CFAP 02 PracticeKit
CFAP 02 PracticeKit
CFAP 02 PracticeKit
ICAP
Practice Kit
Corporate Laws
Note:
“This practice kit is based on relevant laws
as on May 31st 2017. Subsequent changes
in these laws are examinable according to
ICAP policy.”
Second edition published by
The Institute of Chartered Accountants of Pakistan
Chartered Accountants Avenue
Clifton
Karachi – 75600 Pakistan
Email: [email protected]
www.icap.org.pk
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted,
in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, without
the prior permission in writing of the Institute of Chartered Accountants of Pakistan, or as expressly permitted
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You must not circulate this book in any other binding or cover and you must impose the same condition on
any acquirer.
Notice
The Institute of Chartered Accountants of Pakistan has made every effort to ensure that at the time of writing,
the contents of this study text are accurate, but neither the Institute of Chartered Accountants of Pakistan nor
its directors or employees shall be under any liability whatsoever for any inaccurate or misleading information
this work could contain.
C
Corporate Laws
Contents
Page
Section A Questions 1
Section B Answers 35
S
Corporate Laws
Syllabus objective
and learning outcomes
CERTIFIED FINANCE AND ACCOUNTING PROFESSIONAL
CORPORATE LAWS
Objective
To develop in-depth knowledge, understanding and application skills of corporate laws most relevant in
local corporate environment in general and required for secretarial practices, in particular.
Learning Outcome
On the successful completion of this paper candidates will be able to:
1 identify, evaluate and analyze different situations arising in performing the professional duties
with reference to applicable corporate laws
2 perform secretarial practices
3 demonstrate working knowledge of meaning, formation and working of non-banking financial
institutes
4 demonstrate awareness of legal provisions in respect of compromise, arrangements,
amalgamation and reconstruction of companies, winding up of limited and unregistered
companies
5 Demonstrate awareness of laws, rules and regulations related to banking companies, insurance
companies, securities, issue of capital, listing, modarba, competition, anti-money laundering and
foreign exchange
6 recognize ethical and professional issues and act appropriately.
Grid Weighting
Companies Act, 2017 (Section 1 to 275) and relevant rules 30-40
Mediation, Arbitration, Arrangement ,Reconstruction, Management, Winding up and other 15-25
related matters under Companies Act, 2017 and Non-Banking Finance Companies
Other laws and regulations, governance, ethics and professionalism 35-40
Total 100
Syllabus
Contents Level
Ref
A Companies Act, 2017 Section (1 to 275) and relevant rules
1 Companies Act, 2017 (Section 1 to 275) 3
2 Companies E-voting Regulations, 2016 2
3 First, Second and Third Schedules of the Companies Act, 2017 3
4 The Companies (Invitation and Acceptance of Deposit) Rules, 1987 3
5 The Companies’ Share Capital (Variation in Rights and Privileges)
Rules, 2000 3
6 The Companies (Buy-back of Shares) Regulations, 2016 3
7 The Employees’ Provident Fund (Investment in Listed Securities) 3
Rules, 2016
8 Single member Companies Rules, 2003 3
9 Companies (Investment in Associated Companies or Associated 3
Undertakings) Regulations, 2012
10 Public Companies (Employees Stock Option Scheme) Rules, 2001 3
B Mediation, Arbitration, Arrangement, Reconstruction,
Management, Winding up and other related matters under
Companies Act, 2017 and Non-Banking Finance Companies
a Non-Banking Finance Companies
1 Companies Ordinance , 1984 (Section 282A to 282M) 3
2 NBFC (Establishment and Regulation) Rules 2003- Rules 1 to 7 3
3 The Non-banking Finance Companies and Notified Entities 3
Regulations, 2008 (Regulation 2, 3, 9, 10, 15B, 16-18, and 25)
b Mediation, Arbitration, Arrangement and Reconstruction
1 Companies Act, 2017 (Section 276 to 292) 3
c Winding up and other matters
1 Companies Act, 2017 (293-302, 304-306,315-321,323,325, 329, 2
334-337, 338 , 339-341, 342, 344-351, 353,354, 356-392, 406-407,
416-419, 424, 426-429, 439,432-447, 451-453, 464,466-468,471-
473)
C Other laws and regulations, governance , ethics and
professionalism
Syllabus
Contents Level
Ref
a Other laws and regulations
1 Securities Act 2015 (Section 2, 63-65, and 87-131) and Relevant 2
Rules and Regulations made thereunder
2 Rules and Regulations related to prospectus and statement in lieu 2
of prospectus
3 Companies (Issue of Capital) Rules, 1996 2
4 Pakistan Stock Exchange Rule Book (Chapter 5) 2
5 Public Offering Regulations 2017 2
Chapter I [excluding 2 (i), (iii), (xvi), (xvii), (xxii), (xxiv), (xxv),
(xxvii), (xxix), (xxx), (xliii), (xliv), (xlvi), (xlvii), (xlviii), (liii), (liv), (lv),
(lvi), (lvii)]
Chapter II
Chapter III
Chapter IV
Chapter V
First Schedule
6 Listed Companies (Prohibition of Insider Trading) Guidelines 2
7 Central Depository Act, 1997 (Section 1-19) 2
8 Foreign Exchange Regulations Act, 1947 (Section 1-9 and 12) and 2
Foreign Exchange Manual of State Bank of Pakistan (Chapter XIX
and XX)
9 Listed Companies (Substantial Acquisition of voting shares and 2
Takeovers) Regulations, 2008
10 Modaraba Companies and Modaraba (Floatation and Control) 2
Ordinance, 1980 (section 2, 4 to 23, 33, 37, 41 and 42 ) and
Related Modarba Rules, 1981
11 Competition Act, 2010 (Chapter I and II) 2
12 Insurance Ordinance, 2000 (Part I, II, III, IV, V and VI) 2
13 The Banking Companies Ordinance, 1962 (Part I, II, II-A & III) 2
14 Prudential Regulations for Corporate /Commercial Banking of SBP 2
(PART – A Definitions, Regulations R-1-R-10)
15 Anti-money Laundering Act, 2010, Anti-money Laundering 2
Regulations, 2015 (Rule 4, 5, 7 and Appendix I and II)
b Governance, ethics and professionalism
1 Ethics as organizational culture (Merit, fairness, benevolence, 3
confidentiality)
2 Fiduciary duty of directors and corporate executives 3
3 Code of Corporate Governance for Listed Companies and Public 3
Sector Companies
4 Dealing with conflict of interest situations and whistle blowing policy 3
I
Corporate Laws
Chapter 1 – Preliminary
Question Answer
page page
3.13 Debentures 5 48
4.3 Meetings – I 7 51
4.4 Meetings – II 7 52
4.6 Meetings – IV 8 52
4.7 Meetings – V 8 52
Question Answer
page page
6.1 Investment – I 12 58
6.2 Investment – II 12 58
6.11 Interest 14 62
Question Answer
page page
10.1 Liquidator 19 77
Question Answer
page page
Question Answer
page page
A
Corporate Laws
SECTION
Questions
CHAPTER 1 – PRELIMINARY
1.1 Miscellaneous terms
Explain the following terms:
(a) Private Company
(b) Prospectus
(c) Special Resolution
(d) Chief Executive
Corporate members 14
Individuals 34
Total 52
Under the relevant provisions contained in the Companies Act, 2017, suggest the course of action in
the given scenario.
(c) Assume that HL has accepted Zakir’s offer and has purchased all the shares at the price
approved by the board of directors and the shareholders.
Advise HL about the information that it would be required to disclose in its financial statements
in respect of the above and the documents to be submitted to the authorities as specified in the
Companies (Buy-back of Shares) Regulations 2016.
3.13 Debentures
ABC Limited has appointed Mr. Saleem as a trustee, under a trust deed, for securing an issue of
debentures. Subsequent to his appointment, Mr. Saleem is of the opinion that ABC Limited has failed
to meet its obligations under the trust deed, whereas the management denies any wrong doings.
Consequently, Mr. Saleem intends to take appropriate action against the company.
Narrate the circumstances specified under the Companies Act, 2017on account of which Mr. Saleem
may initiate legal action against the company.
(b) A foreign currency loan of US $ 75 million was obtained from Apex Bank Limited which was
secured by a first mortgage on company’s fixed assets ranking pari passu with the charge
created in favour of Trust Bank Limited. The foreign currency loan has been paid in full but the
company has not approached the registrar for vacating the charge because confirmation of
repayment has not been received from Apex Bank Limited.
On behalf of Mr.Yaqoob advise the company in the context of Companies Act 2017.
Date of Amount
Name of bank Security
borrowing borrowed
Hypothecation charge on stock in trade and
Alpha Bank Limited 1 July 2010 Rs. 80 million
receivables
Hypothecation charge on stock in trade and
Beta Bank Limited 15 May 2012 Rs. 45 million
receivables
In August 2013, AHEL defaulted on its loan repayment obligations towards both banks.
It has now been discovered by Alpha Bank Limited that the Bank’s legal adviser who had been
assigned to register the charge had failed to deposit the required documents, which were duly signed
by both the parties, with the Registrar of Companies.
The charge in favour of Beta Bank Limited was duly registered.
Under the provisions of the Companies Act, 2017:
(a) Advise Alpha Bank Limited about the effect of non-submission of the charge documents with
the registrar and how would it affect its position vis-a-vis Beta Bank Limited.
(b) Explain whether Alpha Bank Limited can now register the charge with the Registrar of
Companies.
4.3 Meetings – I
The Annual General Meeting of Trade Limited was held at 11:25 a.m. on
10 November 2015. Certain shareholders have lodged following complaints with the company
secretary:
(i) Notice of the annual general meeting was not received by them although they are resident in
Pakistan and their registered addresses have also been provided to the company.
(ii) Since the meeting could not commence at the scheduled time i.e. 11:00 a.m., it became
invalid and should be called again.
(iii) A resolution passed in the meeting was approved by a show of hands. However, a poll
should have been carried out.
(iv) Mr. Hamid who voted for a resolution was represented through a proxy which was deposited
at 5:01 p.m. i.e. after office hours on 8 November 2015. Since 9
November 2015 was a public holiday, the condition of depositing the proxy at least 48 hours
before the commencement of the meeting, was not met.
(v) Mr. Ghulam who holds 100,000 shares was represented by two proxies i.e.
Mr. Cassim (75,000 shares) & Mr. Danish (25,000 shares). Only proxy with 75,000 shares
was counted for the purpose of voting.
(vi) JKM Limited holding 20,000 shares of the company was represented by Mr. Waheed, who is
neither a director nor an employee of JKM Limited.
In the light of the provisions of the Companies Act 2017 you are required to:
(a) Comment on the validity of each of the above complaints.
(b) Describe the circumstances under which a court may declare the resolution(s) passed in the
above meeting or the entire proceedings of the meeting as invalid.
4.4 Meetings – II
st
Karachi Telecommunication (Private) Limited (KTL) was incorporated on 1 March, 2009 under the
Companies Act 2017. Its directors have decided to hold the first Annual General Meeting (AGM) of
the company on August 10, 2010, for placing the first audited financial statements for the period
ended March 31, 2010, for approval.
Comment on the decision of the directors, in the light of provisions contained in the Companies Act
2017.
4.6 Meetings – IV
On declaration of the result of voting in the Annual General Meeting (AGM) by the chairman of AS
Limited, a public company, few shareholders demanded a poll. The chairman refused to hold the poll
and declared the result of voting on show of hands.
In the light of Companies Act, 2017:
(a) How would you assess whether or not the Chairman’s decision of not holding a poll was valid?
(b) Explain whether the Chairman can delay the holding of poll to a date subsequent to the date of
AGM.
4.7 Meetings – V
The annual general meeting of VX Limited, a listed company, was convened on 30 May 2012.
However, only four shareholders turned up to attend the meeting.
Explain how VX Limited should deal with the above situation in the light of Companies Act, 2017.
4.8 Meetings – VI
An Extraordinary General Meeting of Mastermind Technologies Limited (MTL), a listed company, was
scheduled to be held on October 31, 2009. The directors adjourned the meeting for the next week as
the quorum was not present within fifteen minutes of the scheduled time.
Based on the provisions of the Companies Act, 2017, you are required to comment on the following:
(a) The decision of the directors to adjourn the meeting, assuming:
(i) the meeting was called upon the requisition of the members.
(ii) the meeting was called by the directors.
(b) The impact of the adjournment on the validity and rights of proxies which were deposited with
the company before adjournment.
(c) The validity of the resolution passed at the adjourned meeting.
No. of Nominee
Name of shareholders
shares directors
Western Cement Limited (WCL) - listed company 8,040,000 5
Furqan 3,960,000 *3
12,000,000 8
* including chief executive
WCL is presently considering to appoint one of its directors as the chief executive of HPL to replace
the existing chief executive.
Comment on the above proposal in the light of the provisions contained in the Companies Act 2017.
6.2 Investment II
Western Cement Limited (WCL) has recently formed a provident fund for the benefit of its
employees.
In view of the provisions contained in the Companies Act, 2017 you are required to advise (i)
the directors of WCL and (ii) the trustees of Provident Fund about their responsibilities with
respect to the amount to be contributed to the fund and investment thereof.
Addition/(Deletion)
S. No. Date Remarks
No. of shares (in million)
1. 31.05.2015 45 Purchased from the market
2. 15.07.2015 15 Purchased from the market
3. 30.08.2015 (5) Sold in the market at a profit
4. 20.11.2015 5 Bonus shares
The paid-up capital of DCL is 500 million shares.
Required:
(a) Discuss Mr. Faisal’s responsibilities under the Securities Act, 2015 in respect of the above
transactions.
(b) Briefly discuss the powers of the SECP in case Mr. Faisal fails to carry out his responsibilities
as referred to in (a) above.
6.11 Interest
Kamran is the director of Amazing Paper Limited (APL) and Super Glue Limited (SGL). In a
meeting, the board of directors of APL approved a contract for the purchase of Glue from SGL.
Kamran voted in favour of the resolution. A shareholder of APL has objected that Kamran has
unlawfully influenced the transaction to benefit SGL.
Advise Kamran on the validity of the shareholder’s objections, and the consequences which Kamran
may face under the Companies Act 2017.
(a) State the conditions which Arshad would need to comply with while making a competitive bid.
(b) What would be the status of the offer made earlier by Naveed and the rights available to
Naveed, if Arshad makes a valid competitive bid?
19.2 Definitions - I
Explain the terms “Book building process” and “Free float” as defined in the Book Building
Regulations 2015.
19.3 Definitions - II
Define the following terms.
(i) Floor price:
(ii) Limit price:
(iii) Limit Bid:
(iv) Step Bid:
(v) Strike price:
Using the following data determine the Strike Price for the issue providing rationale for the steps of
the process in accordance with the Book Building Regulations 2015.
SECTION
Answers
CHAPTER 1 – PRELIMINARY
1.1 Miscellaneous terms
(a) Private Company
"private company" means a company which, by its articles,
restricts the right to transfer its shares;
limits the number of its members to fifty not including persons who are in the
employment of the company; and
prohibits any invitation to the public to subscribe for the shares, if any, or debentures or
redeemable capital of the company:
Provided that, where two or more persons hold one or more shares in a company jointly, they
shall, for the purposes of this definition, be treated as a single member;
(b) Prospectus
“prospectus” means any document described or issued as a prospectus and includes any
document, notice, circular, material, advertisement, offer for sale document, publication or
other invitation offering to the public (or any section of the public) or inviting offers from the
public for the subscription or purchase of any securities of a company, body corporate or
entity, other than deposits invited by a bank and certificate of investments and certificate of
deposits issued by non-banking finance companies
(c) Special Resolution
"special resolution" means a resolution which has been passed by a majority of not less than
three-fourths of such members entitled to vote as are present in person or by proxy or vote
through postal ballot at a general meeting of which not less than twenty-one days’ notice
specifying the intention to propose the resolution as a special resolution has been duly given:
Provided that, if all the members entitled to attend and vote at any such meeting so agree, a
resolution may be proposed and passed as a special resolution at a meeting of which less
then twenty-one days’ notice has been given.
“FUTHER RESOLVED THAT the Chief Executive Officer/Company Secretary be and is/are
hereby authorized to take all necessary steps in respect of the above buy-back.”
(b) Company shall, before making public announcement, open an escrow account with a
scheduled bank;
Company shall deposit following amount of cash in this account for making payments against
purchase:
25% of the consideration payable up to a payable of Rs 100 million
10% of the additional amount in case the payable exceeds Rs 100 million
Note: Where purchasing company may also arranges an unconditional and irrevocable
bank guarantee from an A+ rated scheduled bank in favour of manager to the purchase in
lieu of the above amounts
Remaining or (in case of a bank guarantee) the entire consideration shall be deposited by
company in the escrow account at least 3 working days before the close of purchase period;
Company shall open a designated CDC account;
Shares tendered for sale in physical form shall not be accepted for the purchase;
Shares shall be tendered through the share tender form to the manager to the purchase
before closing of the purchase period;
Within 5 days of closing of purchase period, manager to the purchase shall prepare a list
containing:
Names of all those shareholders who have tendered shares for sale;
Number of shares tendered;
Number of shares accepted by purchasing company for purchase from each shareholder
Where shares tendered for sale by shareholders exceed the number of shares announced to
be purchased:
1st preference shall be given to applications up to 500 shares
2nd preference shall be given to applications up to 1000 shares
3rd preference shall be given to applications up to 1500 shares
4th preference shall be given to applications up to 2000 shares
After accommodating all above, the balance shares, if any, shall be purchased on prorate
basis from all the shareholders who have tendered more than 2000 shares
Note: If all applications in any of above preferences or level cannot be accommodated, a
balloting shall be conducted among applications exceeding immediately preceding level.
Where shares tendered for sale by a shareholder are less than minimum marketable lot, the
entire lot tendered shall be accepted and shall not be included in pro-rata calculation;
Payment for accepted shares shall be made by manager to the purchase through a bank draft
or pay order out of the escrow account not later than 7 days of the closing of the purchase
period; and
Unaccepted shares, if any, shall be returned within 7 days of the closing of purchase period.
Explanation.- For the purpose of this clause "a loss-making company" means-
(a) a company which has incurred losses as per its latest audited accounts despite
accumulated profits; and
(b) a company having accumulated losses as per its latest audited accounts despite having
profitable operations for the current year:
(vi) the book closure shall be made within forty five days from the date of the resolution by the
board of directors or approval of the Commission, where required, and letter or offer of right
shall be dispatched or credited within the time period as specified in the listing regulations of
the exchange concerned and the payment and renunciation date once announced for the
letter or offer of right shall not be extended except with the permission of respective stock
exchanges under special circumstances;
(vii) if an announcement of the issue of bonus and right shares is made simultaneously, the
resolution of the board of directors shall specify whether the bonus shares covered by the
announcement qualify for right entitlement:
(viii) in case purpose of the right issue is to finance a project like expansion, balancing,
modernization and replacement etc. the company shall submit a quarterly progress report on
implementation of such project till its completion to the Commission for information and the
stock exchange concerned for public dissemination; and
(ix) a right issue once announced shall not be varied, postponed, withdrawn or cancelled.
(i) the company shall not make a right issue within one year of an issue of capital to the
public or further issue of capital through right issue:
Provided that this clause shall not be applicable to a right issue made for meeting the
minimum equity or paid up capital requirements under any law.
Explanation.- For the purpose of this clause, the time period of one year, in case of
issue of capital to the public shall be reckoned from the last date for public subscription
of such issue and the time period of one year, in case of previous right issue, shall be
reckoned from the last date for payment for such previous right issue;
(ii) the board of directors of the company while deciding the right issue shall in its
resolution clearly record the quantum of the issue, issue price per share, purpose of
the right issue, use of the proceeds of the issue, its benefits to the company and the
risk factors associated with the right issue, if any;
(iii) the resolution of the board of directors to issue right shares along with copy of the
financial plan and three years financial projections duly approved by the board shall be
sent to the Commission for information and the respective stock exchanges for public
dissemination on the day of the resolution:
(iv) the company may charge premium on right shares, if –
(a) Forty percent of all the shareholders of the company undertake to subscribe their
portion of right issue;
(b) the balance right issue is fully underwritten and the underwriters, not being
associated companies, shall include at least two financial institutions including
commercial banks and investment banks and the underwriters shall give full
justification of the amount of premium in their independent due diligence reports
(v) in case of a right issue, at par value, of a loss making company or a company whose
market price of share during the preceding six months has remained below par value
shall be fully and firmly underwritten.
Explanation.- For the purpose of this clause "a loss-making company" means-
(b) a company which has incurred losses as per its latest audited accounts despite
accumulated profits; and
(c) a company having accumulated losses as per its latest audited accounts despite
having profitable operations for the current year:
(vi) the book closure shall be made within forty five days from the date of the resolution by
the board of directors or approval of the Commission, where required, and letter or
offer of right shall be dispatched or credited within the time period as specified in the
listing regulations of the exchange concerned and the payment and renunciation date
once announced for the letter or offer of right shall not be extended except with the
permission of respective stock exchanges under special circumstances;
(vii) if an announcement of the issue of bonus and right shares is made simultaneously, the
resolution of the board of directors shall specify whether the bonus shares covered by
the announcement qualify for right entitlement:
(viii) the sponsors shall not enter into any agreement or arrangement directly or indirectly
with the underwriters for the purchase of shares taken up by the underwriters to the
issue;
(ix) in case purpose of the right issue is to finance a project like expansion, balancing,
modernization and replacement etc. the company shall submit a quarterly progress
report on implementation of such project till its completion to the Commission for
information and the stock exchange concerned for public dissemination; and
(x) a right issue once announced shall not be varied, postponed, withdrawn or cancelled.
(b) (i) The employees of the company getting preferential allocation if any, shall be charged
premium at the same rate as the public.
(ii) No other restriction would be applicable on the right shares issued to employee.
(iii)- the resolution of the board of directors to issue right shares along with copy of the financial
plan and three years financial projections duly approved by the board shall be sent to the
Commission for information and the respective stock exchanges for public dissemination on
the day of the resolution:
(iv) the company may charge premium on right shares, if –
(a) Forty percent of all the shareholders of the company undertake to subscribe their
portion of the right issue;
(b) the balance right issue is fully underwritten and the underwriters, not being associated
companies, shall include at least two financial institutions including commercial banks
and investment banks and the underwriters shall give full justification of the amount of
premium in their independent due diligence reports
(v) in case of a right issue, at par value, of a loss making company or a company whose market
price of share during the preceding six months has remained below par value shall be fully
and firmly underwritten.
Explanation.- For the purpose of this clause "a loss-making company" means-
(a) a company which has incurred losses as per its latest audited accounts despite
accumulated profits; and
(b) a company having accumulated losses as per its latest audited accounts despite
having profitable operations for the current year:
(vi) the book closure shall be made within thirty days from the date of the resolution by the board
of directors or approval of the Commission, where required, and letter or offer of right shall
be dispatched or credited within the time period as specified in the listing regulations of the
exchange concerned and the payment and renunciation date once announced for the letter
or offer of right shall not be extended except with the permission of respective stock
exchanges under special circumstances;
(vii) if an announcement of the issue of bonus and right shares is made simultaneously, the
resolution of the board of directors shall specify whether the bonus shares covered by the
announcement qualify for right entitlement:
(viii) the sponsors shall not enter into any agreement or arrangement directly or indirectly with the
underwriters for the purchase of shares taken up by the underwriters to the issue;
(ix) in case purpose of the right issue is to finance a project like expansion, balancing,
modernization and replacement etc. the company shall submit a quarterly progress report on
implementation of such project till its completion to the Commission for information and the
stock exchange concerned for public dissemination; and
(x) a right issue once announced shall not be varied, postponed, withdrawn or cancelled.
(iv) If any of the existing shareholder declines to accept the offer, the shares so declined
shall be disposed of by the directors in such manner as may be provided in the
articles or in accordance with the special resolution passed by the shareholders.
(v) The fact that the company has different classes of shares with different rights and
privileges, shall be distinctly mentioned in the offering document and the difference in
the rights and privileges of any class of share capital shall be conspicuously
mentioned in the offering document or prospectus etc.
(b) The directors of Jupiter Technologies Limited may offer the following types of variation in
rights and privileges with the different kinds of preference shares provided such variation is
allowed under the articles of association of the company :
(i) different voting rights, voting rights disproportionate to the paid up value of shares
.
held, voting rights for specific purposes only or no voting rights
(ii) different rights for entitlements of dividend, right shares or bonus shares or
entitlement to receive the notices and to attend general meetings.
(iii) rights and privileges for indefinite period, for a limited specified period or for such
period as may be determined by the members through special resolution.
3.13 Debentures
Mr. Saleem, if empowered by the trust deed under which he is appointed, can file a suit against the
company for all redemption monies and interest thereon on the following grounds.
(a) where the issuer of the debentures as mortgagor binds himself to repay the debenture loan
or pay the accrued interest thereon, or both to repay the loan and pay the interest thereon, in
the manner provided on the due date;
(b) where by any cause other than the wrongful act or default of the issuer the mortgaged
property is wholly or partially destroyed or the security is rendered insufficient and the trustee
has given the issuer a reasonable opportunity of providing further security adequate to
render the whole security sufficient and the issuer has failed to do so;
(c) where the trustee is deprived of the whole or part of the security by or in consequence of any
wrongful act or default on the part of the issuer; and
(d) where the trustee is entitled to take possession of the mortgaged property and the issuer fails
to deliver the same to him or to secure the possession thereof without disturbance by the
issuer or any person claiming under a title superior to that of the issuer.
On the other hand, charge of Beta Bank Limited is duly registered and hence it enjoys the
position of a secured creditor.
(b) The Commission may on the application of ABL and on being satisfied that the omission to
register a mortgage or charge within the stipulated time as required by Companies Act, 2017
was accidental or due to inadvertence or to some other sufficient cause, or is not of a nature
to prejudice the position of creditors or that on other grounds it is just and equitable to grant
relief, and, on such terms and conditions as seem to the Commission just and expedient,
order that the time for registration be extended and the charge be registered.
However, even if the charge is registered, Beta Bank Limited would have the first charge on
the assets.
4.3 Meetings – I
(a) (i) Where a notice is sent by post at the registered addresses of the shareholders, service
of the notice shall be deemed to be effected by properly addressing, prepaying and
posting a letter containing the notice and, unless the contrary is proved, to have been
effected at the time at which the letter would be delivered in the ordinary course of post.
By considering the above provisions of law, if Trade Limited has sent a notices after
meeting the above requirement of the law, the shareholders’ complaint is not valid.
(ii) As per the Act, if within half an hour from the time appointed for the meeting, a quorum
is not present, the meeting may either be dissolved or adjourned. Since the quorum was
present within 30 minutes, the meeting is valid.
(iii) As per the Act, at any general meeting, a resolution put to the vote of the meeting shall
be decided on show of hands, unless a poll is demanded. The concerned shareholders
should have demanded a poll on or before the declaration of the result of the voting by
show of hands and not after the meeting is concluded. Therefore the shareholder’s
protest is not valid.
(iv) Proxy is not valid as it was not deposited 48 hours before the meeting.
(v) A member shall not be entitled to appoint more than one proxy to attend any one
meeting. In this case, Mr. Ghulam had appointed more than one proxy for the meeting
and more than one instrument of proxy was deposited with the company, therefore both
the instruments of proxy would be rendered invalid.
(vi) As per the Act, a company which is a member of another company may, by resolution of
the directors, authorise any of its officials or any other person to act as its representative
at any meeting of that other company. Therefore, Mr. Waheed’s vote is valid.
(b) The court may, on a petition by members having not less than ten per cent of the voting power
in the company, that the proceedings of a general meeting be declared invalid by reason of
any material defect or omission in the notice or irregularity in the proceedings of the meeting
which prevented members from using effectively their rights, declare such proceedings or part
thereof invalid and direct holding of fresh general meeting:
However, the petition shall be made within thirty days of the impugned meeting.
4.4 Meetings – II
The decision of the directors contravenes the Companies Act, 2017 since the first financial
statement must be laid within sixteen months after the date of incorporation of the company.
4.6 Meetings – IV
(a) The chairman is required to hold a poll in case the same is demanded by members present in
person or through video-link or by proxy, where allowed and having ten percent or more of the
voting power.
If the shareholder who demanded the poll meets the condition as mentioned above, the
decision of the Chairman of not holding the poll would be invalid.
(b) The Chairman can delay the poll up to fourteen days from the day on which it is demanded for
all matters except the following:
(i) On the election of a chairman, the poll shall be taken forthwith.
(ii) On a question of adjournment, the poll shall be taken forthwith.
4.7 Meetings – V
Since VX Limited is a listed company, unless the articles provide for a larger number the quorum of
an annual general meeting shall not be less than ten members present personally or through video-
link, who represent not less than twenty-five percent of the total voting power, either of their own
account or as proxies.
In VX limited only four shareholders turned up to attend the meeting and therefore the quorum were
not formed. If the quorum is not present within half an hour from the time appointed for the meeting,
the Chairman shall adjourn the meeting and the meeting shall stand adjourned to the same day in
the next week at the same time and place.
At the adjourned meeting if a quorum is not present within half an hour from the time appointed for
the meeting, the members present personally or through video-link, being not less than two, shall be
a quorum, unless the articles provide otherwise.
4.8 Meetings – VI
(a) The directors of the company should have waited for half an hour. The directors of the
company may adjourn the general meeting of the company if within half an hour from the time
appointed for the meeting the quorum is not present and shall
(i) Direct to dissolve the meeting, if the meeting is called upon the requisition of the
member.
(ii) Adjourn the meeting to the same day in the next week at the same time and place, if
meeting is called by the directors.
(b) The proxies deposited before adjournment of the meeting shall stand valid for the adjourned
meeting A proxy shall be entitled to attend and vote instead of member appointing him and
have such rights in respect of speaking and voting at the adjourned meeting as are available
.
to a member
(c) A resolution passed at an adjourned meeting shall for all purpose, be treated as having been
passed on the date on which it was in fact passed and shall not be deemed to have been
passed on any earlier date.
Therefore, the Chief Executive of HPL can be removed only if the proposal is supported by:
(ii) by 3/4th majority of the members in the general meeting either present in person or by way of
proxy.
Since WCL has only 5 nominee directors on the board of HPL and has 67% shareholdings, it cannot
remove the existing chief executive without the support of Furqan or his nominee directors.
Listed company shall follow such procedure as may be specified by the SECP.
Board shall, as soon as practicable but not later than 30 days from receipt of such requisition,
proceed to hold fresh election of directors of the company.
It is important to note that the number of directors fixed in the preceding election shall not be
decreased.
Now if ASML is a listed company, the said course of action is available.
6.2 Investment II
The Directors of the company are responsible to collect the contribution of the employees
and pay such contributions as well as the company’s contributions, to the trustees of the
provident fund within fifteen days from the date of collection and thereupon the obligations
laid on the company shall devolve on the trustees and shall be discharged by them
instead of the company.
The directors shall make sure that no portion of the contribution is utilized by the company
except for the breach of the contract of service by the employee, subject to giving prior notice to
the employee concerned.
It is the responsibility of the trustees to ensure that all the money deposited with a company by
its employees, contribution by the company or received or accruing by way of interest, profit
or otherwise from the date of the contribution, receipt or accrual, shall either be deposited:
TKPL would not be authorized to provide any security in connection with a loan obtained by its
associated company except under the authority of a special resolution which shall indicate the
nature, period, amount of investment and terms and conditions attached thereto.
(b) If Mr. Suleman is found in contravention of the provisions of the law then he is liable to
imprisonment of either description for a term which may extend to three years or to a fine
which may extend to two hundred million rupees or three times the amount of gain made or
loss avoided by such person, or loss suffered by another person, whichever amount is higher
6.11 Interest
Every director of a company who is in any way interested in any contract or arrangement entered
into, on behalf of the company shall disclose the nature of his interest at a meeting of the directors
or through a general notice.
Furthermore, no director of a company shall, as a director, take any part in the discussion of, or vote
on, any contract or arrangement entered into, by or on behalf of the company, if he is in any way
interested in the contract or arrangement and if he does vote, his vote shall be void.
In view of the above provisions of the Companies Act 2017, Kamran may have to face the following
consequences:
(i) Since Kamran is directly interested in the contract for purchase of glue, his failure to disclose
his interest to the directors shall constitute a violation and he shall be liable to a penalty of
level 1.
(ii) Moreover, the court may, on a petition by members/shareholders having not less than ten
percent of the voting power in the APL, declare such proceedings or part thereof invalid on
account of irregularity in the proceeding of the meeting.
(iii) The Court may also declare Kamran as ineligible on account of lacking fiduciary behavior after
giving him an opportunity of showing cause against the proposed action. If such declaration is
given, Kamran would be rendered ineligible for appointment as director; and, shall, ipso facto,
cease to hold office.
reasons for not making complete investment so far where resolution required it to be
implemented in specified time; and
material change (if any) in financial statements of associated company or associated
undertaking since date of the resolution passed for approval of investment in such company.
Latest audited annual financial statements of Yasir Limited along with the latest reviewed financial
statements, if any, shall be made available for inspection of the members of NL in its general
meeting.
(ii) The minority shareholders as a class are required to be facilitated to contest the
election of directors by proxy solicitation. Therefore, with regard to the request
submitted by Mr. Haq representing minority shareholders, AVZ Limited shall:
Annex with the notice issued in respect of election of directors, a statement by Mr.
Haq including his profile.
Provide information regarding members and shareholding structure to Mr. Haq ;
and
On a request by Mr. Haq, annex to the notice issued in respect of election of
directors, an additional copy of proxy form duly filled by Mr. Haq, at the
company’s cost.
(b) A director shall not be considered as independent, if one or more of the following
circumstances exist:
(i) He/she has been an employee of the company, any of its subsidiaries or holding
company within the last three years;
(ii) He/she is or has been the CEO of subsidiaries, associated company, associated
undertaking or holding company in the last three years;
(iii) He/she has, or has had within the last three years, a material business relationship
with the company either directly or indirectly as a partner, major shareholder or director
of a body that has such a relationship with the company.
The major shareholder means a person who, individually or in connection with his
family or as part of a group, holds 10% or more shares having voting rights in the paid
up capital of the company.
(iv) He/she has received remuneration in the three years preceding his/her appointment as
a director or receives additional remuneration, excluding retirement benefits from the
company apart from a director’s fee or has participated in the company’s share option
or a performance-related pay scheme;
(v) He/she is a close relative of the company’s promoters, directors or major shareholders:
Close relative means spouse(s) , lineal ascendants and descendants and siblings;
(vi) He/she holds cross-directorships or has significant links with other directors through
involvement in other companies or bodies;
(vii) He/she has served on the board for more than three consecutive terms from the date
of his first appointment provided that such person shall be deemed “independent
director” after a lapse of one term.
(viii) He/she is nominated as director by the company’s creditors or other special interest by
virtue of contractual agreements.
(ix) He/she is nominated as a director by the corporation/company who has made
investment or otherwise extended facilities.
(x) He/she is nominated as a director by Federal Government, Provincial Government,
Commission, foreign equity holders on the board of PICIC or any other company set
up under a regional co-operation.
(i) where the first auditors are not appointed by the directors within ninety days of date of
incorporation of the company.
(ii) where at an annual general meeting no auditors of the company are appointed,
(iii) where the auditors appointed are unwilling to act as auditors of the company,
(iv) where a casual vacancy in the office of an auditor is not filled within thirty days after the
occurrence of the vacancy.
However, the appointment of BL & Co. may be valid if the concerned partner discloses the fact on
his appointment as auditor and gives an undertaking that these shares would be disinvested, within
90 days of his appointment.
(b) On receipt of notice, the company shall forthwith send a copy of such notice to the retiring
auditor and shall also be posted on its website
The company shall, on the receipt of a representation by the retiring auditor be read out at the
meeting before taking up the agenda for appointment of the auditor
(iii) Every listed company shall advise and keep advised to the Exchange all decisions of its
Board of directors relating to dividend in the manner notified by the Exchange from time
to time.
(iv) The above said information is required to be communicated to the Exchange prior to its
release to any other person or print/electronic media.
(v) Intimation of dividend shall be sent to the Exchange not later than 14 days prior to the
commencement of the book closure.
(b) (i) When a dividend has been declared, it shall not be lawful for the directors or the
company to with-hold or defer its payment.
(ii) The chief executive of the company shall be responsible to make the payment in the
manner provided in the Companies Ordinance, 2016
(iii) where a dividend has been declared but is not paid within the period specified as
above, the chief executive of the company shall be punishable.
In case of final dividend, from the date of General Meeting in which the dividend has
been approved;
(v) intimate the Exchange immediately as soon as all the dividend warrants are posted to
the shareholders;
(vi) dispatch interim and final dividend warrants to the shareholders by registered post
unless those entitled to receive the dividend require otherwise in writing.
(vii) All dividend warrants, in addition to the place of the Registered Office of the issuing
companies, shall be encashable at Karachi, Hyderabad, Sukkur, Quetta, Multan,
Lahore, Faisalabad, Islamabad, Rawalpindi and Peshawar* for a period of three months
from the date of issue.
the names of the persons who, at any time during the financial year, were directors of
the company;
the principal activities and the development and performance of the company’s
business during the financial year;
a description of the principal risks and uncertainties facing the company;
any changes that have occurred during the financial year concerning the nature of the
business of the company or of its subsidiaries, or any other company in which the
company has interest, whether as a member or otherwise;
(i) Material changes and commitments affecting the financial position of the company
occurred after close of the financial year and before preparation of the report.
(iv) In case of subsidiary company, the name of its holding company, and country of
incorporation, if it is established outside Pakistan.
(vi) Reasons for incurring loss and a reasonable indication of future prospects of profit, if
any.
(vii) Information about defaults in payment of debts, if any, and reasons thereof.
(viii) Business review must, to extent necessary for understanding the development etc,
include:
Main trends and factors likely to affect future development, performance and
position
(i) Within one month of the close of the first and third quarter of its year of account and two
months of close of second quarter, prepare quarterly financial statements; and
In respect of cumulative figures for second quarter the half-yearly financial statements
shall also be subject to limited scope review by the statutory auditors
The quarterly financial statements shall be posted on the company’s website for the
information of its members and also be transmitted electronically to the Commission,
securities exchange and the registrar within the above-mentioned period, the said
financial statements shall also be dispatched, if requested, to the member in physical
form
(ii) The financial statements shall be approved by the directors and shall be signed by the
chief executive and chief financial officer and at least one director
If a company fails to comply with any of the requirements of this section, every director
including chief executive and chief financial officer of the company who has knowingly by his
act or omission been the cause of such default shall be liable to a fine of not exceeding one
hundred thousand rupees and a further to a penalty of level 2 on the standard scale .
(i) The director of ML shall ensure that, except where in their opinion there are good reasons
against it, the financial year of MSPL coincides with the ML’s own financial year.
(ii) ML is required to attach to its financial statements for the year ending 31 December 2014,
consolidated financial statements of the group presented as those of a single enterprise.
(iii) Consolidated financial statements shall comply with the disclosure requirement of the relevant
Schedule of the Companies Act, 2017 and financial reporting Standards
(v) The consolidated financial statement shall be signed by the same person by whom the
individual balance sheet and the profit and loss account of the holding company are required
to be signed.
(vi) The consolidated financial statements shall disclose any note or saving contained in such
accounts to call attention to a matter which, apart from the note or saving, would properly
have been referred to in such a qualification, in so far the matter which is the subject of the
qualification or note is not covered by the holding company’s own accounts and is material
from the point of view of its members.
(i) As the financial year of MSPL precedes the day on which the ML financial year ends by more
than three months, MSPL is required to make an interim closing on the day on which ML’s
financial year ends i.e. December 31, 2014 and prepare financial statements for
consolidation purposes.
(b) Mr. Jameel can investigate the affairs of a company considers it necessary for reasons to be
recorded in writing, he may probe after seeking prior approval of the Commission, the affairs
of any other associated company or associated undertaking which is, or has been associated
and also from the chief executive of any such company.
(b) The registrar may, after he has obtained the permission of SECP under that sub-section, also
authorize any officer subordinate to him, not inferior in rank to an assistant registrar.
(i) to enter, with such assistance as may be required, the place where such books and
papers are kept;
(c) The registrar shall return the books and papers seized under this section as soon as may be
and in any case not later than the thirtieth day after such seizure, to the company or, as the
case may be, to the chief executive or any other person from whose custody or power they
were seized:
Provided that the Commission may, after providing to the company an opportunity to show
cause against the order proposed to be made by it, allow the registrar to retain any books and
papers for a further period not exceeding thirty days:
Provided further that the registrar may, before returning books and papers as aforesaid, take
copies of, or extracts from them or put such marks of identification thereon as he considers
necessary.
(a) the affairs or business of the company are or is being or have or has been conducted or
managed:
(i) in a manner likely to be prejudicial to the interest of the company, its members or
creditors, or any director of the company or person concerned with the management of
the company is or has been guilty of breach of trust, misfeasance or other misconduct
towards any of its members or creditors or directors.
(ii) with intent to defraud its members or creditors or any other person or for a fraudulent or
unlawful purpose or
(b) any industrial project or unit to be set up or belonging to the company has not been completed
or has not commenced operations or has not been operating smoothly or its production or
performance has so deteriorated that:
(i) the market value of its shares as quoted on the stock exchange or the net worth of its
shares has fallen by more than seventy-five per cent of its par value or
(c) any industrial unit owned by the company is not in operation for over a period of two years or
has been in operation intermittently or partially during the preceding two years. Or
(d) the accumulated losses of the company exceed sixty percent of its paid-up capital.
As name of Wasif is proposed by the creditors with an outstanding balance of Rs.20 million
(though the creditors in number were seven) shall be the liquidator of Jaffrey Pharma Limited.
The directors and creditors who voted for Asim to be appointed as liquidator of the company
may, within fifteen days after the date on which the nomination was made by the creditors,
apply to the Court for an order either directing that the person nominated as liquidator by the
company shall be liquidator instead of or jointly with the person nominated by the creditors or
appointing some other person to be liquidator instead of the person appointed by the
creditors.
(i) to institute or defend any suit, action, prosecution or other legal proceeding, civil or
criminal, in the name and on behalf of the company;
to do all acts and to execute, in the name and on behalf of the company, all deeds,
receipts and other documents, and for that purpose, to use, when necessary, the
company’s seal;
(ii) to carry on the business of the company so far as may be necessary for the beneficial
winding up thereof;
(iii) to sell the movable and immovable property and actionable claims of the company by
public auction or private contract, with power to transfer the whole thereof to any
person or company or to sell the same in parcels.
(iv) to do all acts and to execute, in the name and on behalf of the company, all deeds,
receipts and other documents, and for that purpose, to use, when necessary, the
company’s seal;
to sell whole of the undertaking of the company as a going concern;
to invite and settle claim of creditors, employees or any other claimant and distribute
sale proceeds in accordance with priorities established under this Act;
to draw, accept, make and endorse any negotiable instruments in the name and on
behalf of the company, with the same effect with respect to the liability of the company
as if such instruments had been drawn, accepted, made or endorsed by or on behalf of
the company in the course of its business;
to obtain any professional assistance from any person or appoint any professional, in
discharge of his duties, obligations and responsibilities and for protection of the assets
of the company, appoint an agent to do any business which the official liquidator is
unable to do himself;
to appoint an Advocate entitled to appear before the Court or such person as may be
prescribed to assist him in the performance of his duties;
to take all such actions, steps, or to sign, execute and verify any paper, deed,
document, application, petition, affidavit, bond or instrument as may be necessary,—
the number of members is reduced, in the case of a private company, below two, or, in
the case of public company, below three; or
the shares in respect of which he is a contributory or some of them either were originally
allotted to him or have been held by him, and registered in his name, for at least six
months during the eighteen months before the commencement of the winding up, or
have or devolved on him through the death of a former shareholder.
(ii) The registrar may file a petition for the winding up with a prior permission of the Commission.
(iii) The Commission may file a winding up petition when an investigation into the affairs of the
company has revealed that:
its business is being conducted in a manner oppressive to any of its members or persons
concerned in the formation of the company, or
its management has been guilty of fraud, misfeasance or other misconduct towards the
company or towards any of its members.
Provided that if a licence granted by the Commission under this Act or any other
licencing authority is revoked, no investigation into the affairs of the company shall be
required to present the petition for winding up of the company;
(iv) A Creditor including contingent or prospective creditor may file a petition for winding up:
when security for costs has been given as the Court thinks reasonable.
when prima facie case for winding up has been established to the satisfaction of the
Court.
However, the corporate state and powers of the company shall continue until it is
dissolved, notwithstanding anything to the contrary in its articles of association.
(ii) The directors of MSSL must ensure that the declaration of solvency made by them is :
Verified by an affidavit to the effect that they have made a full inquiry into the
affairs of the company.
The company will be able to pay its debts in full with in such period not exceeding
twelve months from the commencement of the winding up.
Made within five weeks preceding the date of the passing of the special
resolution for winding up of the company.
(b) The liquidator cannot be appointed by the directors as he/she is required to be appointed
by the company in its general meeting.
The liquidator‘s remuneration shall also be fixed in the general meeting by way of
percentage of the amount realized by him by disposal of assets or otherwise having
regard to the amount and nature of the work to be done and experience, qualification of
such liquidator and size of the company
The remuneration of liquidator when fixed shall not be enhanced subsequently but may be
reduced by the court at any time.
In addition to the remuneration, a liquidator may be paid a monthly allowance for meeting
the expenses of the winding up a period not exceeding twelve months from the date of the
commencement of winding up.
If the liquidator resigns, is removed from office or otherwise ceases to hold office before
conclusion of winding up, he shall not be entitled to any remuneration and remuneration
already received by him, if any, shall be refunded by him to the company.
(ii) In addition to the remuneration, the TPL in general meeting may authorize payment of
a monthly allowance to the liquidator for meeting the expenses of the winding up for a
period not exceeding twelve months from the date of the commencement of winding
up.
(iii) The remuneration fixed as aforesaid shall not be enhanced subsequently but may be
reduced by the Court at any time.
(iv) If the liquidator resigns, or is removed from office or otherwise ceases to hold office
before conclusion of winding up, he shall not be entitled to any remuneration and
remuneration received by him, if any, shall be refunded by him to the company.
(b) (i) If a vacancy occurs, by reason of resignation, in the office of liquidator appointed by
the company, the company in general meeting may, subject to any arrangement with
its creditors, fill the vacancy by appointing a person who has given his written consent
to act as liquidator.
(ii) For that purpose a general meeting shall be convened by the outgoing liquidator
before he ceases to act as liquidator, failing that may be convened by any
contributory or by the Court on the application of the registrar or any person
interested in the winding up of the company.
(iii) The meeting shall be held in the manner provided by the Companies Act, 2017 or by
the articles or in such manner as may, on application by any contributory or by the
continuing liquidators, be determined by SECP.
(iii) The notice of the meeting specifying the time, place and object of the meeting shall also
be published at least twenty one days before the date of the meeting.
(iv) Within one week after the meeting, the Liquidator shall file with the registrar his final
report in the prescribed format
(v) If a quorum is not present at the meeting, the Liquidator shall, in lieu of the return
referred to in sub-section (4), file a return that the meeting was duly summoned and that
no quorum was present there at, and upon such return being made within one week
after the date fixed for the meeting along with a copy of his report and account in the
prescribed manner, the provisions of sub-section (4) as to the making of the return shall
be deemed to have been complied with.
Therefore director of CL should extend the period fixed for the duration of the company by
making necessary amendments in the article of association of the company.
(b) Declaration of solvency must contain the following:
That the company will be able to pay its debts in full within a period not exceeding twelve
months from the commencement of the voluntary winding up.
Report of the auditors of the company, prepared, so far as the circumstances admit, in
accordance with the provisions of this Act, on the statement of financial position and
profit and loss accounts of the company for the period commencing from the date up to
which the last such accounts were prepared and ending with the latest practicable date
immediately before the making of the declaration.
the company is not being wound up to defraud any person or persons;
A declaration is required to be made within five weeks immediately preceding the date of
passing of the resolution for winding up and is delivered to the registrar before the date.
(i) Date, time and place of its board meeting at least one week in advance.
(ii) Decision of the Board about cash dividend and approval of the audited accounts
immediately after the meeting. The information is required to be communicated to the
Exchange prior to its release to any other person or print/ electronic media.
(iii) DL shall send to the Exchange such number of copies of its annual report and audited
accounts as may be prescribed by the Exchange not later than 21 days before a
meeting of shareholders is held to consider the same.
(iv) DL shall furnish certified true copies of minutes of its annual general meeting within 60
days of such meeting.
(b) As DL plan to hold its AGM by 15 July 2015, the notice of AGM should be sent at least 21,
days before the meeting i.e. latest by 24 June 2015.
It can close its books for a period of 7-15 days and that period should fall between 30 June
2015 to 14 July 2015.
Further, DL is also required to give minimum of 14 days notice to the PSX prior to closure of
share transfer books, therefore, this aspect should also be considered by the directors in
deciding the dates of book closure.
(i) if from three years of the date of formal listing, it has not started commercial production in the
case of a manufacturing company or has not commenced business in the case of any other
company.
(ii) if it has failed to hold its annual general meeting for a continuous period of three years.
(iii) if it has gone into liquidation either voluntarily or under court order.
(iv) if it has failed to pay the annual listing fees as prescribed in listing regulations for a period of 2
years.
(v) if it has failed to comply with the requirements of any of the listing regulations.
(vi) if for any reasons whatsoever it refuses to join the Central Depository System (CDS) after its
securities has been declared eligible securities by the Central Depository Company (CDC).
Hence the action taken by the Exchange is valid if the time period of two years has lapsed.
(ii) If FFL fails to pay listing fees within the period of ninety days, the Exchange shall immediately
suspend trading in shares of the company and simultaneously issue compulsory buy-back
directions to the majority shareholders having control of FFL to provide all the shareholders an
option for selling their shares to the majority shareholders and the shares tendered by the
shareholders shall be purchased by the majority shareholders
The price for such buy-back of shares shall be fixed by the Exchange in accordance with
listing regulations.
In case FFL is also listed on another stock exchange in Pakistan but not in similar default at
such other stock exchange, the Exchange shall not issue any directions for compulsory buy-
back of its shares and shall delist the company.
If FFL is in default at all the stock exchanges where it is listed, the compulsory buy-back
directions shall be issued by all the stock exchanges in coordination with each other.
(i) The company must first be converted from private limited company to public limited company.
(ii) The paid up capital (including public offer) shall not be less than Rs 200 million.
a. In case post-issue paid-up-capital of the company is up to Rs. 500 million, the allocation
of capital to the General Public, excluding premium amount and Pre-IPO placement, if
any, shall not be less than 25% of the post-issue paid up capital of the company.
b. In case post-issue paid-up-capital of the company is above Rs. 500 million, the allocation
of capital to the General Public, excluding premium amount and Pre-IPO placement, if
any, shall be at least Rs. 125 million or 12.5% of the post-issue paid up capital, whichever
is higher.
(iii) A running company for one full year or more, reflecting losses in their last audited accounts
shall not qualify for listing if its equity is eroded by 40% or more.
(v) The promoters/ sponsors / controlling directors who are also promoters /sponsors /controlling
directors in other listed companies should not be in default of any Listing Regulation.
(vi) The company should not be a wholly owned subsidiary of any other listed company which has
violated Listing Regulations and which is still in default of any Listing Regulation.
(vii) The company should not be an associated company of any other listed company which has
violated Listing Regulations and which is still in default.
(viii) The Chief Executive should not previously been a chief executive of any other listed company
which had violated the Listing Regulations.
(ix) Promoters / sponsors / controlling directors should not be in the defaulter’s list of the State
Bank of Pakistan either in their individual capacity or in the capacity of directors of other
companies. However, this will not apply to nominee directors of the Government and Financial
Institutions.
(x) The company should provide an undertaking to abide by all the Listing Regulations.
(ii) The companies quoted on the Future Counter shall intimate to the Exchange the dates of
th
book closure and corporate actions, if any, on or before 20 day of the month with a notice
th
period of at least 21 days after the said 20 day for commencement of book closure.
(iii) The company shall give a minimum of 14 days notice to the Exchange prior to closure of
share transfer books for any purpose.
(iv) The company shall treat the date of posting as the date of lodgments of shares for the
purpose for which shares transfer register is closed, provided that the posted documents are
received by the company before relevant action has been taken by the company.
(v) The company shall issue transfer receipts immediately on receiving the shares for transfer.
(vi) The company shall not charge any transfer fee for transfer of shares.
(vii) The company shall provide a minimum period of 7 days but not exceeding 15 days at a time
for closure of share transfer register, for any purpose, not exceeding 45 days in a year in the
whole.
(viii) No listed company shall exercise any lien whatsoever on fully paid shares and nor shall there
be any restriction on transfer of fully paid shares.
By considering the above provision of law, Saad would be entitled to have a representation on
the board of directors of SML, if he acquires further 4% shares of SML.
Withdrawing the public offer with the prior approval of the Commission:
Provided that if no such announcement is made within seven days of the public
announcement of the competitive bid, the earlier offer on the original terms shall
continue to be valid and binding on Mr. Naveed except that the closing date as such of
public offer shall stand extended to the date of closure of public offer under the last
subsisting competitive bid.
(ii) Having made a public announcement and provided he has not withdrawn his public
offer as above, Mr. Naveed shall have the option to make an upward revision of his
offer in respect of the price and the number of voting shares to be acquired at any time
within seven working days prior to the date of closure of public offer.
(ii) In case the price to be paid is different from the fair value as determined above, an
explanation along with justification, reasons and basis of determination of price shall be
disclosed to the members.
(iii) Share deposit money shall be transferred for equity investment only after announcement of
the offer for issue of shares by its associated company and in case shares are not issued
within ninety days of the transfer of share deposit money such share deposit money shall be
treated as loan and interest/mark up thereon shall be charged from the date of transfer of
funds.
Conditions to be complied with in the case of Option II (funded and non-funded facilities)
(i) The company shall not invest in its associated company by way of loans or advances except
in accordance with an agreement in writing and in accordance with the approval of the
members in the general meeting;
(ii) ABC Limited shall charge and recover interest in line with the standard terms applied by the
commercial banks on similar facilities. Mark-up for the grace period is being charged at 50%
less than the normal which seems not in accordance with the standard terms normally
applied. It should be re-considered by ABC Limited.
(iii) ABC Limited shall not extend to its subsidiary any loan for a period beyond one year
provided that members may approve renewal of such loan.
(iv) In case of unfunded facilities (i.e. for a guarantee), rate of return shall be determined based
on the rate of commission charged by commercial banks on similar unfunded facilities.
The property and liabilities of the amalgamated NBFCs shall, by virtue of sanction order, be
transferred to the merged NBFC.
The Commission while sanctioning the scheme shall determine the value to be paid to
shareholders dissenting from the scheme.
At least twenty five percent of the paid up share capital should be held by the promoters.
(iii) The directors would have to get release their shares from the schedule bank and shall
have to deposit their shares with Central Depository Company of Pakistan Limited in an
account marked as “Blocked” and such shares shall not be sold or transferred without
prior approval of the Commission.
The directors and majority shareholders of the company shall undertake that they would
not enter into any agreement for sale or transfer of their shares in any manner without
prior approval of the Commission.
(iv) The company should get changes in the memorandum before applying for the license as in
order to get a licence, the company has to give an undertaking that no change in the
Memorandum of Association, other than increase in the authorized capital, would be made
without prior approval of the Commission.
(v) Any company in the Al-Shaban group of companies shall not already hold a licence for the
same form of business.
(vi) The company can appoint X as chief executive of the company with the prior permission of
the Commission, however, he has to fulfill the following conditions.
(a) Gain one more year experience as the minimum experience requirement is seven to ten
years whereas he has an experience of six years.
Provided that without prejudice to the generality of this explanation no director shall be
considered independent if one or more of the following circumstances exist:
(i) He/she has been an employee of the company, any of its subsidiaries or holding
company within the last three years;
(ii) He/she is or has been the CEO of subsidiaries, associated company, associated
undertaking or holding company in the last three years;
(iii) He/she has, or has had within the last three years, a material business relationship with
the company either directly, or indirectly as a partner, major shareholder or director of a
body that has such a relationship with the company:
Explanation: The major shareholder means a person who, individually or in concert with his
family or as part of a group, holds 10% or more shares having voting rights in the paid-up
capital of the company;
(iv) He/she has received remuneration in the three years preceding his/her appointment as
a director or receives additional remuneration, excluding retirement benefits from the
company apart from a director’s fee or has participated in the company’s share option or
a performance-related pay scheme;
(v) He/she is a close relative of the company’s promoters, directors or major shareholders:
Explanation: Close relative means spouse(s), lineal ascendants and descendants and
siblings;
(vi) He/she holds cross-directorships or has significant links with other directors through
involvement in other companies or bodies;
(vii) He/she has served on the board for more than three consecutive terms from the date of
his first appointment provided that such person shall be deemed “independent director”
after a lapse of one term.
Any person nominated as a director under Sections 182 and 183 of the Ordinance shall not be
taken to be an "independent director" for the above-mentioned purposes.
At least one third of an NBFC’s directors shall be independent directors.
At least two of its directors, excluding the chief executive officer, shall have relevant
experience of at least five years at a senior management level in the financial sector.
The Commission shall be the final authority to determine the status of a director as
independent or otherwise.
(i) EFL shall give an undertaking to comply with the rules, regulations or directions given
by the Commission.
(j) EFL shall give an undertaking that within ninety days of the Certificate of Registration, it
shall provide evidence to the Commission that the personnel employed by it for
executive positions, research or other related functions, possess sufficient educational
qualifications and professional experience to undertake the asset management
business.
(b) An NBFC should commence business within one year of the issuance of license and if it fails,
the license shall be deemed to be cancelled or otherwise as specified by the commission by
notification in the official gazette.
The license granted to the NBFC shall be valid for three years from the date of its issuance
and shall be renewable upon expiry of the three years as by making an application at least
one month prior to expiry.
The Commission may after making such inquiry and after obtaining such further information
as it may consider necessary renew the license of NBFC for three years on such conditions
as it may deem necessary.
Provided that till such time the license is renewed the existing license shall be deemed valid
for the purposes of these rules and the regulations unless the company fails to apply and
fulfills all the requirements to the satisfaction of the commission for the grant of the license.
(i) continued association of the chief executive is or is likely to be detrimental to the interests
of NBFC or its shareholders or persons whose interest is likely to be affected; or
(iii) to prevent the affairs of NBFC being conducted in a manner detrimental to the interest of
its shareholders or in a manner prejudicial to the interests of NBFC; or
(b) If in the opinion of the Commission, any delay in the removal of CEO would be detrimental to
the public interest or the interest of its shareholders, the Commission may, at the time of giving
the opportunity aforesaid or as any time thereafter and pending the consideration of the
representation aforesaid , if any, by order direct that:
(i) the chief executive shall not, with effect from the date of the order:
in any way, whether directly, or indirectly, be concerned with, or take part in the
management of the NBFC;
(ii) any person authorized by the Commission in this behalf shall act as such chief executive
of the NBFC till another person is elected in a general meeting or a board meeting, as
may be directed by the Commission, to fill in the vacancy.
(i) hold office during the pleasure of the Commission subject to such conditions as may be
specified in the order of his appointment and, subject thereto, for such period, not
exceeding three years as the Commission may specify; and
(ii) not incur any obligation or liability for anything which is done or intended to be done in his
capacity as chief executive.
(iii) holds or possesses on behalf of any other person any property knowing or having
reason to believe that such property is proceeds of crime; or
(iv) participates in, associates, conspires to commit, attempts to commit, aids, facilitates, or
counsels the commission of the specified in clauses (a), (b) and (c).
The knowledge, intent or purpose required as an element of an offence set forth in above may
be inferred from factual circumstances in accordance with the Qanun-e-Shahadat 2016.
(b) Punishment for committing Money Laundering offence
Whoever commits the offence of money laundering shall be punishable with rigorous
imprisonment for a term which shall not be less than one year but may extend to ten years
and shall also be liable to fine which may extend to one million rupees and shall also be liable
to forfeiture of property involved in the money laundering
Provided that the above fine may extend to five million rupees in case of a company and
every director, officer or employee of the company found guilty shall also be punishable under
this section.
(c) Where an investigation has been undertaken based on STR report by the Bank. Mr. Aslam
should justify why all or any of such funds should not be declared to be involved in money
laundering. If Mr. Aslam is acquitted on satisfaction of the investigating officer and Court, the
transaction shall be allowed in normal course of business.
Otherwise, if the suspicion of money laundering is found true, the AML officer shall freeze the
account of Mr. Aslam based on the court order for forfeiture of such amount which is found involved
in money laundering, after giving an opportunity of being heard to Mr. Aslam. The subject property
shall be forfeited to the Federal Government.
Mr. NR shall be allowed to trade freely in any shares quoted on any Stock Exchange in
Pakistan from this account.
Payment from such purchases may be debited to the account on production of stock
broker’s memo.
Disinvestment proceeds may be credited to the account on provision of stock broker’s
memo.
Transfers from one such account to another may also be made in case of transfer of
shares between the two account holders.
(ii) Yes, Mr. NR is entitled to receive dividends which shall also be credited into special
convertible rupee account.
There are no restrictions on repatriation of funds outside Pakistan and the funds
available in such special accounts can be transferred outside Pakistan or credited to a
Foreign Currency Account maintained in Pakistan at any time without prior approval of
the State Bank of Pakistan.
(b) “A person resident outside Pakistan” covers a foreign national including a foreign national of
Indo-Pakistan origin as also a Pakistani holding dual nationality for the time being resident in
Pakistan and a company registered in Pakistan which is controlled directly or indirectly by a
person resident outside Pakistan.
19.2 Definitions - I
"Book Building Process", means a mechanism of price determination through which indication of
interest for investment in the shares offered by an issuer/offeror is collected from Institutional
Investors and High Net Worth Individual Investor (HNWI) and a book is built which gives a picture of
demand for the shares at different price levels. The strike price is determined based on the price at
which demand for the share at the end of book building period is sufficient to raise the minimum
capital required;
“Free-float” means the proportion of total shares issued by a company that are readily available for
trading at the Stock Exchange. It generally excludes the shares held by controlling directors /
sponsors / promoters, government and other locked-in shares not available for trading in the normal
course.
19.3 Definitions - II
Define the following terms.
(i) Floor price:
Floor price means the minimum price per share set by the Issuer or the Offerer.
(ii) Limit price:
Limit price means the maximum price a prospective Bidder is willing to pay for a share under
the Book Building.
(iii) Limit Bid:
Limit Bid means a bid by the Bidder at a Limit Price.
(iv) Step Bid:
Step Bid means a series of Limit Bids at increasing prices.
(a) (i) When the shares are issued through book building, the price at which the
securities will be allotted is not known whereas in case of normal public issue,
the investor knows the price in advance.
(ii) In Book Building securities are offered at prices above or equal to the floor
prices, then bids are received and price is set at the end, whereas in case of a
normal public issue securities are offered at a fixed price.
(b) Dutch Auction method means the method through which Strike Price is determined by
arranging all the Bid Prices in the descending order along with the number of shares
and the cumulative number of shares bid for at each Bid Price. The Strike price is
determined by lowering the Bid Price to the extent that the total number of shares
offered under the Book Building Portion is subscribed.
This may well be illustrated with the help of the following simple example. The data has
been kept simple only for illustration purposes.
On the basis of the figures provided in the question, according to the Dutch Auction Method, the strike
price would be set at Rs.18.0 per share to sell the required quantity of 42.7 million ordinary shares.
At Rs.22 per share, investors are willing to buy only 20 million shares, since 22.7 million shares are
still available, therefore the price will set lower.
At Rs.20 per share, investors are willing to buy 5 million shares, since 17.7 million shares are still
available, therefore, the price will set lower.
At Rs. 19 per share, investors are willing to buy 5 million shares, since 12.7 million shares are still
available, therefore, the price will set lower.
At Rs. 18.0 per share, investors are willing to buy 30 million shares and the cumulative number
exceeds the required quantity of 42.7 million shares therefore Rs.18 becomes the Strike Price.
The bidders, who have submitted bids at prices above the Strike Price i.e. Institution A and Institution
B, will be issued shares at the Strike Price and the differential would be refunded. This is in
accordance with the sub regulation one (1) of the Regulation 7 of Book Building Regulations, 2015
that provides the basis of allotment and says that in case the bids received are sufficient to allot the
total number of shares offered for sale under the Book Building Portion, the allotment shall be made
on the basis of highest bid priority that is the bid made at the highest price shall be considered first for
the purpose of allotment of shares.
Institution C has also made a Bid at the Strike Price so therefore as per sub regulation two (2) of
Regulation 7 of the Book Building Regulations 2015, in case all the bids made above the Strike Price
are accommodated and shares are still available for allotment, such available shares will be allotted
against the bids made at the Strike Price strictly on time priority basis.
The bidders who have submitted bids at prices below the Strike Price i.e. Institution D and Institution
E do not qualify for allotment and their money would be refunded.
Summarising, for allotment of shares, priority will be given to investors who placed higher bids,
Investors with bids lower than the Strike Price would get disqualified and if the number of shares bid
for at Strike Order exceed the required quantity then allotment will be made on time priority basis.