Till the conclusion of
demutualization, SECP was empowered to appoint independent directors to the PSX board.
The
Demutualization Law and the Articles of Association clearly provide that the Board of PSX should be reconstituted after completion of
demutualization process.
Because shares can be traded or sold in contrast to ownership rights, which can -not
demutualization increases the possibility of profit for those involved, and tends also to benefit the economy.Pros and Cons of
Demutualization:1) Flexible Governance:Demutualization results are more flexible governance structure fostering decisive action in response to changes in the business environment.
counterparts, went through a phase of
demutualization in the late 1990s and early 2000s, the legislature didn't develop regulations for property/casualty
demutualization until 2015.
Under the aforesaid
Demutualization Act, members have ceased to be Members of PSX and they have been issued Trading Right Entitlement Certificates (TRECs) and PSX's ownership shares.
Subsequent to
demutualization of stock exchange, ownership has been separated through issuance of shares.
The Stock Exchanges (Corporatization,
Demutualization and Integration) (Amendment) Act, 2015, aims at extending the moratorium period provided in chapter III of the Stock Exchanges (Corporatization,
Demutualization and Integration) Act, 2012, as due date had already elapsed due to delay in promulgations the Act.
Upon
demutualization, the Dorrances received stock from the companies with an aggregate fair market value of $1,794,771.
Yet, such efficiency gains are questionable in many cases in regard to
demutualization (Chaddad).
The Nairobi bourse is currently owned by 22 investors but the stock market changed to the Nairobi Securities Exchange after undergoing a
demutualization process.
The Insurance Department counsel, who has devoted many years to the
demutualization issue, acknowledged that there is still a lot to learn about the procedure.
