SECP asked to reverse 'hostile takeover' of Ecopack.

KARACHI -- Minority shareholders of Ecopack Ltd - a listed company that makes plastic bottles for beverage firms - have sought the intervention of the Securities and Exchange Commission of Pakistan (SECP) to protect the entity from hostile and allegedly illegal takeover by a group of seven investors.

The seven acquirers 'acted in concert' to accumulate over 50 per cent shareholding within a few months without making any regulatory disclosures or tender offer to small investors, according to the minority shareholders.

The hostile takeover attempt culminated on Oct 28, 2022 when four individuals gained control of the company by getting elected to the board of directors. As a result, Kamran Nasir, who served as CEO of JS Global Capital Ltd until September 2022, became chairman of Ecopack Ltd.

The pattern of shareholding shows that the group of seven investors collectively held just 1.28pc shares in the company until February 28, 2022. But their shareholding increased to 36.9pc within the next one month. They kept on accumulating shares from the stock market and crossed the 50pc threshold by June 30, 2022.

Minority shareholders allege a few investors 'acted in concert' to buy over 50pc shares in three months

Importantly, none of the seven acquirers crossed the individual limit of 10pc shares to avoid mandatory reporting, which would've red-flagged the accumulation of shareholding.

What blew the lid off the takeover attempt were a number of 'off-market transactions' carried out at the same rate of Rs18 per share on March 21, 2022. Commonly known as the Negotiated Deals Market (NDM), the trading counter helps brokers conduct transactions among themselves outside the trading system of the Pakistan Stock Exchange (PSX).

Data from the PSX website shows three NDM transactions involving 13.7 million shares, constituting 32.69pc of the total shareholding, took place on the same day and at the same rate among brokers.

The NDM transactions should trigger the takeover laws as the cumulative shareholding bought by two individuals and two companies on March 21, 2022 was well above the threshold of 30pc prescribed in Section...

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