We authored the Pakistan Chapter of the Chambers Corporate M&A Guide 2023, which provides a comprehensive overview of the legal framework governing mergers and acquisitions in Pakistan.
Discussing recent trends, the guide notes an increase in M&A activity as businesses pursue growth strategies amid depressed valuations. The key industries that experienced significant M&A activity were IT and IT-enabled services, independent power producers, and the consumer goods sectors.
Pakistan’s corporate M&A landscape is governed by the Companies Act 2017, the Securities Act 2015 and related regulations and the Competition Act 2010. The primary regulators overseeing M&A transactions are the Securities and Exchange Commission of Pakistan (SECP), the Competition Commission of Pakistan (CCP), and, for cross-border M&A deals, the State Bank of Pakistan (SBP). Sector-specific statutes impose additional requirements for M&A transactions in regulated industries such as insurance and banking.
The guide examines the legal regime applicable to foreign investments in Pakistan, including security clearance requirements, repatriation of profits and dividends, and sectoral caps on foreign ownership.
The main modes of acquisition of a company in Pakistan are share purchases and schemes of arrangement. Factors influencing choice include complexity, timelines and tax implications.
Common practices around due diligence and deal structures are also discussed. The scope of due diligence depends on commercial factors, transaction structure and the size/industry of the target. Detailed legal due diligence is common for local deals, while foreign acquirers may opt for more limited red flag reviews.
The guide provides an in-depth overview of the takeover regulations applicable to acquisitions of listed companies in Pakistan, including public disclosure requirements, mandatory public offer thresholds, timelines, permissible conditions on the offer, implications for minority shareholders and available squeeze-out mechanisms.
In addition, the guide examines directors’ duties under Pakistani law in connection with M&A deals, including their role during the negotiation process and in providing recommendations to shareholders.
The guide discusses defensive measures that can be adopted by target companies in Pakistan to thwart hostile takeover attempts. Common defensive measures include seeking court injunctions or involving regulators if the acquirer violates laws.
The guide further covers the growing trend of shareholder activism in the country, where minority shareholders in listed companies increasingly exercise their rights to influence major corporate decisions. For comprehensive insights on M&A regulations and trends in Pakistan, read the Pakistan chapter of the Chambers Corporate M&A Guide 2023.
For more information on M&A, contact one of our partners: Bilal Shaukat, Shafaq Rehman, or Adil Tirmizey.
Note: This article is not legal advice; it provides information of general interest about current legal issues.
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