book building method or any other
method acceptable to the Exchange.
5) Allocation of capital to QIBs is not less than one million shares or 25% of the post listing issued
capital of the SME Company, whichever is higher.
6) The SME Company and its project/business has been appraised by commercial bank or an
investment bank or any other institution registered with the Commission as an underwriter. The
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appraisal report must contain evaluation of the issue and the offer price and be made part of the
Information Memorandum. The appraisal report must state with valid rationale/justification that:
(i) They have examined the technical, managerial, commercial, economic and financial aspects
of the project of the SME Company.
(ii) The SME Company has or will have the necessary operational infrastructure within a
stipulated time period.
(iii) The SME Company and its project(s) are viable and are investment worthy.
7) Names of the existing sponsors and other shareholders of the SME Company along with the
number of shares held by each, the subscription price per share and the date of issue thereof shall
be disclosed in the Information Memorandum.
8)

Number of initial subscribers is not less than ten (10).

9)

The equity security to be listed under these Regulations shall be issued only in demat/scrip-less
form through depository system of a depository company and this fact should be disclosed in
Information Memorandum.

10) It has appointed, through agreement in writing, atleast one Market Maker for Market Making of
its share for an initial period of not less than three years from the date of listing of the SME
Company.
11) The Company Secretary or any other officer of the SME Company has been designated as
Compliance Officer who shall perform such functions as mentioned in regulation 13 of these
Regulations.
12) It has developed its own website and has disseminated through it the basic information about the
SME Company and its business activities including the Information Memorandum, its annual
and half-yearly financial reports and monthly progress report on implementation of the project,
where required.
13) The sponsors of the issuing SME Company shall retain their entire shareholding in the SME
Company for a period of not less than twelve months from the date of listing of the SME
Company or from the date of commencement of commercial operation or production by the SME
Company, whichever is later or till such additional period as required by the Exchange.
14) The sponsors of the issuing SME Company shall retain not less than twenty five percent of the
paid-up capital of SME Company for not less than three financial years from the date of listing of
the SME Company or from the date of commencement of commercial operations or production
by the SME Company, whichever is later or till such additional period as required by the
Exchange.
15) Subject to clauses (13) and (14) above, the sponsors of the SME may sell their excess
shareholding through block-sale and shall report the sale of shares, on same day, to the
Exchange.
16) The shares held by sponsors during the time period as specified above, shall be deposited in an
account with a depository company in freezed form.
17) In case the capital is being raised for a green field project, balancing, modernization and
replacement or expansion:
a)

the size of capital to be issued shall be in accordance with the financial plan approved by the
Board of Directors of the issuing SME Company and the financial plan shall be disclosed in the
Information Memorandum and variations, if any, in the financial plan till circulation of the
Information Memorandum alongwith rationale for such variations shall also be disclosed in the
Information Memorandum;
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b)

the SME shall, alongwith application for listing, provide the Exchange a certificate from its
auditors confirming that:
(i) the financial plan disclosed in the Information Memorandum has been verified by the
auditors;
(ii) the shares allocated to sponsors, foreign and local investors, if any, have been fully paid for;
(iii) fifty per cent of the proceeds of the sponsors subscription have been utilized in the project; or
the issuing company has opened an escrow account with a scheduled bank where proceeds of
the equity securities to be issued to QIBs shall be kept and shall be utilized only after fifty
percent of the proceeds of the sponsors equity subscription are utilized;
(iv) the land for the project, where required, has been acquired;
(v) financial close of the project has been made and Feasibility Report of the project has been
finalized by commercial bank or an investment bank or any other institution registered with
the Commission as an underwriter; and
(vi) the SME Company shall submit quarterly progress report on implementation of the project to
the Exchange for dissemination till commencement of the commercial production or
operation of the project.

Explanation.__ For the purposes of this clause green field project means a project that is being
newly built.
4. Issue Of Equity Securities At Premium:
An SME Company may issue its equity securities to QIBs at premium subject to the following
conditions:
(1)
the SME Company has commenced commercial operations and based on its latest audited
accounts for not less than twelve months, it has(a) earned profit from its principal operations; and
(b) positive earnings per share.
(2) save as provided in clause (4), the premium on offer to QIBs shall not exceed the amount of
premium charged on placements with foreign or local investors, if such placement has been made
within a period of six months preceding the commencement of the subscription period for QIBs and
the names and addresses of such investors/institutions shall be disclosed in Information
Memorandum.
(3) the SME Company shall justify the amount of premium and the justification shall be disclosed in
Information Memorandum; and
(4) the provisions of clauses (1) and (2) shall not be applicable where the issue is made through the
book building process in accordance with the relevant regulations of the Exchange.
5. Procedure For Making Application For Listing Of Equity Securities Of SMEs:
An SME, desirous of listing its equity securities under these Regulations, shall be required to adopt
the following procedure::
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1) The SME Company shall make an application to the Exchange on Form-I along with the
documents/information as mentioned in Annexure -I.
2) The SME shall pay an initial listing fee of mentioned in regulation 17 of these Regulations.
3) The Exchange may reject any application, made under these Regulation at its sole discretion if it
deems that listing of the SME Company is not in the interest of the market or the SME Company
does not meet the minimum eligibility criteria set out in the Regulations:
Provided that, the SME Company shall be given an opportunity of hearing by the Exchange before
the listing application is rejected.
4) The Exchange shall not entertain listing application of an SME Company whose:
(i) Chief Executive has served or is serving as Chief Executive of a listed company which has been
found to have violated the Listing Regulations of the Exchange, during his tenure as the Chief
Executive.
(ii) Promoters/sponsors/controlling directors are in the defaulters list of the State Bank of Pakistan
either in their individual capacity or in the capacity as directors of other listed companies. This
will not apply to the directors nominated by the Federal Government or any Provincial
Government and the Financial Institutions.
6. Contents Of Information Memorandum:
1) The Information Memorandum to be circulated to QIBs for offer of shares of an SME Company
shall contain at least such information as provided in Schedule-I to these Regulations.
2) Information Memorandum shall be a private document and shall be circulated only to QIBs.
Information Memorandum shall not be used as a document inviting the general public or a class
of the general public for subscription of shares and shall include a statement to this effect on its
cover page.

7. Appointment Of The Market Maker:

1) The SME Company shall, through an agreement in writing, appoint atleast one Market Makerfor
a period of not less than three years from the date of formal listing of the SME Company.
In case the Market Maker appointed by the SME discontinues to act as Market Maker upon
completion of the initial time period of three years or due to any other reason, the SME Company
shall immediately appoint another person eligible to act as Market Maker and shall notify the same to
the Exchange and through its website on the same day.

8. Functions Of The Market Maker:

The Market Maker, in addition to its functions and duties as prescribed in the Regulations Governing
Market Makers of the Exchange, shall be responsible for performing the following functions:
1) The Market Maker shall not quote beyond the maximum spread of 3% which shall be disclosed in
the Information Memorandum.
2) The Market Maker shall at all times hold at least one percent of the issued shares.
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3) Market Maker shall purchase or arrange purchase of the shares from any holder that tenders such
shares for sale to it.
4) Market Maker shall sale or arrange sale of the shares to any investor that intends to purchase it.
5) Market Maker shall make available copy of the Information Memorandum to the QIBs any time
upon request at during at least three years from the date of listing of the SME Company and that
of the latest audited accounts of the SME.

9. Retention Of Market Maker:

An SME must retain a Market Maker at all times. In case a market maker is not available at any time
or discontinues to act as market maker due to any reason, the Company shall appoint a new Market
Maker within a period of sixty days, failing which, a penalty of Rs.1,000/- for each day of default
shall be imposed.

10. Bought-Out Deals by SMEs:

An SME Company may sell and issue its shares to commercial bank or an investment bank or any
other institution registered with the Commission as an underwriter upon an understanding that such
bank/institution shall list such shares through offer for sale to QIBs.

11. Trading Of Securities And Risk Management Matters:

Trading in equity securities of an SME Company shall only be allowed to QIBs.
a)

Market-Making

The SME Company shall provide an undertaking to the Exchange stating that:
(i) the compulsory market-making will continue during all times as the security remains listed.
(ii) The spread for Market Making shall not be more than 3%.
(iii) The minimum order size shall not be less than Rs. 500,000.
b) Applicability of minimum Free Float Requirement
The Exchange shall require the SME Company to maintain the minimum free float of five thousand
shares or 20% of the paid up capital at all times whichever is higher.
c) Trading through SATS
The shares listed under these Regulations shall be traded through SME Automated Trading System
(SATS) under T+2 Settlement System or any other counter subject to the clearing and settlement
procedure as may be decided by the Board with suffix SME added to its symbol.
d) Prohibition of short/blank sale
Short/blank sale shall not be permissible on the SME board.

e) Circuit Breakers
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(i) Circuit Breakers shall be applicable as per the criteria mentioned below:
a) In case of price fluctuation of 50% from the last day Closing Price or any other limit prescribed by
the Exchange with the prior approval of the Commission, if share price is less than Rs. 10.
b) In case of price fluctuation of 25% from the last day Closing Price or any other limit prescribed by
the Exchange with the prior approval of the Commission, if share price is between Rs. 10 and
Rs. 20.
c) If Share price is Rs. 20 or more, normal circuit breakers as provided under the Regulations
Governing Risk Management of the Exchange shall be applicable.
(ii) In case of application of three upper/or three lower Circuit Breakers in three consecutive trading
days for any share, the thresholds mentioned in (i) above shall be reduced by 50%.

f) Clearing and Settlement

Clearing and settlement of the transactions executed at the SME Board shall be done through the
National Clearing Company of Pakistan Limited.
g) Margins and Deposits
(i)

Deposit against exposure would be payable by the Brokers on the basis of Value At Risk (VAR)
based margining system as prescribed under Regulation Governing Risk Management of the
Exchange.

(ii) Further provisions relating to risk management including Open Interest, Mark to Market (MtM)
losses, Margin against Exposures and losses, etc. shall be applicable as provided under the
Regulations Governing Risk Management of the Exchange.
h) Risk Management Modalities
(i) The procedure for risk management and surveillance system for SME Board shall be the one
as provided in Regulations Governing Risk Management of the Exchange with such
amendments as may be made by the Exchange with the prior written approval of the
Commission, from time to time.
(ii) The Brokers of the Exchange will be allowed to engage in the purchase/sale of shares of the
SME Companies listed on the SME Board, on their own behalf or on behalf of their clients,
subject to certain conditions prescribed by the Exchange from time to time.

12.
Dissemination Regarding Non-Applicability of The Listing Regulations Of The
Exchange:
An SME Company listed under these Regulations shall not be subject to compliance with the
provisions of the Listing Regulations of the Exchange including the Code of Corporate Governance.
The SME shall be required to disclose this fact in the Information Memorandum and all the
subsequent annual and half-yearly financial reports.
13.

Functions And Responsibilities Of The Compliance Officer:

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1)
The compliance officer shall be responsible for ensuring compliance by the SME Company
with all the requirements of these Regulations and all other applicable rules, regulations and the
directives issued by the Commission or the Exchange from time to time.
2) The compliance officer shall, every quarter, report status of the compliance mentioned in subregulation (1) above to the Board of Directors of the SME Company till the time the SME
Company remains listed on the SME Board of the Exchange.
3) The compliance officer shall also report status of the compliance, mentioned in sub-regulation (1)
above, directly to the Exchange.
4) The compliance officer shall inform the Exchange when he ceases to be a compliance officer.
The compliance officer shall act with due skills, diligence and care at all times.
14. Reporting And Disclosure By SME:
(1) An SME Company listed under these Regulations shall report and disseminate various information
in the following manner:
(A) Disclosure of Price Sensitive Information:
All non-public material information relating to the change of management, financial condition and
business performance of the SME Company etc. which, if made public, would likely cause a
substantial change in the market price of its share, must be notified, without delay, to the Exchange
according to the procedure laid down in the Exchanges Correspondence Manual.
(B) Disclosure of Related Party Transactions:
All non-public information relating to any related party transaction that is significant/material, must
be notified, without delay as soon as the terms of a transaction with a related party are agreed, to the
Exchange according to the procedure laid down in the Exchanges Correspondence Manual including
the following:
(i) nature of the transaction and amount involved;
(ii) name of the related party(ies) and the nature and extent of their interest in the transactions;
(iii) effect of the transaction on the SME Company;
(iv) any other information necessary to enable investors to evaluate the effect of the transaction on the
SME Company; and
(v) a statement that with the exception of the director(s) who is/are involved in the transaction as a
related party, its directors consider that the terms of the transaction are fair and reasonable in so far as
its shareholders are concerned.

(C)

Disclosure of Miscellaneous Information:

SME Company shall notify, without delay, to the Exchange the information relating to:
(i) change of its Market Maker;
(ii) any change in its accounting reference date;
(iii) any change in its registered address;
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(iv) the resignation, dismissal or appointment of any director giving the date of such occurrences;
and
(v) any other material information.
(2) SME Company shall provide the Exchange any other information, in such form and
within such time limits as the Exchange may reasonably require.

15. Suspension Of Trading:

The Exchange may suspend trading in the equity securities of an SME Company listed under these
Regulations where:
(i) the SME Company fails to appoint the Market Maker within the stipulated time;
(ii) trading in the share is not being conducted in an orderly manner;
(iii) it considers that the SME Company has failed to comply with any provision of these
Regulations;
(iv) the protection of investors so requires; or
(v) the integrity and reputation of the market has been or may be impaired by dealings in the
shares.
16. Disciplinary action:
If the Exchange considers that an SME Company has contravened any of the provision of these
Regulations, it may take the one or more of the following measures:
(i) Censure the SME;
(ii) Impose a fine on the SME;
(iii) Publicly disclose the fact that it has been fined or censured;
Suspend trading in the shares of the SME
17. Listing And Annual Fee:
(i) An SME applying for listing of its equity securities under these Regulations shall be required to
pay an initial listing fee equivalent to 0.05% of the total paid-up capital subject to a maximum of Rs.
0.1 million.
(ii) Whenever the SME Company increases its paid-up capital, it shall be required to pay the
Exchange an additional listing fee equivalent to 0.05% of increase in the paid-up capital subject to a
maximum of Rs.0.1 million.
(iv) The SME shall pay an annual listing fee for each subsequent financial year of the Exchange,
commencing from 1st July and ending on 30th June, as per following schedule:

S.
No
.
(i)

Companies having Paid-up Capital

Amount of fee

UptoRs. 50 million

Rs. 20,000/-

(ii)

Above Rs.50 million &upto Rs.100 Rs. 30,000/million

Above Rs.100 million &upto Rs.200 Rs. 40,000/million

(iii
)

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(iv) Above Rs.200 million &upto Rs.300 Rs. 50,000/million

Provided that the Exchange may relax/revise the above fees or any of the slabs or add new slabs as it
may deemed appropriate, subject to prior approval of the Commission.
Provided further that every company applying for listing shall pay annual listing fee for the entire
financial year of the Exchange along with listing application irrespective of the date of its listing
during the financial year.
(iv) The listing fee or any other sum fixed by the Exchange shall be payable by 30th September in
advance for every financial year.
18. Changes in the Regulations:
The Exchange may with the prior approval of the Commission make any changes in these Regulations
after giving reasonable notice and publication through the Gazette of Pakistan.
19. Relaxation:
The Exchange shall have powers, for reasons to be recorded, to waive or abate the requirements of
any of the Regulations in any particular case or class of cases, with the prior written approval of the
Commission.

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FORM I
FORM OF APPLICATION FOR SEEKING LISTING OF AN SME COMPANY ON THE
EXCHANGE UNDER SECTION 9 OF THE SECURITIES AND EXCHANGE ORDINANCE
1969
[Regulation 5(1) of the Regulations]
To:
The Secretary,
Islamabad Stock Exchange Limited,
Islamabad.
Dear Sir,
1.
We hereby apply for the listing of our _____________________________________ on your
Stock Exchange.
(Name of the SME Company)
2.
Necessary information and documents as required under the Regulations and mentioned at
Annexure-I to Form I are enclosed herewith.
Yours faithfully,

______________________
SIGNATURE & ADDRESS
c.c. to:
The Securities & Exchange Commission of Pakistan
ISLAMABAD - as required under Sub-Section (1) of Section 9 of the Securities & Exchange
Ordinance, 1969.

Annexure -I
LIST OF DOCUMENTS REQUIRED TO BE SUBMITTED ALONGWITH APPLICATION
FOR SEEKING LISTING OF AN SME COMPANY ON THE EXCHANGE UNDER
SECTION 9 OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969
An SME Company alongwith application on Form-I for listing under section 9 of the Securities and
Exchange Ordinance, 1969 shall furnish the following documents/information:
1) Memorandum and Articles of Association containing copy of the certificate of incorporation and
copy of the certificate of commencement of business.
2) Certified true copy of the Feasibility Report, where applicable.
3) A brief history of the company since incorporation giving names of the sponsors/promoters and
all directors, details of its activities including any re-organization, changes in its capital structure
and borrowings.
4) A statement showing cash dividends and bonuses paid during the last 3 years or such shorter
period as the company may have been in existence.
5) A statement containing particulars, dates of and parties to all material contracts, agreements
(including agreements for technical advice and collaboration), concessions and similar other
documents except those entered into in the normal course of the companys business or intended
business together with a brief description of the terms of such agreements.
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6) Names and addresses of the directors and persons holding ten per cent or more of any class of
equity security as on the date of application together with the number of shares and other
securities convertible into ordinary shares held by each of them.
7) Particulars of the security listing of which is sought.
8) An undertaking on the format as prescribed in Form-II.
9) Pay Order/Bank Draft/Cheque in favour of the Exchange for payment of initial listing fee, annual
listing fee and service charges as prescribed under the Regulations.
10) Copy of the resolution passed by the Board of Directors of the SME Company with respect to
issue and listing of the shares.
11) Auditors Certificates on the SME Companys latest balance sheet, five years income statement
containing EPS as well, paid up capital and the break-up value per share on the basis of latest
audited accounts. The certificate must contain calculation of the Break-up value.
12) Copy of the appraisal report as mentioned in regulation 3 of these Regulations.
13) Consent of Market Maker appointed by the SME Company under regulation 3 of the Regulations.
14) Undertaking by the Market Maker, on the format provided in Form-III, for compulsory Market
Making in the share of the SME Company under regulation 3 of the Regulations.
15) Certificate by the Consultant / Lead Manager/Book Runner to the Issue confirming that they have
reviewed all the material contracts / agreements relating to issue / offer of shares by the SME and
also confirm that the contents of the Information Memorandum are fair and true to the best of their
knowledge and belief.
16) Copies each of Information Memorandum, audited annual accounts of the SME Company for the
last 5 years or for a shorter period if five years of the commencement of business are not
completed.
17) Copy of application submitted to the Central Depository Company (CDC) for declaration of the
share of the SME Company as an eligible security for its Central Depository System (CDS).
18) Report of State Bank of Pakistan that name of the SME Company as well as the names of other
companies in which directors of the SME Company are holding directorship and name of
promoters/sponsors/controlling directors, of the SME Company are not in the Defaulters List of
State Bank of Pakistan either in their individual capacity or in the capacity of Directors of other
companies. (This will not apply to nominee Directors of the Federal Government, Provincial
Governments and Financial Institutions).
SCHEDULE-I
CONTENTS OF INFORMATION MEMORANDUM
[Regulation 6]
The Information Memorandum (IM) prepared with respect to issue of shares for listing under these
Regulations shall contain at least the following information/disclosures:
(i) On cover page the following shall be disclosed:
a) a disclaimer in bold letters stating that, This is not a prospectus for issue of shares to the general
public but a document prepared for the purpose of offering shares of an SME Company only to
Qualified Institutional Buyers(QIBs) . This IM has not been approved by the Securities &
Exchange Commission of Pakistan (the Commission) or the Islamabad Stock Exchange (the
Exchange);
b) a disclaimer in bold letters stating that, This is an IM by [Name of the issuing SME
Company]which is an SME. SMEs being small capital based companies exposed to the risk of
high volatility in its share market price at the Exchange after listing. The investors are strongly
advised to evaluate their risk tolerance and sustainability capability prior to investing in the equity
of this company. ISE or SECP shall not be held responsible for any direct or indirect losses incurred
due to investment in the equity of this SME Company.

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c) a statement in bold letters stating that, The SME Board is designed primarily for emerging of
small capital based companies. Companies listed at SME Board are comparatively exposed to
higher investment risk as compared the companies listed at the main Board of the Exchange. The
prospective investor should, therefore, be aware of the risk of investing in such companies and
should make the decision to invest only after careful diligence of the issue and consideration. It is
advisable to consult any independent investment advisor before making investment in the equity of
this SME Company.
d) a statement in bold letters stating that, The Board of Directors of (Name of the issuing SME
Company) accepts responsibility for accuracy of the information contained in this document;
and
e) name of the SME Company, name of the entity that has prepared the IM and date of the IM.
(ii) Table of contents, Executive summary by the entity that has prepared the IM, purpose of
preparation of the IM and their scope of work;
(iii) Glossary of technical terms and acronyms should be provided after the table of contents;
(iv)

The capital structure of the SME Company;

(v) Information about the SME Company like its name, date of its incorporation, registration
number, addresses of its registered & head offices, names of its sponsors, major shareholders and
associated companies/undertakings etc.;
(vi)

Organization structure of the SME Company and its principle business;

(vii) Latest pattern of shareholding of the SME Company;

(viii) Names of the directors of the SME Company and their directorships in other companies;
(ix) Profile of the management of the SME Company including all the members of the Board of
Directors excluding the nominee directors, the Chief Financial Officer and the Company Secretary;
(x)

Future outlook/ business strategy of the SME Company;

(xi) Highlights of major restructuring, if any, like merger, demerger, amalgamation, acquisition,
reorganization, financial restructuring etc.;
(xii) Five years financial highlights relating to cash flows and financial & operating position of the
SME Company including key financial ratios like debt/equity ratio (pre & post issue), current ratio,
return on equity, return on assets, earning per share, Break-up value per shares (pre & post issue) etc.
in tabular form;
(xiii) Salient features of the Issue like issue size, face value of share, offer price etc.
(xiv) Justification for premium, if any;
(xv) Terms & conditions for investment in the SME Companys shares;
(xvi) Rights of the shareholders like right to vote, dividend etc.;
(xvii) Purpose of the issue & breakup of the utilization of the proceeds of the Issue;

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(xviii) In case the proceeds of the Issue are to be utilized for project financing, detail of such project
like project cost & means of financing (i.e. Financial Plan), project implementation schedule, latest
status of the implementation of the project, expected date of completion of the project, expected date
of trial & commercial production etc.;
(xix) Five years financial projections (i.e. Balance Sheet, Income Statement, cash flow statement and
statement on changes in equity) including key financial ratios;
(xx) All the risk factors associated with the investment in the shares of the SME Company and their
mitigants;
(xxi) Basic information about the industry the SME Company belongs to, key players in the industry,
basic raw material used by the SME Company, if any, and list of supplier thereof, main clients of the
SME Company, competitors of the SME Company, etc.;
(xxii) Summary of all the material contracts relating to the Issue and the project, if any;
(xxiii) Any other material fact, information and disclosure as required under any agreement, rules,
regulations or the law for the time being enforced which may affect the investors decision to invest;
(xxiv)Names of all the stock exchange(s) where the SME Company will be listed;
(xxv) Tentative subscription dates;
(xxvi)Tentative date of allotment of shares to the investors.

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FORM II
FORM OF UNCONDITIONAL UNDERTAKING BY THE SME COMPANY
[Clause 8 of Annexure I]
Date: _______________
The Governing Board of Directors,
Islamabad Stock Exchange Limited,
Islamabad.
UNDERTAKING
We undertake, unconditionally, to abide by the Regulation(s) of the Islamabad Stock Exchange
applicable to the company which presently are, or hereinafter may be in force.
We further undertake:
(1)

That our shares shall be quoted on the _______________ at the discretion of the Exchange;

(2)
That the Exchange shall not be bound by our request to remove shares from the
______________________;
(3)
That the Exchange shall have the right, at any time to suspend or remove the said share for
any reason which the Exchange consider sufficient in the interest of the market.
(4)
That such provisions in the Articles of Association of our company or in any declaration or
agreement relating to any other security as are or otherwise not deemed by the Exchange to be in
conformity with the Listing Regulations of the Exchange shall, upon being called upon by the
Exchange, be amended to supersede the Articles of Association of our company or the nominee
relating to the other securities to the extent indicated by the Exchange for purposes of amendment and
we shall not raise any objection in relation to a direction by the Exchange for such amendment; and
(5)
That our company and/or the share may be delisted by the Exchange in the event of noncompliance and breach of this undertaking.
Yours sincerely,

__________________________________
SIGNATURE OF AUTHORIZED PERSON
Common Seal of the Company

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FORM III
FORM OF UNCONDITIONAL UNDERTAKING BY THE MARKET MAKER
[Clause 14 of Annexure I]
To:
The Secretary,
Islamabad Stock Exchange Limited,
Islamabad.
UNDER TAKING
We (Name of Market Maker) , have been appointed by (Name of SME Company) as the Market
Maker for Market Making in its shares applied for listing at SME Board of the Exchange.
We the Market Maker hereby undertake as under:That we shall abide by all the applicable provisions of the Regulations Governing Listing of Small
and Medium Enterprise (SME) Companies which presently are, or hereinafter may be in force.
2.
That we will compulsorily make market in the scrip of the SME Company at least for a period
of three years from the date of commencement of trading on the Exchange i.e. from the date of listing
and shall not withdraw from such Market Making obligation until another Market Maker is appointed
under the Regulations and the Exchange has given its consent for such withdrawal.
3.
That we will quote bids and offer in the share of the SME Company within the spread which
shall not be more than 3%.

Yours faithfully
___________________________
(Signature of Authorized Person)
Common Seal of the company

Page 17 of 17