About SRO 328

If you own or direct an unlisted company in Pakistan, the way you handle shares is changing forever. On February 19, 2026, the Securities and Exchange Commission of Pakistan (SECP) issued SRO 328(I)/2026, a notification that makes the move from physical paper certificates to digital “book-entry” shares mandatory for many.

In simple terms: the era of paper share certificates is coming to an end. Here is a breakdown of what this means for your business.

1. What is the “Book-Entry” Form?

Think of it like moving from cash in a drawer to money in a bank account. Instead of holding a physical piece of paper (the share certificate), your ownership is recorded digitally in the Central Depository System (CDS), managed by the Central Depository Company (CDC).

2. The Golden Rule: Convert Before You Move

The most critical part of this new rule is the “trigger.” Starting 30 days after the notification (approximately late March 2026), an unlisted company cannot complete any share-related transaction unless those shares are first converted into digital form.

This applies to:

• Transferring shares from one person to another.

• Issuing new shares (Allotments, Bonus shares, or Rights issues).

• Buying back shares.

If you plan to change your shareholding structure, you must digitize your shares first.

3. How Do You Comply?

The process involves a few key steps:

• Apply to the CDC: Your company must apply to the Central Depository to become “CDS Eligible”.

• Onboard All Parties: Not just the company, but the buyers (transferees) and sellers (transferors) must ensure their holdings are maintained in book-entry form.

• Follow the Guidelines: You must adhere to all directions issued by the SECP or CDC regarding how digital shares are maintained.

4. New Reporting Requirements

When you file your usual forms with the Registrar, you will now need to attach extra proof from the CDC:

Current Form	Why You File It	New Required Attachment
Form-3	Allotment or Transfer of shares	CDS Statement of Allotment or CDS Account Activity Report.
Form-A	Annual Return	Complete CDS list of beneficial owners.
Form-27	Buying back shares	CDS Account balance statement.

5. Don’t Throw Away the Old Papers Yet!

Even after you convert to digital, the law requires you to keep the cancelled physical share certificates and transfer forms for at least 10 years.

6. What if There is a Dispute?

The SECP understands that sometimes things are complicated. If you cannot convert shares due to a legal dispute, pending court case, or other “reasonable cause,” you must report this to the SECP. The Commissioner may then grant a relaxation or extension.

7. Why Does This Matter?

This shift is designed to make share transactions faster, safer, and more transparent. However, failing to comply is serious. Under the Companies Act, 2017, anyone who contravenes these requirements may face penalties.

Final Advice for Directors

Don’t wait for your next big transaction to start this process. Converting your shares now will save you from delays when you actually need to transfer or issue shares in the future.

Need help navigating the CDC registration? Contact your Synergy Business Consulting today to ensure your company stays compliant.