Setting of Papers May Be Expected.: Corporate Laws - Abridged Form

Corporate Laws Abridged Form
ICAP Syllabus Outline MODULE E PAPER E 16: CORPORATE LAWS (100 marks) INDICATIVE GRID SYLLABUS CONTENT AREA WEIGHTAGE 1. Practical aspects in respect of areas of the Companies Ordinance, 1984 covered at Module D examination in Company Law paper. 2. Companies Ordinance, 1984 from section 261 onwards. Second schedule 3. Various Rules under the Companies Ordinance 4. Secretarial Practices 5. Other laws and regulations TOTAL Note: The weightages given above are for guidance purposes only and deviations in setting of papers may be expected. CONTENTS(Extracts of areas covered in these Notes): 2. Other specialized areas of the Companies Ordinance, 1984. a. Part VIII Investigation and related matters. b. Part VIII A Non Banking Finance Companies (NBFC) Provisions as to Establishment and Regulation of NBFC c. Part IX Arbitration, arrangements and reconstruction. d. Part X Prevention of oppression and mismanagement. e. Part XI Winding-up i) Modes of winding-up, and provisions relating to contributories (sections 297 and 306) ii) Winding-up by court; provisions relating to the following: - Cases in which companies may be wound-up by the court (section 305 and 306). - Petition for winding-up (section 309 and 310). - Commencement of winding-up by the Court (Section 311). - Official liquidators (section 321 to 331, 333 and 334, 336 and 337, 339 to 341 and 346 to 350). - Enforcement of court orders (section 355 to 357) * For section 328 and 329, students are only required to be familiar with the contents of statement of affairs to be made to official liquidator and report by official liquidator. iii) Voluntary winding-up (Sections 358 to 401) iv) Provisions applicable to every mode of winding-up - Status of companies being wound-up (section 402) - Proof and ranking of claims (Section 403 to 407) - Supplementary provisions as to winding-up (Section 421, 422 and 431 to 434) f. Part XIII Winding-up of unregistered companies g. Part XIV Companies established outside Pakistan (Section 450 to 462) h. Part XV Registration offices and fees (section 468 and 469) i. Part XVI General legal proceedings, offences etc. (Section 494 and 496) Second Schedule - Salient features of disclosure requirements for prospectus or statement in lieu of prospectus and understanding of the reports and certificates to be included in the prospectus. 3. Various Rules under the Companies Ordinance a. Explanatory provisions only of Companies Rules 1985; knowledge of the contents of the Forms is not expected. b. Capital Issues The rules for issue of capital by companies, premium on shares, issue of shares for consideration other than cash and related aspects, covered by the Companies (Issue of Capital) Rules, 1996 and Stock Exchange Rules. c. Companies (Appointment of Legal Advisors) Rules, 1975. www.canotes.multiply.com
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d. Companies (Buy-back of Shares) Rules, 1999. e. Companies' Share Capital (Variation in Rights and Privileges) Rules, 2000. f. Non-Banking Finance Companies (Establishment and Regulations) Rules, 2003 (1 10) Non-Banking Finance Companies and Notified Entities Regulations, 2008 - Regulation 25 - Schedule IX (Fit and Proper Criteria) - Schedule X (Long, Medium and Short Term Financing Facilities) 5. Other laws and regulations a) Foreign Exchange Regulations Foreign Exchange Manual 8th Edition i) Chapter XIX Loans, overdrafts and guarantees Part A: Rupee loans Foreign exchange regulations relating to definition of foreign controlled companies, provisions for general permission for lending to foreign controlled companies for working capital, local borrowings by foreign controlled companies for capital expenditure. Part B: Foreign private loans Private foreign currency loans, repatriable foreign currency loans by foreign controlled companies for meeting working capital requirements, foreign currency loans (repatriable and nonrepatriable basis) by Pakistani firms and companies functioning in Pakistan. ii) Chapter XX Securities Knowledge and application of provisions relating to rules and regulations governing acquisition and holding of foreign securities, issue, transfer and export of Pakistani securities to non-residents, general exemption from the restriction on transfer and issue of Pakistani securities to non-residents, procedure for issue of shares to nonresidents, trading of quoted shares by non-residents, and special instructions regarding shares transferred under the Central Depository System CDS of the Central Depository Company. b) Stock Exchange Listing Rules and Guidelines especially those relating to secretarial matters, public issue of shares, Code of Corporate Governance and Transfer Pricing. Laws governing certain specialized institutions c) Banking Companies Ordinance, 1962 Sections pertaining to audit and accounts, mainly sections 34 to 38 of the Banking Companies Ordinance, 1962. d) The Central Depositories Act, 1997 and Central Depository Companies (Establishment and Regulation) Rules 1996 Understanding of provisions relating to - Central Depository System; and - Effect of the Central Depository on provisions of the Companies Ordinance, 1984 relating to interalia, sending of notices to members, registration of transfers, payment of dividend, maintenance of register of members, issue of bonus and right shares and effect on the rights of members. e) Modaraba Companies and Modarabas (Floatation and Control) Ordinance, 1980. Provisions relating to the following: - Definitions (Section 2) - Registration of Modaraba Companies (Section 4 to 6) - Provisions applicable to Modaraba (Section 7 to 23,33,37,41 and 42) Modaraba Companies and Modaraba rules, 1981 - Rules 2 to 4,7 to 13,16 to 20-B,23 and 25 to 28 - First Schedule (Form no.1,9 and 11 including annexure) - Third Schedule - Fourth Schedule (salient features of matter to be specified in prospectus and reports to be set out therein) f) The Insurance Ordinance, 2000 provisions relating to statutory and special audits and maintenance of accounts, mainly sections 45 to 49, 51 and 52 and the Securities and Exchange Commission (Insurance) Rules 2002 including regulations and Format accounts. Broad understanding of the Code of Corporate Governance for listed and unlisted insurance companies. g) The Securities and Exchange Ordinance 1969 and the Securities and Exchange Rules, 1971 provisions pertaining to issuance of shares and securities to the general public (mainly section 9 ) and Insider Trading. h) 1. Competition Ordinance 2007 (Chapter I,II,IV,V). 2. Competition (Merger Control) Regulations 2007 Excluding The Schedule. 3. Competition ( Leniency) Regulations 2007. i) Listed Companies (Substantial Acquisition of Voting Shares and Takeover) ordinance, 2002. and Listed Companies (Substantial Acquisition of voting shares and Takeovers) Regulations, 2008. j) Rules and regulations framed by the Federal Government from time to time, as may be specifically notified by the Institute of Chartered Accountants of Pakistan for inclusion in the syllabus. Note: Where specific reference to an Act, Ordinance, Rules, Regulations, Guidelines or SRO gazette notification www.canotes.multiply.com
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Important Information
Dear Fellows! Following Areas of Syllabus are Covered under these Notes: Part 2: Companies Ordinance, 1984 (Sec-263 onwards) Module D] Part 3: Various Rules under the Companies Ordinance, 1984. Part 5: Other Laws and Regulations. [Covers 40 Marks; combined with [Covers 30 Marks] [Covers 15 Marks]
Except for the followings 2nd Schedule to the Companies Ordinance, 1984. [Part-2] Companies (General provisions and Forms) rules, 1985. [Part-5] Insurance Rules, 2002. [Part-5] Listed Companies (Substantial Acquisition of voting shares and Takeovers) Regulations, 2008. [Part-5] Moreover following areas of syllabus are totally excluded from these notes: Part 1: The Companies Ordinance, 1984 covered in Module D Syllabus. Part 4: Secretarial Practices [Covers 15 Marks]
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Investigation and Related Matters (263 - 281)

Investigation of affairs of Co.:
SECP may appoint inspectors to investigate and report on affairs of Co. on: Application of Members or Shareholders having 1/10th voting securities. Application of persons comprising 1/10th in number of the persons entered in register of members [Co not having Share Capital] Application of Registrar if he called for information or explanation and it was not given or was unsatisfactory. Order of court Resolution of Co. in general meeting. Discretion of SECP, if there are circumstances suggesting that: Business is conducted to defraud Creditors, Members or any other person or Oppressive to members or purpose is fraudulent/ unlawful. Person in management are guilty of Breach of Trust, Misfeasance or Misconduct. Members are deprived of reasonable return. Members are not given reasonable information. Shares are allotted for inadequate consideration. Business is not managed on sound principles/prudent practices. Financial position is indicating insolvency. Application must be supported by Evidence showing good reason for investigation. SECP may require any security for cost of investigation. SEC shall give a show cause notice to Co..
Members at their request [who applied for investigation] Court [if applied by court] SECP may forward a copy, on request of and on payment of prescribed fee to: Members/ Body corporate/ Persons interested in affairs of Co. Persons whose interest as creditor appears to be affected SECP may send copy to registrar which such directions as think fit. SECP may get report/any part published itself or may direct Co. to do so. Copy of report shall be admissible in any legal proceedings as evidence of opinion of inspector.
Court Orders
If reasons proved after investigation SEC may apply to Court and Court may: 1. Remove any Director, Chief Executive, Managing agent or other officer. No compensation for loss of office If Directors removed [casual vacancy filled in accordance with the provisions of AOA] If CE removed [Directors shall elect another person as CE] If all directors including CE removed [General Meeting for election of directors be called] Directors etc. so removed will be ineligible for such post for 5 years or such lesser period as directed by the Court 2. Direct Directors to carry out changes in management and in accounting policies. 3. Direct any existing contract, which is to the detriment of the Co., to be annulled or modified. No compensation payable on modification or annulment of contracts 4. Direct Co. to call a meeting of members to take remedial actions on specified matters.
Power of Inspector
Inspector to be Court for following purposes: Enforcing attendance of persons and examining them. Compelling discovery & production of books and papers. Issuing SECs for examination of witness. If Inspector thinks necessary, he can also investigate (after approval of SEC) the affairs of: Any body corporate which is (or at any relevant date has been) Co.s associated Co. as Subsidiary, Holding, Subsidiary of holding or Holding of subsidiary. Any body corporate which is or was managed by a Chief Executive who is or was also Chief Executive of the Co. Any person who is Chief executive, Managing agent or an associate of Chief executive or managing agent.
Proceedings for recovery of damages & property

SECP can proceed for recovery of Damages [in case of fraud, breach of trust, misconduct] Property [which has been misapplied or wrongfully retained]
Expenses of Investigation:
Firstly paid by SEC and subsequently reimbursed from Persons convicted of prosecution or persons who have applied for investigation.
Imposition of restriction on shares debentures and prohibition on transfer:
&
Inspectors Report
Inspector may (or on direction of SECP shall) make interim reports and on conclusion of investigation shall make final report to SECP Such report shall be typed or printed as SECP may direct SECP shall forward a copy of inspectors report to: Regd. office of the Co. with directions of SECP
If SECP think fit, for finding out relevant facts about any shares, it may impose following restrictions Transfer of shares void Not be issued No voting rights No further shares issue in right of those shares No payment from Co. to anyone for sum due No change in directors, CE, Managing agent unless by operation of law.
Enquiries and investigation against Co. shall not be effected by

Resolution passed by Co. for winding up
Corporate Laws Abridged Form Petition submitted by court for winding up Civil/Criminal proceedings initiated against Co./Officers
Non Banking Finance Companies (282 A N)

Section 282-(A) [Application of this Part]
1. An NBFC, which includes companies licensed by SECP to carry out any one or more of the following forms of the business: a) Investment Finance Services (Investment Banks) IFC b) To perform a business of Leasing Service c) Housing Finance Service d) Venture Capital Investment (Project Investment, Risky Investment) e) Discounting Services f) Investment Advisory Services g) Asset Management Services 2. Such other companies as the Federal Government may notify for this purpose. 3. notified entities which include] such other company or class of companies or corporate body or trust or any other entity or person as the Federal Government may, by notification in the official Gazette specify for the purpose under this clause
(2) Notwithstanding anything contained in this Ordinance or any other law, the Commission may register the notified entity on such terms and conditions and payment of such fee, as the Commission may deem fit to impose from time to time. (3) Every entity notified by the Federal Government under clause (b) of section 282A which is in existence before the commencement of this provision, and every other entity notified by the Federal Government under the aforesaid section shall within a period of six months apply in writing to the Commission for registration under this section, and the Commission after being satisfied that the applicant has fulfilled the conditions specified by the Commission may register the notified entity.]
Section 282-(D) [Power to issue Directions]

The SECP may issue directions from time to time where it is satisfied to do so in the public interest to prevent the affaires of NBFC being conducted in a manner detrimental to the interest of shareholders or the persons having interest in the NBFC to secure proper management of NBFC by rectifying situations NBFC shall be bound to comply with such directions.
Section 282-(B) [Powers to make rules]
Section 282-(E) [Powers to remove]

(1) Notwithstanding anything contained in any other provision of this Ordinance, where the Commission is satisfied that (a) continued association of any chairman or director or chief executive by whatever name called] or any other officer 3[or person responsible for the affairs of a NBFC 4[or a notified entity], is or is likely to be detrimental to the interests of NBFC 5[or a notified entity] or its shareholders or the notified entity or persons whose interest is likely to be affected; or (b) the public interest so demands; or (c) to prevent the affairs of a NBFC or a notified entity being conducted in a manner detrimental to the interest of its shareholders or unit or certificate holders, as the case may be, or the participants or in a manner prejudicial to the interests of NBFC or a notified entity or (d) to secure a proper management of the NBFC or a notified entity, it is necessary so to do, the Commission may, for reasons to be recorded in writing, by order, remove from office, with effect from such date as may be specified in the order, any chairman or director or chief executive by whatever name called or other officer or person responsible for the affairs of the NBFC or a notified entity. (2) No order under sub-section (1) shall be made unless the chairman or director or chief executive or other officer or person responsible for the affairs has been given a reasonable opportunity of making a representation and of being heard: Provided that if, in the opinion of the Commission, any delay would be detrimental to the public interest or the interest of its shareholders or unit holders as the case may be, the Commission may, at the time of giving the opportunity aforesaid or at any time thereafter and pending the consideration of the representation aforesaid, if any, by order direct that (i) the chairman or, director or chief executive 2[by whatever name called or other officer or person responsible for the affairs] shall not, with effect from the date of the order(a) act as such chairman or director or chief executive or other officer 4[or person responsible for the affairs] of the NBFC or a notified entity; or
Federal Govt. may make rules for establishment and regulation of NBFC & NE and such rules may provide for any other matter which the Commission may deem fit for the effective regulation of NBFCs and 2[the notified entities. The Commission may make regulations, for the establishment and regulation of NBFCs and notified entities and their business and activities and such regulations may provide for any matter which the Commission deems fit for the effective regulation of NBFCs, notified entities and their businesses and activities. The Commission may issue such directives, circulars, codes, notifications and guidelines as are necessary to carry out the purposes of Part VIIIA and the rules and regulations made there under.]
Section 282-(C) [Incorporation of NBFC]

NBFC shall not be incorporated without prior approval by the SECP. 2) NBFC shall not carry on any business unless it holds a license from SECP for that business. 3) NBFC shall not commence business unless it has minimum prescribed capital for each form of business. 4) Notwithstanding anything in this Ordinance, the provisions of this Part VIIIA and the rules and regulations made thereunder shall continue to apply to any NBFC whose license has expired, or any NBFC or notified entity whose license or registration has been cancelled or suspended, or to any existing company or entity carrying on a business specified in clause (a) of section 282A or notified under clause (b) of section 282A which has not applied for a fresh license or registration, or whose application for a fresh license or registration has not been decided by the Commission. 282CA. Registration of notified entities.(1) Any entity notified by the Federal Government under clause (b) of section 282A shall not operate without prior registration with the Commission. 1)
Corporate Laws Abridged Form (b) in any way, whether directly, or indirectly, be concerned with, or take part in the management of the NBFC or a notified entity; (ii) any person authorized by the Commission in this behalf shall act as such chairman or director or chief executive of the NBFC or a notified entity 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. (3) Where any order under sub-section (1) is made in respect of a chairman or director or chief executive 8[by whatever name called] or other officer or person responsible for the affairs] of a NBFC 10[or a notified entity], he shall cease to be a chairman or a director or chief executive or other officer of the NBFC or a notified entity and shall not in any way, whether directly or indirectly, be concerned with, or take part in, the management of the NBFC or a notified entity or any other NBFC or a notified entity for such period not exceeding three years as may be specified in the order. (4) Any person appointed as chairman or director or chief executive under sub-section (2) shall (a) 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 (b) not incur any obligation or liability for anything which is done or intended to be done in his capacity as such chairman or director or chief executive. (5) No person removed from office under sub-section (1) shall be entitled to claim any compensation for the loss or termination of office.
SECP may call an inquiry or inspection by persons appointed by it. The inquiry officer may call any information inspect and cease books of account and documents of NBFC. All the directors, managers and officers and related persons shall furnish necessary information to the inquiry officer. The person conducting an enquiry or inspection may call for, inspect and seize books of account and documents in possession of any such NBFC or the notified entity or any of its directors, managers or other officers.
Section 282-(J) [Penalty for failure, refusal to comply with provisions]

(1) Notwithstanding anything contained in any other provision of this Ordinance, if a NBFC 1[or a notified entity] or its officers (including auditors) fails or refuses to comply with, or contravenes any provision contained in this Part or of any of the provisions of the rules 2[or regulations] made under section 282B or 3[regulation, circular or directive or] any direction or order passed by the Commission under the provisions contained in this Part or knowingly and willfully authorizes or permits such failure, refusal or contravention, shall, in addition to any other liability under this Ordinance, be also punishable with fine the amount of which shall not exceed fifty million rupees: Provided that if the failure, refusal, default, contravention is committed by NBFC, every director, manager, or other officer 5[or person] responsible for the conduct of its affairs shall, unless he proves that the failure or contravention or default took place or committed without his knowledge, or that he exercised all iligence to prevent its commission, be deemed to be guilty of the offence. (2) Without prejudice to the provisions of sub-section (1), in case of contravention of any provision of this Ordinance or rules 6[or regulations] made or noncompliance of any direction given or order passed thereunder by the Commission, the Commission may cancel 7[or suspend] any one or more of the licenses in respect of the various forms of business of the NBFC 8[or registration granted to any notified entity], after issuing a show cause notice and giving such NBFC 9[or notified entity as the case may be], an opportunity of being heard or pass any other order which may be deemed appropriate by the Commission. (3) Upon cancellation of all the licenses 10[or registrations], the functions and carrying on the business of NBFC 11[or the notified entity] shall cease and 12[notwithstanding anything contained in section 305 or sub-clause (c) of the proviso to section 309], the Commission may move the Court for winding up of the NBFC 13[or the notified entity]. 1[(4) Where a NBFC or a notified entity carries on the business after its license or registration to do such business has been suspended by the Commission, the chief executive, by whatever name called, and every director, manager, and other officer of the NBFC or the notified entity as the case maybe, who is responsible for such default, shall be punishable with fine not exceeding fifty million rupees and to a further fine of two hundred thousand rupees for every day after the first during which the default continues.] (5) Notwithstanding anything to the contrary contained in this Ordinance, if an officer (which expression includes auditors) of a NBFC fails to make payment, within six months of the order imposing penalty on him, the Commission may, by an order in writing, disqualify him from holding any office in any company or NBFC for such period as may be specified in the order.
Section 282-(F) [Power to supersede BOD]

Where the SECP satisfied that Association of BOD with the NBFC is detrimental to its interest it may supersede the BOD for such period as it may specify.
Section 282-(G) [Powers to require to furnish information]

(1) The Commission may, at any time, by notice in writing, require NBFCs generally, or any NBFC or notified entity in particular to furnish it within the time specified therein or such further time as the Commission may allow, with any statement or information or document relating to the business or affairs of such NBFC or notified entity or NBFCs (including any business or affairs with which such NBFC 6[or notified entity] or NBFCs is or are concerned) and, without prejudice to the generality of the foregoing power, may call for information, at such intervals as the Commission may deem necessary. (2) No NBFC or notified entity, director, officer, employee or agent or auditor thereof shall, in any document, prospectus, report, return, accounts, information or explanation required to be furnished in pursuance of this part or the rules or regulations made thereunder, or in any application made under this Part or the rules or regulations, make any statement or give any information which he knows or has reasonable cause to believe to be false or incorrect or omit any material fact therefrom.
Section 282-(H) [Special Audit]

SECP shall monitor the general financial conditions of NBFC and may order for special audit carry out detail scrutiny of affairs of NBFC. On receipt of special audit orders, NBFC may be directed to do/ abstain certain acts
Section 282-(I) [Inquiry by SEC]

Section 282-(K) [Penalty for making false statements]

(1) Notwithstanding anything contained in any other provision of this Ordinance, if any person, being the chairman, director, chief executive, by whatever name called 2[, or a person not being a professional advisor in accordance with whose directions or instructions the directors are accustomed to act,] or official liquidator or any officer of a NBFC 3[or a notified entity] in any document, prospectus, report, return, accounts, information or explanation required to be furnished in pursuance of this Ordinance or the rules 4[or regulations] made thereunder, willfully makes a statement which is false in any material particular knowing it to be false, or willfully omits to make a material statement, mismanages the affairs of the NBFC 5[or a notified entity] or misuses his position for gaining direct or indirect benefit for himself or any of his family members, he shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine which shall be not less than one hundred thousand rupees, and shall be ordered by the Court trying the offence, to deliver up or refund within a time to be fixed by the Court any property acquired or gained by him in his own name or in the name of his family members by so mismanaging the affairs of the NBFC 6[or a notified entity] or misusing his position or, in default, to suffer imprisonment for a term which may extend to three years. (2) Any officer, director or chief executive of a NBFC 7[or the notified entity] who is either directly or indirectly owned, controlled or managed by the Federal Government or a Provincial Government who extends, or aides in extending, a loan, advance, or any financial facility to a borrower or customer on the verbal instruction of a holder of a public office without reducing the terms of the instructions into writing and drawing them to the attention of his superior officer, or the board of directors, shall be guilty of an offence punishable with imprisonment of either description which may extend to one year, or with fine, or with both, in addition to such other action which may be taken against him in accordance with law. (3) If any company which is not a NBFC 1[or a notified entity,] or a company which does not hold a license under section 282 C or the license granted to which has been cancelled, 2[or which has not been registered under section 282C or its registration has been cancelled] or any individual or association or body of individuals, transacts the business specified in section 282 A, the chief executive, by whatever name called, of the company and every director, manager, and other officer of the company, and the individual and every member of the association or body of individuals, shall be deemed to be guilty of such contravention and shall be punishable with imprisonment of either description for a term which may extend to seven years and with fine the amount of which shall not exceed one million and shall be ordered by the Court trying the offence to pay the fine within a time to be fixed by the Court or in default to suffer further imprisonment for a term which may extend to five years.
Notice of above general meeting shall be given to each share holder and this notice shall also be published at least once a week for three consecutive weeks in not less than two newspapers. Any share holder who has voted against the scheme and descend from the scheme of amalgamation shall be entitled to claim from NBFC in respect the shares held by him. The decision of SECP on the value of shares shall be final for all purposes. Once the scheme for amalgamation is approved by the requisite majority of shareholders, it shall be submitted to the SECP for sanction. If the scheme is sanctioned by SECP it shall become binding on the concerned NBFC and all their shareholders. Remaining/surviving entity shall transmit a copy of the sanctioning order of the SECP to the registrar. On receipt of sanction order the registrar shall strike off the name NBFC which has been amalgamated and it will cease to function. The property and liab. of the amalgamated NBFC shall be transferred to and vest in resulting/surviving entity. The business and undertaking amalgamated NBFC shall also become the business of resulting entity.
Section 282-(M) [Punishment or adjudication of fine or penalty]

Where a penalty or fine is provided for any offence, contravention or default in complying with, any provision of Section 282, the same shall be adjudged and imposed by the SECP. Provided that fine or penalty shall only be imposed after giving an opportunity to show cause and if he so requests, after giving him an opportunity of being heard personally (or through such person as may be prescribed in this behalf.) No Court shall take cognizance of any offence punishable u/s 282 K except on complaint in writing made by an officer of SECP generally or specially authorized in writing in this behalf by the SECP and no Court other than the High Court shall try such offence.
Section 282-(N) [Rehabilitation of NBFCs and NEs]

SECP shall have the same powers as are exercisable by the Federal Government u/s 296 for rehabilitation of a NBFC/NE which is facing financial or operational problems. Where SECP declares a NBFC/NE as sick, the SECP may, in addition to powers u/s 296 Make application to the Court u/s 412 or 413 and u/s 408 & 409 and provisions of these sections shall apply mutatis mutandis in all respects Failure to give effect, or implementing rehabilitation plan approved by SECP Fine up to 10 million rupees (plus Per day up to Rs 10,000 for continuing default)
Section 282-(L) [Procedure for amalgamation of NBFC]

NBFCs may be amalgamated with each other provided a scheme containing the terms of such amalgamation has been placed in draft before the shareholders of each NBFC separately and it is approved by a resolution passed by a majority of 2/3.
Arbitration, Arrangements and Reconstruction (SEC 283 to 289)

Compromise is an agreement terminating disputes
between parties.
Arrangement involves reorganization of capital by

consolidation or division of shares of different class.
Power of companies to refer matters to Arbitration:

Co. may refer matter to arbitration by: By Written agreement According to Arbitration Act 1940 On existing or future difference between itself and other Co. or person Parties to arbitration may delegate to arbitrator powers to settle any term or determine any matter capable of being lawfully settled.
If an application of Compromise/Arrangement proposes a Reconstruction/Amalgamation, Court may make provisions relating to all or any of following matters: 1. Transfer to the transferee Co. of whole or part of undertaking, properties and liabilities. 2. The allotment/appropriation of any shares/debentures or other interest by the transferee Co.. 3. Continuation by or against the transferee Co. of any legal proceedings. 4. Dissolution, without winding up, of the transferor Co.. 5. Provisions regarding any person dissenting from scheme or contract. 6. Other matters. After the order of transfer, all properties and liabilities stand transferred and removed from charge, if the order contains so. Certified copy is filed with registrar within 30 days.
Power to make compromise or arrangements Power and Duty to with Creditors/Members: dissenting When Compromise or Arrangement is proposed between members contract: Co. and Creditors or Members:
Court shall, on application, order a meeting of creditors or members to be conducted. 2. If a majority in number representing 3/4th in value of creditors or members approves it, it will be binding on all Creditors/Members 3. Court shall make an order sanctioning Compromise/Arrangement provided Court is satisfied that all material facts have been disclosed Co. would file Copy of order to Registrar within 30 days Copy of order shall be annexed to every MOA and AOA issued after it. Court may at any time Stay commencement of any suit/ proceedings against the Co. Give such directions or make such modification as think fit by it. If court is satisfied that Compromise/Arrangement cannot work satisfactory, it may (self or on application by registrar/interested person) make an order of winding up. 1.
acquire shares of from scheme or
Information as to compromise arrangement with Creditors/Members:
or
Where a meeting of Creditors/Members is called, every notice shall accompany a statement showing: Terms of compromise/arrangement explaining its effect. Material interest of Directors (including C.E.) as Directors or Members or Creditors. Effect of Compromise/Arrangement on these interests so far as different from like interests of other persons. If a notice is given by advertisement, it shall either o Accompany such statement or o Mention the place where statement could be obtained by Creditors/Members free of charge. Same information required for Trustees of any deed securing issue of debentures, if compromise affects rights of Debenture holders. Every director, CE, Managing agent, Trustee for debenture holders shall give to Co. Notice of such matters related to himself necessary for compromise or arrangement Such further info as requested by Co.
If a scheme of transfer of shares is approved by 9/10 th shareholders (holders of shares whose transfer is involved, other than shares already held by transferee Co. at date of offer) within 120 days of offer from Transferee Co.: Transferee Co. may give notice to dissenting members within 60 days of its intention to acquire their shares and Co. will be bound then to acquire shares on same terms and conditions, as given in scheme for transfer of shares, of approving shareholders. Dissenting shareholders may apply to court within 30 days of notice. If court thinks fit, it may direct otherwise. If court rejects application a. Order of rejection is to be filed by Transferee Co. to Transferor Co. b. Within 30 days (of notice or order whichever is later) c. Price payable (kept in a separate account in a Schedule bank) will be handed over to transferor Co. d. Instrument of transfer also filed to transferor Co., executed on behalf of shareholders by any person appointed by trustee e. Transferee Co shall Register Transferor Co. as holder of those shares Within 30 days of registration inform dissenting share holders of the fact & receipt of amount payable to them Where Transferee Co. already holds more than 1/10th shares, above provisions would not apply unless: Every holder of Transferor Co. is offered the same terms. And The holders, who approve the scheme, shall be 3/4th in majority having 9/10th remaining shares. When Transferee Co. becomes holder of 9/10th shares in cumulative: It will give notice to remaining shareholders. Remaining shareholders may within 90 days of notice require Transferee Co. to acquire their shares.
Provisions relating Provision for facilitating Reconstruction and containing offer Amalgamation:
to
offer
or
circular
Corporate Laws Abridged Form Each such offer or recommendation by directors of transferor to accept shall Contain such info as may be prescribed Contain statement by transferee Co. ensuring that steps taken for availability of cash Presented to registrar for registration o Registrar may refuse to register if info not provided Appeal against orders of registrar can be filed to SECP
Market value or net worth of share has fallen below 75% of Par value. ii. Debt/Equity ration has fallen beyond 9:1. iii. Current ration fallen beyond 0.05:1 Industrial unit owned by Co. is not in operation for 2 years. Accumulated losses exceed 60% of paid up capital.
i.
Oppression, Mismanagement and Rehabilitation (SEC 290 to 296)

Prevention of Oppression
Who can apply: 1. Member(s) having 20% or more Issued share capital or 2. Creditors having interest equivalent to 20% or more Paid up capital or 3. Registrar, if affairs conducted/will be conducted in an Unlawful, Ultravires MOA, Oppressive or Prejudicial manner
SECP may appoint an Administrator within 60 days of receipt of representation to manage the affairs of Co. on specified terms Administrator may be appointed from Panel maintained by SECP Other person by giving notice to SBP if that person is not on panel
Provisions relating to Administrator

Receive such remuneration as SECP may determine On appointment management of Co.s affairs vest in him shall exercise all powers of director/management Director/management shall cease He can cancel any purchase/sale agency contracts which is patently to benefit any director or person related with management He is not liable to compensate or pay damages for Loss of office Termination of contract After purpose of appointment fulfills, SECP may permit the Co. to appoint directors and Administrator shall cease to hold office. No suit can be filed against Administrator for acts done in good faith in pursuance of these rules. SECP may issue such directions to Administrator as it deems desirable and he may apply to SECP any time for instructions about different matters. Any person aggrieved by orders of SECP or Administrator (termination of contract) may appeal to Federal Govt. within 60 days of order. Any order or decision of SECP under this section shall be final and shall not be called in question in any court Provisions of this section shall apply notwithstanding anything contained in MOA, AOA & Companies Ordinance 1984.
Order of Court:
If Court is of the opinion, on any such petition that Co affairs conducted in a manner aforesaid To wind up Co would unfairly prejudice Co/members Court may order: Regulating Co.s affairs in future Purchase of shares of any members of Co or by other member of the co or by co itself. If purchase by co, reduction accordingly of Co.s capital. Where any order makes any alteration in Co.s M/AOA It is as valid as if duly made by Special Resolution of co Copy of order to be filed with Registrar within 14 days.
Power of Court:
Court may terminate or modify any agreement between co and any Director including Chief Executive, Managing Agent or Other officer on terms and conditions as may in the opinion of court are just & equitable. Court may set aside any transfer/delivery of goods, payment execution or other transaction within 3 months before application, which is deemed in his solvency to be a fraudulent preference. Court may decide any other matter including change in management. Court may on application of any party to the proceedings make interim orders [Any claim for damages against co would be inadmissible.]
Rehabilitation of sick units by Federal Govt.

Provisions apply to Industrial unit owing by Co. facing financial/operational problems, declared sick by Federal Govt. After declaration as such, any institution, authority, committee or person authorized by Federal Govt., may draw a Rehabilitation Plan which may include any or all of the following provisions a) Reconstruction, Compromise or Amalgamation. b) Alteration of share capital and variation of rights c) Alteration of loan structure, rescheduling and conversion into share capital carrying special rights. d) Acquisition/transfer of shares of sponsors/persons managing affairs of Co.. e) Issue further share capital including shares containing special rights
Management by Administrator
Representation to the SECP
If any time creditors having interest of amount not less than 60% of paid up capital represents to SECP that: Co.s members/creditors/directors/person connected with management of Co. is guilty of Breach of Trust, Misfeasance or Misconduct. Affairs are conducted in Unlawful, fraudulent, Oppressive, and prejudicial manner. Members are deprived of reasonable return. No adequate dividend for consecutive 3 years Industrial project or unit to be set up or belonging to Co. is not completed, commenced or smoothly operated such that:
Corporate Laws Abridged Form f) Removal and appointment of Directors including CE or other officer g) Amendments, modification & cancellation of existing contracts Without any compensation. h) Alteration of MOA, AOA or change in Accounting Policies. Plan shall be submitted to Federal Govt. for approval. After approval, it will be published in Official Gazette. Federal Govt. or any person authorized by Federal Govt. shall supervise Rehabilitation Plan. Copy of plan sent to registrar by Federal Govt. for registration and it should be kept with other documents of the Co. Provisions shall apply notwithstanding anything contained in MOA, AOA, CO 1984.
2) 3)
Voluntary Under supervision of court
Contributories
Contributory means every person liable to contribute to the assets of a Co. in the event of its being wound up, and include the holder of any shares which are fully paid up; and persons who are deemed to be contributories or alleged to be a contributory Liab. of contributory accrues on commencement of liab. but payable at time specified in calls made on him for enforcing the liab.
Liab. of contributories as past and present members

Past and Present members will contribute money to pay all debts, liabilities, expenses of winding up and adjustment of rights of contributories among themselves with following qualification: No contribution from past member if member ceases to be a member one year before winding up or debt was contracted after he ceased to be a member. Past member will contribute only if court deems it necessary that present members are unable to pay debt. For Co. limited by shares, maximum liab. shall be upto amount unpaid on shares. For Co. limited by guarantee, maximum liab. shall be upto amount undertaken by member. For Co. limited by guarantee having share capital, maximum liab. shall be amount unpaid on shares as well as amount undertaken by member. A sum due to any member in respect of dividend, profit etc. shall not be a debt. Ordinance not applied where liab. of individual is restricted and funds of Co. liable (e.g. policy of insurance)
Introduction to winding up (SEC 297 to 304)

Meanings & Objectives of Winding up
A proceedings in which all affairs of Co. are wound up, its rights & liabilities ascertained and the claims of its creditors are paid off out of the proceeds of the assets of the Co. including contributions by its members to necessary extent. Where any surplus assets are left, the same are distributed to members of Co. in proportion of their rights under AOA Then Co. is dissolved in compliance with formalities of Co..Ord.1984
Consequences of winding up
Winding up puts an end to business of Co. Winding up doesnt means that Co. s financially embarrassed, even a solvent Co. may sometimes wind up in apprehension of future losses Effects of winding up as regards to different persons are Co.: Co. continues to be a corporate entity with all rights. Only Management & Administration passes to Liquidator. Shareholders: A new statutory liab. comes into existence No transfer or change in shareholdings except with approval of Liquidator. Creditors: They have to lodge claims with Liquidator and Prove debt (except secured creditor). Cannot file or continue suit against Co. except with leave of court. Employees Winding up by court appears to be a notice of termination They an prove claims/damages in respect of wrongful termination Voluntary winding up does not necessary operates as notice of discharge Directors Directors/ CE and officers cease to hold office except for the purposes of winding up Committee of inspection or creditors in general meeting may sanction continuance Properties of Co. No disposition of properties without leave of court
Liabilities of director whose liab. is unlimited:

In addition to his liab. as ordinary member, such director shall be liable to contribute as if he were a member of unlimited Co. provided: If he ceased to be a director one year before winding up or if debt was contracted after he ceased to be a member. Contribution will be made only if court deems it necessary subject to AOA.
Contributories in case of death, insolvency or winding up of member.

Death: 1. His legal representative will be liable 2. Deceaseds property if default is made by legal representatives in payment of money Insolvency: 1. His assignee 2. May be proved against the estate of insolvent. Winding up: 1. Liquidator. 2. May be proved against assets of body corporate. Note: ICAP have specifically excluded following sections from course of Corporate Laws, Module E Winding up by Court [ 307, 308, 312 to 320, 332, 335, 338, 342 to 345, 351 to 354 ] Provisions applicable to every mode of winding up [ 408 to 420, 423 to 430, 435 to 442 ] Please refer to ICAP course outline for any change therein.
Modes of winding up
Co. can be wound up in any of the following modes 1) By court [Compulsory winding up]
Winding up by Court (SEC 305 to 357)

Petition for winding up
Winding up by Court shall be deemed to commence on presentation of petition for winding up to Court. Following persons may file petition to court subject to certain conditions mentioned 1. Co., after Special resolution Co. has to file particulars of assets, liabilities and suits against it 2. Creditors including contingent or prospective creditors Have to give security for costs of winding up 3. Contributories If no. of members reduced below minimum numbers (2 or 7). Shares have been held by him for atleast 6 months during last 18 months. 4. Registrar (with sanction of SECP) 5. SECP, after investigation that Business of Co. is Illegal, Ultravires MOA or oppressive to members or Management is guilty of fraud or misfeasance or misconduct
He is paid agent of Co.: bound to carry out duties with due care and skills
Appointment of Official Liquidator (OL)

Court shall maintain a panel of persons form amongst persons specified by SECP From this panel 1or more OL or Provisional Manager (PM) shall be appointed Such person with 3 days of communication of order shall inform court of his inability to act so A person other than panel can be appointed if 1. Court considers it. or 2. On application of creditor whom 60% of issued share capital or more is due 3. Notice of fact sent to Registrar. OL shall forthwith start his duties till conclusion of winding up Where more than 1 person are appointed, court shall declare whether any act shall be done by all or some or anyone Court shall decide whether any security needed to be given by OL
Resignation, removal & Filling Vacancy:

OL Cant resign before conclusion of winding up o except on personal disability to the satisfaction of court Can be removed by court any time.
Circumstances in which Co. may be wound up by Court

On Special resolution by members of Co. Default by Co. in a. Holding Statutory meeting b. Holding Statutory report c. Holding any 2 consecutive AGM 3. Number of members fall below minimum number. 4. Co.. does not commence business within 1 year of incorporation 5. Co. suspends its business for whole year. 6. Co. Ceased to be a listed Co.. if was so 7. Unable to pay debt. 8. If court thinks it just and equitable. 9. Where the business of Co. is a. Illegal b. Ultravires MOA. c. Oppressive to minority shareholders, promoters and members d. Management is guilty of fraud, misfeasance, or misconduct towards MOA, AOA or Co Ord.1984. Minority share holders means shareholders together holding at least 20 % of the share holding 1. 2.
Any vacancy in office of OL to be filled by Court, o Outgoing OL shall continue to act until successor takes his place.
Remuneration of OL
OL is paid remuneration for his services as follows %age of amount realized on disposal of assets There may be different %age for different class of assets Or Fixed by the Court having regard to amount and nature of work done In addition to remuneration Court may permit payment of monthly allowance for meeting expenses of winding up for period of 12 months from date of commencement Subsequently, remuneration can not be enhanced but may be reduced by court anytime If OL resigns, removed or otherwise ceases to hold office before conclusion He shall not be entitled to any remuneration Remuneration already paid shall be refunded to Co. Past acts of OL having defects on appointment or qualification are valid till discovery. Winding up procedure shall be completed within 1 year. Extension may be granted by court For one month at a time, maximum for six months On ground that any proceedings by or against Co. are pending in a Superior Court. If OL is convicted of misfeasance, breach or default, he shall cease to hold office Be disqualified for 5 years to hold any other office including that of Director in any Co..
Co. when deemed unable to pay its debts.

1. If a creditor of lesser of 50,000 or 1% of Paid Up Capital serves a notice at Regd. office of Co. for payment of sum, himself or through agent or legal advisor and within 30 days Co.. neither pays the same Nor secures Nor satisfies creditor by compounding it If court order in favor of creditor and still he remains unsatisfied It is proved to court that Co. is unable to pay debt Court shall take into account Contingent and Prospective liabilities
General provisions as to Official Liquidator
2. 3.
Official liquidator
Official Liquidator occupies dual position on winding up He represents Co. & creditors He is bound to be impartial, not to make secret profits
Corporate Laws Abridged Form A Receiver can not be appointed for assets in the hands of Liquidator except by leave of court. OL shall maintain proper books to make entries or minutes of proceedings, any other prescribed matters Creditors and contributories can inspect it OL shall take property of Co. in custody from any directors etc He may contact dist. Magistrate having jurisdiction over that area
Statement of affairs
When: Within 21 days from the relevant date or time extended by OL, PM, or Court till 45 days. Relevant date for purpose of this statement of affairs means o where PM or OL is appointed, its date of appointment or o where no such appointment is made, the date of winding up orders. Who: Statement shall be submitted and verified by persons who Were directors, chief executive or secretary at the relevant date Have within 1 year of relevant date Been Directors, Chief Executive or Officer Taken part in formation of Co. Been in employment of Co. and are capable of giving required information Been in employment of a Co. which is the officer of the Co.. Particulars 1) The assets of Co. stating separately, Cash in hand, Cash at bank and Negotiable securities 2) Debts and liabilities of Co. 3) The names, addresses and occupation of the creditors of the Co. stating separately o Secured debt (with particulars, value and date of security given) o Unsecured debt 4) Names, addresses and occupation of debtors and amount likely to be realized from them. 5) Where property of Co. is in possession of any other person, name of person and place property. 6) Places where Co. conducted its business in last 6 months from relevant date and name of in charges there 7) Detail of pending suits or proceedings in which Co. is a party 8) Any other prescribed information. Any Creditor or Contributory can take copy on payment of prescribed fee. OL may reimburse expenses incurred in preparation of report from Co.s assets. Expenses may include preparation of affidavit for verification purposes
d. Movable and Immovable properties of Co. e. Unpaid calls 3. Cause of failure if Co. has failed 4. Whether in his opinion, further inquiry is desirable to any matter relating to formation, promotion, or conduct of business If OL thinks fit, he may make a further report stating Manner in which Co. was formed or promoted Whether in his opinion any fraud has been committed by any person (director or other officer) in its formation or promotion since its formation. Certified copy of report shall also be sent to registrar simultaneously. OL shall present to court an account of his receipts and payments and dealing as liquidator at prescribed times but not less than twice in a year Account shall be in prescribed form, made in duplicate & verified by declaration Court may have such accounts get audited. 1 copy held with court and other delivered to Registrar along with auditors report Each copy shall be open for inspection by any person on payment of prescribed fees OL shall send it to every creditor and contributory along with auditors report.
Liquidators Account
Powers of Official Liquidator

OL shall with sanction of court or committee of inspection have following general powers To institute or defend any suit, action, prosecution or other legal proceedings (civil/criminal) in the name and on behalf of the Co. To carry on business necessary for beneficial winding up. To sell movable and immovable property of Co. by Public auction or private contract. To pay any classes of creditors in full To compromise or make arrangements with creditors having any type of claim against Co. To compromise all calls, debts, liabilities or claim/damages between Co. and contributories, debtors or other persons apprehending liabilities and all questions affecting assets or winding up of Co. OL shall have following powers subject to any general/special directions of court or committee of inspection To execute all deeds and use Co. seal To prove, rank and claim in bankruptcy/insolvency of any contributory for any balance against his estate and receive dividends in bankruptcy/insolvency in respect of that balance To accept, make, or endorse bills of exchange To raise on security of assets of Co. any money requisite To take out in his official name letter of administration to any deceased contributory, do any other act for payment due from contributory To appoint an agent to do business which he himself can not do To do acts to recover payments due from a contributory To do other acts as are necessary for winding up and distribution of assets OL shall maintain proper books to make entries, or minutes of proceedings, any other prescribed matters. Creditors and contributories can inspect it.
Report by Official Liquidator

On winding up order as soon as possible, after receipt of Statement of Affairs, not later than 30 days or further 30 days extendable by court shall submit a preliminary report To Court Such statement shall contain following particulars 1. Capital issued, subscribed and paid up 2. Estimated amount of assets and liabilities giving separately a. Cash, Bank and negotiable securities b. Debts due from Contributories c. Debts due to Co. and securities(if any) available against them
Certain obligations of Official Liquidator
Corporate Laws Abridged Form OL shall take property f Co. in custody from any directors etc, for which he may contract Dist. Magistrate having jurisdiction over that area
Provisional Manager
At any time after presentation of petition and before Winding up orders, court may appoint a person eligible for appointment as official liquidator. Court shall give notice to Co. and provide opportunity to make representation Court may dispense such notice for reasons to be recorded. PM shall have same powers as official liquidator Court may limit and restrict his powers in appointment or subsequent order. PM shall cease to hold office when order of winding up being made.
Contributory, trustee, receiver, banker, agent, officer, employee or auditor of Co. to convey, surrender, deliver or transfer to OL any Money, property, books, papers or documents of Co. in his hands. Court may at any time after Winding up order, order any contributory to pay any money due from him/estate of person whom he represents to Co.. In following cases a contributory can setoff any amount, due to him from Co., otherwise than as a member of Co. In case of unlimited companies Limited Co., where directors liab. is unlimited Cases where creditors are paid in full, as regards call made after. As soon as may be possible after making a winding up order, court shall settle a list of contributories with powers of rectify register of members where necessary and shall cause the assets of the Co. to be collected and applied in discharge of its liabilities. In settling list of contributories, court shall distinguish between Person who are contributories in their own rights Person who are contributories as being representative of or liable for debts of others. Court may dispense with settling list of court where it is not necessary to make calls to adjust right of contributories. All orders made by court under companies ordinance may be enforced in same manner in which decree of such court in any suit be enforced. Such orders for winding up shall be enforceable in any place of Pakistan in the same manner as at place of jurisdiction. Where any order of court is to be enforced by any other court A certified copy of order to be produced to proper officer of court required to enforce the same. Production of such copy shall be evidence of that order. Such 2nd court shall enforce matters in the same manner.
Committee of Inspection
Official liquidator shall within 30 days of orders, summon separate meeting of creditors and contributories of Co. for determining Whether COI inspection should be appointed to act with official liquidator Who should be its members Where Winding up order made on ground that Co. is unable to pay its debts, it is not necessary for official liquidator to conduct such meeting If there is a difference between creditors and contributories, court shall decide it
Settlement of List of Contributories
Distribution by official liquidator

Official liquidator shall, subject to directions of court, distribute surplus funds among creditors/contributories within 30 days of receipt. Surplus funds means funds that come in hands of official liquidator after providing Expenses of Winding up Preferential payments Claims against Co. which are subject matter of adjudication/assessment. Amount retained for this purpose shall be invested in Khas deposit certificates that shall be deposited with court and distributions shall be made when claims are settled. Under following circumstances court shall make an order that the Co. be dissolved from date of order and the Co. shall be dissolved accordingly o When affairs of Co. have been completely wound up o When court is of the opinion that official liquidator cannot proceed for winding up for want of funds and assets. o For any other reason just and reasonable of the case Dissolution shall not extinguish any right of debt due to Co. against or from any person. Copy of order shall be forward to registrar within 15 days of making. Registrar shall make a minute of dissolution of Co..
Enforcement of Orders
Dissolution of Co.
Voluntary Winding up (SEC 358 to 395)

Circumstances for voluntary winding up:
A Co. may be voluntary wound up under following circumstances When period, if any, fixed by AOA expires; or Where event, if any, occurs the occurrence of which AOA provides for dissolution and Co. in general meeting passes a resolution for it 3. Where Co. resolves by general meeting that Co. be wound up voluntary Voluntary winding up deemed to commence at date on which resolution passed. 1. 2.
Powers of the Court

Court may fix a time within which creditors are to prove their debts/claims or to be excluded from any distribution made before these debts proved. Adjust rights of contributories amongst themselves, so distribute any surplus to entitled persons. When assets are insufficient to satisfy the liab., court may make an order of payment out of assets for costs, charges and Winding up expenses in such order/priority as court may think fit. At any time after Winding up order require any of ;
Consequences of winding up:

Co. ceases to carry on business o except for requirements of winding up. Corporate state/powers continue until Co. is dissolved.
Notice of resolution:
Corporate Laws Abridged Form Notice of resolution for winding up Co. is to be given within 10 days By advertisement in Official Gazette In newspapers having circulation in Province of Regd. office For listed; also in Province of Stock exchange (English & Urdu) To Registrar
12 months expires without paying debt or Liquidator thinks that Co. is unable to pay debt in stated time. OL shall present Statement of Affairs. Creditors may appoint different liquidator who has consented to act as such. Notice of meeting, Return of meeting and Statement of Affairs are to be sent to Registrar within 10 days of meeting.
Declaration of solvency:
Directors of Co. (if more than 3, majority of Directors including Chief Executive) shall at a meeting of Board of Directors make a declaration, verified by affidavit to the effect that they have made full enquiry and concluded that 1. Co. has no debts or 2. Co. is able to pay its debts within 12 months of commencement of winding up. Declaration shall not be effective unless Made within 5 weeks immediately preceding date of resolution Delivered to registrar for registration within 5 weeks of passing of resolution Supported by auditors report on P&L A/C and Balance Sheet. If Directors make declaration without reasonable ground they will be punishable Imprisonment of six months or Fine Rs. 10,000 or Both If debts are not paid within specified period, it will be assumed that directors did not have any reasonable ground.
Duty of Liquidator to call general meeting at end of each year:

If winding up continues for more than 1 year liquidator shall summon a general meeting of Co. at
End of 1st year of commencement of winding up Within 30 days of extended period, where proceedings are not concluded during 1st year and extension is granted. Liquidator shall lay before general meeting Audited receipts and payments Dealing as liquidator & conduct of winding up Reason for delay, steps taken, and time required. Return of convening meeting, notice, statements shall be filed to Registrar within 10 days. As soon as affairs of Co. are fully wound up, Liquidator shall Make up a report & accounts of winding up, showing how it has been conducted and how property being disposed off. Call a general meeting of Co. for giving report + notice + any explanation Get accounts audited and copy of audited accounts with auditors report shall be sent to each contributory by post at least 10 days before meeting Notice for meeting must be published at least 10 days before meeting Within 1 week after meeting Liquidator shall sent followings to Registrar: a. Copy of his report and account b. Return of holding meeting + minutes or c. Return of non-holding meeting + fact of no quorum Registrar shall register it these documents after scrutiny On expiration of 3 months Co. deemed to be dissolved. Court may order to defer date of winding up on application of liquidator or interested person and certified copy of this order is to be filed with Registrar.
Final meeting and Dissolution:

1.
Members Voluntary winding up

Appointment of liquidator:
Co. in general meeting shall appoint one or more liquidators to wind up affairs and distribute assets, receiving Such meeting may fix Remuneration, otherwise it will be same as in winding up by court On appointment all Powers of Directors, Chief Executives & other officers cease except so far as Co. in general meeting or liquidators allows for Giving notice of resolution to wind up Co.. Appointment of Liquidator Filing consent of Liquidator. If any vacancy occurs by death & resignation or otherwise in office of liquidator, Co. in general meeting may fill, subject to arrangement with creditors. For this purpose general meeting may be called by Out going liquidator: or Continuing liquidator , or Any contributory , or Court on application of Registrar or Any other person interested in winding up
Meeting shall be held in manner provided by
2. 3.
4. 5. 6.
Powers to accept consideration:
shares
etc.
as
CO84 or AOA or court may determine
Co. shall give notice to registrar within 10 days of appointment, filling vacancy etc
Calling creditors insolvency
meeting
in
case
of
Liquidator shall call a meeting of creditors where
Liquidator of transferor Co., with sanction of special resolution of Co., may have general or special authority to Accept shares or interest in profits of Transferee Co. for distribution among members of Transferor Co. Any dissenting member of transferor Co. shall apply to liquidator within 7 days for Abstain from carrying resolution into effect
Corporate Laws Abridged Form Purchase of his interest at price determined by agreement/arbitration
Voluntary Winding up by Creditors

Meeting of Creditors:
Co. shall call a meeting of creditors on or very next day of members meeting on which resolution of winding up was passed. Notice of both meetings shall be sent together Notice of creditors meeting shall be advertised in same manner Directors and Chief Executive of Co. shall Cause, a full statement of Co.s affairs together with list of creditors (and estimated amount of their claims), to be laid before creditor meeting. Appoint one of directors to preside at meeting, who shall attend & preside accordingly If meeting of voluntary winding up is adjourned, resolution passed at creditors meeting shall be deemed to have been passed immediately after adjourned meeting is held Notice of any resolution passed at creditors meeting is to be given to registrar within 10 days along with consent of appointed liquidator.
The winding up for which declaration of solvency has been made and delivered to registrar is termed as Members Voluntary winding up; otherwise it would be Creditors voluntary winding up
Provisions same in voluntary winding up

Provisions Remuneration of auditor Filing vacancy of liquidator Powers of liquidator to accept Creditors meeting in insolvency sanction it shares etc as consideration
members/creditors
Exception Same Same Powers not exercised unless court/COI Liquidator bound to call meeting of both creditors and members Liquidator bound to call meeting of both, and Person obtaining order shall file same with registrar within 10 days (not 14 days)
Final meeting and dissolution
Provisions applicable to every Voluntary Winding Up

Accounts and Statements to be audited All accounts and statements being placed before meetings of creditors or contributories shall be duly audited by an auditor. Auditors report shall be annexed to these accounts etc Auditor shall submit his report within two months of end of period.
Appointment of liquidators:
Creditors and Co. at their respective meetings may nominate a person who has given written consent to act as liquidator If liquidator not appointed by either of creditor or Co., liquidator appointed by other shall be liquidator. If creditor & Co. select different persons as liquidator, creditors shall override Co. Co. shall within 7 days of nomination by creditors may apply to court for an order directing Person nominated by Co. shall be liquidator instead of or jointly with nominated by creditors Any other person to be liquidator (by Court) On appointment all Powers of Directors, Chief Executives & other officers cease except so far as Co. in general meeting or liquidators allows for Giving notice of resolution to wind up Co... Appointment of Liquidator & filing his consent If COI or Creditor(if no COI) may sanction continuation
Distribution of property of Co.

Properties of Co. on winding up are applied in satisfaction of its liabilities pari passu. Subject to such application, distributed to members according to their rights, unless AOA provides otherwise.
Powers and duties of liquidator in voluntary winding up

Committee of Inspection (COI)

Creditors at their meeting may appoint a COI containing not more than 5 members Co. shall appoint not more than 5 of its members to act as members of COI at meeting for passing winding up resolution or subsequently Creditor may refuse all/any of said persons, unless court direct otherwise o Court may on application by Co., appoint other person to act as member in place of those rejected by creditors Main Difference between members & creditors voluntary winding up
Exercise powers of court of setting lists of contributories Exercise Powers of court to make calls Creditor/contributory may apply to court with respect to any powers exercise by liquidator Liquidator shall pay debts of Co. and shall adjust rights of contributories among themselves Following powers/duties are same as in winding up by court Distribution of funds Period of winding up [1 year/ extended period by court] Liab. for misfeasance or breach of trust etc Determination of duties by court among more than 1 liquidator Court may appoint liquidator, he would have same powers/obligations as in winding up by court Court may remove & appoint new one on application of creditors/contributory/registrar Remuneration fixed by court as in case of winding up by court
Power of court to appoint & remove liquidator
Miscellaneous
Corporate Laws Abridged Form Liquidator within 14 days of appointment publish in Official Gazette and deliver notice to registrar Any arrangement between Co., in course of winding up, and creditors shall, subject to appeal within 21 days, be Binding on Co. if sanctioned by special resolution Binding on creditors if accepted by 3/4th in number & value of creditors Liquidator may apply to court for public examination of promoters, directors etc Expenses of winding up including remuneration of liquidator shall be paid in priority of all Where Co. is being wound up voluntarily and order is made for winding up by court, court may adopt all/any of proceedings of voluntary winding up
Court shall use all powers as if it were a winding up by court
Regards to wishes contributories
of
creditors
and
Court may in following matters shall have regard to the wishes of creditor or contributories as proved by sufficient evidence In directing between winding up by court and winging up under supervision of court In appointment of liquidator In all matters relating to winding up under supervision of court
Provisions Applicable to Every Mode of Winding up

all purposes till its final dissolution All powers of CO84 shall apply to Co. mutatis mutandis
Power to apply to court to have questions Status of Co. being wound up Co. being wound up shall continue to be a Co. for determined or powers exercised
Liquidator or any contributory or any creditor may apply to court to Determine any question arising in winding up of Co. Exercise all/any powers of court as if it was winding up by court. Court may, if think fit, accede wholly/partly for above on conditions as think fit
Proof & Ranking of claims

In every winding up all debts payable on a contingency and all claims against the Co., present or future, certain or contingent, shall be admissible to prove against Co. A just estimate being made, if possible, of value of debts/ claims In case of insolvent Co.: subject to provisions of CO84 or law of insolvency For winding up of insolvent companies, rules & provisions of law of insolvency shall apply Preferential Payments: (1) In a winding up, there shall be paid in priority to all other debts(a) all revenues, taxes, cesses and rates due from the company to the Federal Government or a Provincial Government or to a local authority at the relevant date and having become due and payable within the twelve months next before that date; (b) all wages or salary (including wages payable for time or piece work and salary earned wholly or in part by way of commission) of any employee in respect of services rendered to the company and due for a period not exceeding four months within the twelve months next before the relevant date and any compensation payable to any workman under any law for the time being in force, subject to the limit specified in sub-section (2); (c) all accrued holiday remuneration becoming payable to before, or by the effect of, the winding up order or resolution; (d) unless the company is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another company, all amounts due, in respect of contributions towards insurance payable during the twelve months next before the relevant date, by the company as employer of any persons, under any other law for the time being in force; (e) unless the company is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another company, or unless the company has, at the commencement of the winding up, under such a contract with insurers as is mentioned in section 14 of the Workmen's Compensation Act, 1923 (VIII of 1923), rights capable of being transferred to and vested
Copy of order staying proceedings of winding up forwarded by Co. to registrar.
Winding up Subject to Supervision of Court (SEC 396 to 401)

Power to order winding up subject to supervision
Where co has passed resolution for voluntary winding up, court may Of its own motion or On application of any person entitled to apply court for winding up make an order of continuance of voluntary winding up but subject to supervision of court with such liberty to creditor/contributory etc & with such conditions as think fit. Petition of continuance of voluntary winding up under supervision of court shall be deemed to be petition for winding up by court for purposes of legal proceedings
Winding up subject to supervision of court any employee or in the case of his death to any other person in his right, on the termination of his employment and effect on liquidator
Court shall appoint an official liquidator who would replace liquidator appointed by Co. On application by creditor/contributory/registrar/ persons authorized by SECP Liquidator shall, subject to restrictions imposed by courts, exercise all his powers as liquidator of voluntary winding up without sanction of court Order for winding up under supervision shall not affect duties, obligation etc of liquidator under voluntary winding up If order for winding up under supervision is made and subsequently order for winding up by court is made, court may appoint voluntary liquidator as official liquidator Either provisionally or permanently Either with or without addition of any other person
Corporate Laws Abridged Form in the workman, all amounts due in respect of any compensation or liability for compensation under the said Act in respect of the death or disablement of any employee of the company; (f) all sums due to any employee from a provident fund, a pension fund, a gratuity fund or any other fund for the welfare of the employees maintained by the company; and (g) the expenses of any investigation held in pursuance of section 263 or section 265 in so far as they are payable by the company. (2) The sum to which priority is to be given under clause (b) of sub-section (1) shall not, in the case of any one claimant, exceed two thousand rupees: Provided that, where a claimant is a laborer in husbandry who has entered into contract for the payment of a portion of his wages in a lump sum at the end of the year of hiring, he shall have priority in respect of the whole of such sum, or a part thereof as the Court may decide to be due under the contract, proportionate to the time of service up to the relevant date. (3) Where any compensation under the Workmen's Compensation Act, 1923 (VIII of 1923), is a weekly payment, the amount due in respect thereof shall, for the purposes of clause (e) of sub-section (1), be taken to be the amount of the lump sum for which the weekly payment could, if redeemable, be redeemed if the employer made an application for that purpose under the said Act. (4) Where any payment has been made(i) to an employee of a company on account of wages or salary; or (ii) to an employee of a company or, in the case of his death, to any other person in his right, on account of accrued holiday remuneration; out of money advanced by some person for that purpose, the person by whom the money was advanced shall, in a winding up, have a right of priority in respect of the money so advanced and paid, up to the amount by which the sum in respect of which the employee or other person in his right would have been entitled to priority in the winding up has been diminished by reason of the payment having been made. (5) The foregoing debts shall(a) rank equally among themselves and be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportion; and (b) so far as the assets of the company available for payment of general creditors are insufficient to meet them, have priority over the claims of holders of debentures under any floating charge created by the company, and be paid accordingly out of any property comprised in or subject to that charge. (6) Subject to the retention of such sums as may be necessary for the costs and expenses of the winding up, the foregoing debts shall be discharged forthwith so far as the assets are sufficient to meet them and, in the case of the debts to which priority is given by clause (d) of sub-section (1), formal proof thereof shall not be required except in so far as may be otherwise prescribed. (7) In the event of a landlord or other person distraining or having distrained on any goods or effects of the company within three months next before the date of winding up order, the debts to which priority is given by this section
shall be a first charge on the goods or effects so distrained on, or the proceeds of the sale thereof: Provided that, in respect of any money paid under any such charge, the landlord or other person shall have the same rights of priority as the person to whom the payment is made. (8) For the purposes of this section,(a) any remuneration in respect of a period of holiday or of absence from work through sickness or other good cause shall be deemed to be wages in respect of services rendered to the company during that period; (b) the expression "accrued holiday remuneration" includes, in relation to any person, all sums which by virtue either of his contract of employment or of any enactment (including any order made or direction given under any enactment), are payable on account of the remuneration which would, in the ordinary course, have become payable to him in respect of a period of holiday had his employment with the company continued until he became entitled to be allowed the holiday; and (c) the expression "the relevant date" means(i) in the case of a company ordered to be wound up compulsorily by the Court, the date of the appointment (or first appointment) of the provisional manager or, if no such appointment was made, the date of the winding up order, unless in either case the company had commenced to be wound up voluntarily before that date; and (ii) in any other case, the date of the passing of the resolution for the voluntary winding up of the company.
Avoidance of Transfer:
Transfer of Shares after commencement of winding up is void unless approved by Liquidator. Transfer of property (movable or immovable) made within one year before commencement of winding up is void unless in ordinary course of business and in good faith for valuable consideration.
Disclaimer of Property:
Where any part of the property of a company which is being wound up consists of land of any tenure burdened with onerous covenants, of shares or stock in companies, of unprofitable contracts or of any other property that is unsaleable, or not readily saleable, by reason of its binding the possessor thereof to the performance of any onerous act, or the payment of any sum of money, the liquidator of the company, notwithstanding that he had endeavored to sell or has taken possession of the property, or exercised any act of ownership in relation thereto, may, with the leave of the Court and subject to the provisions of this section, by writing signed by him, at any time within twelve months after the commencement of the winding up or such extended period as may be allowed by the Court, disclaim the property : Provided that, where any such property has not come to the knowledge of the liquidator within one month after the commencement of the winding up, the power under this section of disclaiming the property may be exercised at any time within twelve months after he has become aware thereof or such extended period as may be allowed by the Court. (2) The disclaimer shall operate to determine as from the date of disclaimer, the rights, interests, and liabilities of the company, and the property of the company, in or in respect of the property disclaimed, but shall not, except so far as is necessary for the purpose of releasing the company and the
Corporate Laws Abridged Form property of the company from liability, affect the rights or liabilities of any other person. (3) The Court, before or on granting leave to disclaim, may require such notices to be given to persons interested, and impose such terms as a condition of granting leave, and make such other order in the matter as the Court thinks just. (4) The liquidator shall not be entitled to disclaim any property under this section in any case where an application in writing has been made to him by any persons interested in the property requiring him to decide whether he will or will not disclaim, and the liquidator has not, within a period of twenty-eight days after the receipt of the application or such further period as may be allowed by the Court, given notice to the applicant that he intends to apply to the Court for leave to disclaim, and in case the property is a contract, if the liquidator, after such an application as aforesaid, does not within the said period or further period disclaim the contract, the company shall be deemed to have adopted it.
company to the amount of the compensation or damages payable in respect of the injury, and may accordingly prove the amount as a debt in the winding up.
Supplementary Provisions
Payments received by Liquidator:
Liquidator shall open an account in a Scheduled Bank in Co. name. All receipts shall be deposited within 3 days in that account. If liquidator retains amount exceeding 500 rupees or such amount as authorized by Court, he shall be punishable as follows: Make good any loss Pay surcharge @ 2% p.m. Disallowance of all or part of remuneration Removed from office by Court.
Unclaimed (5) The Court may, on the application of any person who is, assts:
as against the liquidator, entitled to the benefit or subject to the burden of a contract made with the company, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract or otherwise as the Court thinks just, and any damages payable under the order to any such person may be proved by him as a debt in the winding up. (6) The Court may on an application by any person who either claims any interest in any disclaimed property or is under any liability not discharged by this Ordinance in respect of any disclaimed property, and after hearing any such persons as it thinks fit, make an order for the vesting of the property in, or the delivery of the property to, any person entitled thereto or to whom it may seem just that the property should be delivered by way of compensation for such liability as aforesaid, or a trustee for him, and on such terms as the Court thinks just; and, on any such vesting order being made, the property comprised therein shall vest accordingly in the person therein named in that behalf without any conveyance or assignment for the purpose: Provided that, where the property disclaimed is of a leasehold nature, the Court shall not make a vesting order in favor of any person claiming under the company whether as under-lessee or as mortgagee except upon the terms of making that person(a) subject to the same liabilities and obligations as those to which the company was subject under the lease in respect of the property at the commencement of the winding up; or
dividends
and
undistributed
Money With liquidator (after 6 months) shall be submitted to SBP + credit to Federal Govt. in Co. Liquidation Account Liquidator shall forthwith submit to Registrar a statement containing particulars of persons entitled to participate along with official receipt of SBP Liquidator responsibility ceases on receipt of deposit from SBP. Thereafter Registrar can make payment after approval of authority. Any money unpaid after 15 years shall be transferred to general revenue A/C of Fed. Govt.
Books, accounts and other proceedings to be kept by liquidator:

At Regd. Office. Any Creditor/Contributory can inspect it. Federal Govt. may alter any requirement. Appointment of Auditor: Same provisions as applicable to companies not in the process of being wound up, Except All obligations of management with respect to audit vest in liquidator Appointment of auditor made By authority appointing liquidator i.e. (Court, Members, or Creditors) and same shall fix his Remuneration Where no auditor is appointed, liquidator shall inform SEC who will appoint.
Liquidator to exercise certain powers subject to sanction (sec 421) (b) if the Court thinks fit, subject only to the same liabilities
and obligations as if the lease had been assigned to that person at that date; and in either event (if the case so requires) as if the lease had comprised only the property comprised in the vesting order, and any mortgagee or under-lessee declining to accept a vesting order upon such terms shall be excluded from all interest in and security upon the property, and, if there is no person claiming under the company who is willing to accept an order upon such terms, the Court shall have power to vest the estate and interest of the company in the property in any person liable, either personally or in a representative character, and either alone or jointly with the company, to perform the lessee's covenants in the lease, freed and discharged from all estates, encumbrances and interests created therein by the company. (7) Any person injured by the operation of a disclaimer under this section shall be deemed to be a creditor of the
(1) The liquidator may, with the sanction of the Court when the company is being wound up by the Court or subject to the supervision of the Court, and with the sanction of a special resolution of the company in the case of a voluntary winding up, do the following things or any of them: (i) pay any classes of creditors in full; (ii) make any compromise or arrangement with creditors or persons claiming to be creditors or having or alleging themselves to have any claim, present or future, whereby the company may be rendered liable; (iii) compromise any calls and liabilities to calls, debts, and liabilities capable of resulting in debts, and all claims, present or future, certain or contingent, subsisting or supposed to subsist between the company and a contributory or alleged contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or
Corporate Laws Abridged Form liabilities or the winding up of the company, on such terms as may be agreed, and take any security for the discharge of any such calls, debt, liability or claim, and give a complete discharge in respect thereof. (2) The exercise by the liquidator of the powers under subsection (1) shall be subject to the control of the Court, and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of these powers.
Execution issued on a decree obtained in favor of creditor and it returned unsatisfied in whole or in part. If it is proved to the satisfaction of Court a. Court shall take into account Prospective and Contingent Liabilities All those liable to contribute for payment of liab., expense of winding up and adjustment of rights among themselves. If he dies/gets solvent, his heirs/assignees shall be contributories.
Contributories:
Meetings to ascertain wishes of creditors (S Miscellaneous Provisions 422) Companies established outside Pakistan would be
(1) In all matter relating to the winding up of a company, the Court(a) shall have regard to the wishes of creditors or contributories of the company, as proved to it by any sufficient evidence;
(b) may, if it thinks fit for the purpose of ascertaining those wishes, direct meetings of the creditors or contributories to be called, held and conducted in such manner as the Court directs; and may appoint a person to act as chairman of any such meeting and to report the result thereof to the Court. (2) When ascertaining the wishes of creditors, regard shall be had to the value of each creditors debt. (3) When ascertaining the wishes of contributories, regard shall be had to the number of votes which may be cast by each contributory.
Winding up of UnRegd. Companies (SEC 443 to 449)

What is UnRegd. Co.
Includes any Partnership, Association or Co. consisting of more than 7 members. Not includes o A Railway Co. incorporated by UK or Pakistani Law o A Co. Regd. under any previous Companies Act or under Co.Ord1984. No unRegd. Co. shall be wound up voluntary or subject to supervision of court [Only By Court.] For determining Court having jurisdiction o Co. shall be deemed to be Regd. in Province where its Principal Place of Business is situated. o Principal place of business where proceedings are started, deemed to be Regd. office of Co. Circumstances of winding up are: i. If the Co. is dissolved, or ceased to carry on business or is carrying on business to wind up affairs. ii. If Co. is unable to pay debt. iii. If Court thinks it just and equitable.
wound up as an unRegd. Co. Provisions of this ordinance with respect to staying and restraining suits and legal proceedings between petition for winding up and order for winding up shall extend to suits & proceedings against any contributory No suit/proceedings can be continued/started against unRegd. Co. being wound up against any contributory of Co. Except by leave of court Court & Official liquidator may exercise any powers on unRegd. Co. being wound up as it is a Co. Regd. under Co.s Ordinance 1984 If unRegd. Co. has no power to suit/to be sued in a common name Court may order all properties, interests, rights & obligations to be vest in Official liquidator Official liquidator may, after giving indemnity as directed by court, bring or defend in his official name any suit/proceedings
Companies Established Outside Pakistan (sec 450 to 462)

Documents to be delivered to Registrar
Every foreign Co. incorporated outside Pakistan having a Place of business in Pakistan within 30 days of Establishment or Change of place in Pakistan shall deliver following documents to registrar: Certified copy of charter, statue, MOA & AOA or other instrument defining constitution in English/Urdu(or translation in English/Urdu) Full address of Regd. Office or Principal Office in the country of incorporation List of directors, chief executive and secretaries with detailed particulars. Return showing complete particulars of Principal Officer in Pakistan. [Name (sur, former, father, husband), nationality (present, former), designation & addresses] Complete particulars of Persons authorized to receive notices etc. together with his consent. Full address of office in Pakistan, deemed to be Principal Office in Pakistan. Return containing particulars of change, where any change in above info / docs, within 30 days of change
Provisions of winding up

Co. when deemed unable to pay debt:

A creditor whose Rs. 25,000 or more is due, serves his notice and Co. within 30 days neither pays nor secures nor compound for satisfaction of creditor. A suit has been instituted against any member for any sum due from the Co./member on behalf of Co. and a notice is served to Co. and Co. neither pays nor secures within 15 days.
Documents to be given every year:

Prescribed no. of copies, not less than 3, of audited B/S and P&L with such particulars as are required to be filed by a Co. Regd. in Pakistan. List of Pakistani members and Debenture holders. Within earlier of
Corporate Laws Abridged Form 45 days of date of submission to the public authority of country of incorporation, or Within 6 months of the date up to which accounts are prepared
Certain obligation of Foreign Companies:

Maintain at Principal Officer a register of Pakistani members and debenture holders which shall be open to inspection. In prospectus, inviting share or debenture, state country of incorporation. For issue of Prospectus authorization of Federal Govt. is must. State the name of Co, country of incorporation, outside every office in English/Urdu Mention liab., if limited, on each prospectus, advertisement & outside every place of business in English, Urdu and vernacular language. Also state above particulars on every document.
Service of document on Co.

Deemed to be sufficiently served 1. By giving to person authorized in this behalf. 2. By leaving or posting to place of business where i. Address of authorized person not provided ii. Authorized person is dead, ceased to reside at provided address or refused to accept the documents on Co.s behalf.
Miscellaneous provisions:
If Co fails to comply requirements It shall have no effect on validity of any contract, dealing or transaction entered into by the Co. and liab. to be sued Co. can not bring any suit, claim, set-off, counter claim unless all requirements met. Provisions of Companies Ordinance 1984 relating to name, power of registrar for investigation/inspection shall apply to this Co.. Where Co. intends to cease having place in Pakistan it shall 30 days before ceasing to have place of business Intimate to Registrar. Publish notice of such intention at least in 2 newspapers. [Obligation of Co. to deliver documents shall also cease] Restriction of going house to house for sale of securities (except offices)
The same shall not be deemed to have been delivered to him in accordance with the provisions of this Ordinance unless revised document provided in specified time. The registrar shall communicate his decision in writing to the Co.. If registration of any document is refused, the Co. may either Supply the deficiency and remove the defect pointed out or, within thirty days of the order of refusal, prefer an appeal to Registrar, where the order of refusal has been passed by an additional registrar, a joint registrar, a deputy registrar or an assistant registrar SECP, where the order has been passed, or upheld in appeal, by the registrar An order of the SECP shall be final and shall not be called in question before any Court Acceptance of documents presented after prescribed time (SEC 469.) Where any document required or authorized by or under Co.s Ordinance to be filed or Regd. with the registrar within a specified period is presented after the expiry of such period, the registrar may accept same on payment by the Co. or other person concerned of such additional fee as may be prescribed by the SEC, not exceeding 3 times the amount of the specified fee payable in respect thereof No such document shall be deemed to have been filed with the registrar until the specified has been paid in full. Acceptance of the document by the registrar shall not absolve the defaulting Co. or other person concerned of any liab. arising from the default, delay in filing or other failure to comply with the requirements of Companies Ordinance.
General Proceedings, Offences etc (Sec 494, 496)

Liab. of directors for allotment of shares for inadequate Consideration (SEC 494)
Any director, creditor or member of a Co. may apply to the Court for a declaration that any shares of the Co. specified in the application have been allotted for inadequate consideration. Every director of the Co. who 1. is a party to making the allotment of such shares 2. had knowledge that the consideration so received by the Co. was inadequate, or 3. failed to take reasonable steps to ascertain whether such consideration was in fact adequate Shall be liable, jointly and severally with his co-directors, if found by court after full enquiry into circumstances of transactions, to make good to the Co. the following amount [Consideration to be received consideration inadequately received]
Registration Offices and Fees( Sec 468, 469)

Registrar not to accept defective documents (SEC 468)
If in the opinion of the registrar, any document required or authorized by or under this Ordinance to be filed or Regd. with the registrar contains any matter contrary to law, or does not otherwise comply with the requirements of law; is not complete owing to any defect, error or omission; is insufficiently legible or is written upon paper which is not durable; or is not properly authenticated; The registrar may either require the Co. to file a revised document on specified form & within specified time Refuse to accept or register the same. Where the registrar refuses to accept any document for any of the reasons aforesaid
Penalty for carrying on ultra virus business (SEC 496)

If any business or part of business carried on or any transaction made, by a Co. is ultra vires of the Co. Every person who acted as a director or officer of the Co. and is responsible for carrying on such business shall be liable to a fine not exceeding 5,000 rupees and shall also be personally liable for the liabilities and obligations arising out of such business or transaction.
Companies (Issue of Capital) Rules 1996

They shall apply to(i) the companies proposing to offer share capital to the public; (ii)listed companies proposing to increase share capital through right issue or bonus issue; (iii) all companies proposing to issue shares for consideration otherwise than in cash; and (iv) certain persons offering shares for sale to the public.
Policy For Issue Of Capital (First Offer)

A Co. which owns a Loan Based Project or Equity Based Project and proposes to raise capital through public offer for the first time shall comply with the following conditions:
1. LOAN BASED PROJECT

Financial plan shall be approved by institution financing the project. Size of capital to be issued shall be in accordance with the financial plan approved by the Institution financing the project. Underwriting is not mandatory. The auditor shall certify that the Sponsors subscription has been received in full and at least 80% utilized in the project. Stock Exchange shall certify that At least 30% of plant & machinery has been installed Last consignment of plant & machinery has been shipped. The Sponsors shall all the time retain at least 25% of the capital of the Co.. The fixed capital expenditure shall be entirely financed by Equity. The project must be appraised by a Financial Institution or a Commercial Bank or an Investment Bank. The appraisal report shall be accompanied by a certificate from the auditor conforming that: Capital allocated to the Sponsors, Foreign and Local investors have been fully paid. The land for the project have been acquired L/Cs has been established and shipment schedule for plant & machinery with the supplier has been finalized. The issue shall be fully underwritten and the Under Writers (Not being Associated Co.) shall include at least two financial institution including Commercial Banks and Investment Banks. The Under Writers shall evaluate the project in their independent Due Diligence Report. Sponsors subscription must be received in full before public issue and auditors must certify the same The Sponsors shall retain at least 25% of the capital of the Co. for the period of 5 years from the date of public subscription.
The issue shall be fully underwritten. The Under Writers shall give justification of premium in Due Diligence Report. The Due Diligence Report shall form the part of material contract. Full justification of the premium shall be disclosed in prospectus. Employees getting preferring allocation shall be charged premium at the same rate as to the public. If there is preferential allocation at Par to any person Such shares shall not be saleable for the period of two years. These persons shall be issued Jumbo Certificate with the marking Not saleable for two years. After the expiry of prescribed period the shares would be split into Marketable Lots The Co. shall not make a right issue within 1 year of 1. First issue of capital to the public; or 2. Further issue of capital through right issue. The Co. while announcing right issue shall clearly state 1. The purpose of right issue 2. Benefits to the Co. & use of funds 3. Financial projection for three years. That shall be signed by all the directors who were present in the meeting in which the right issue was approved. The decision of the Co. to issue right shares shall be communicated to the SECP and the respective stock exchange on the day of decision. The Co. may charge premium on the right shares up to free reserves per share as certified by the Co.s auditor, provided where a Co. purposes to charge premium on right issue above the free reserves per share shall be required to fulfill additional conditions: 1. At least 40% share holders undertake to subscribe their portion of right at such premium. 2. The remaining right issue shall be fully under written and the under writers shall give the full justification of premium in Due Diligence Report. The right issue of following shall fully and firmly under written Loss making Co. or A Co. whose market share price during preceding 6 months has remained below than par value, Book closure shall be made within 45 days of the announcement of the right issue. Payment and renunciation date once announced shall not be extended except under special circumstances with the permission of respective stock exchange. If announcement of bonus and right issue is made simultaneously the resolution of the Board shall specify whether the bonus shares covered by the announcement qualify for right entitlement. The decision of directors regarding bonus issue shall be communicated to stock exchange & SECP on the date of decision. [If SECP closed at that time, on very next day before 09:45 am]
Issue of right shares by a listed co.
2. EQUITY BASED PROJECT

Issue Of Shares On Premium

A Co. may issue shares to the public on premium subject to the following conditions: Co. shall have profitable operation record of at least one year. The premium on public offer shall not exceed the amount of premium charged on placement (local or foreign) [Names & addresses of such institutions must be disclosed in prospectus]
Issue of bonus shares by a listed co.
Corporate Laws Abridged Form Free Reserves retained after bonus issue must be 25 % of enhanced capital
[Free Reserves Bonus] = at least25% [Capital + Bonus]

The auditor shall certify the same. All contingent liabilities shall be deducted while calculating free reserves.
willfully authorizes or permits such failure, refusal or contravention, shall, in addition to any other liability under the Ordinance, be also punishable with fine not exceeding two thousand rupees, and in case of continuing failure, refusal or contravention, to a further fine not exceeding one hundred rupees for every day after the first during which such contravention continues.
Free Reserves
Free reserves includes any amount which has been set aside out of reserves or other surplus after adjustment of all intangibles or fictitious assets and is free that it is not retained to meet any specific liab., diminution in value of asset contingencies and commitments. But does not include the followings Reserve for revaluation of assets Goodwill reserve Depreciation reserve Development allowance reserve Workers Welfare Fund Provision for taxation [ deferred/current ] Capital redemption reserve
Companies (Appointment of Legal Advisor) Act, 1974 and Rules 1975

A Co. having capital not less than 500,000 shall appoint legal advisor Purpose To advise the Co. in the performance of its functions and discharge its duties in accordance with the law The appointment shall be on retainer ship basis, not less than Rs.1, 500 per month
Remuneration
Issue Of Shares Against Otherwise Than In Cash
Consideration
Eligibility No person other than advocate or Regd. firm of advocates Co. shall not appoint an advocate or firm of advocates to be the legal advisor, if at the time of appointment, the number of companies of which such advocate or firm is legal advisor, will exceed: In case of advocate 3 3 X
Following are the conditions for valuation of assets representing consideration for shares: Value of assets shall be determined by consulting valuer Regd. with Pakistan Engineering Council and is on the penal of at least two financial institutions as valuer. Value must be net of depreciation. Goodwill and intangible assets shall be excluded from the consideration. A certificate from a practicing CA shall be obtained for compliance of above conditions. Offer Of Shares By Certain Persons A person who holds more than 10% of shares of the Co. may offer such shares for sale to general public subject to following conditions: Size of capital offered to the public shall be not less than lower of 100,000,000 or 25% of the capital No premium shall be charged unless the Co. has profitable operations of one year. In case the premium is charged other formalities regarding premium Offer shall be under written Under writers shall give justification in due diligence report. Full justification of premium shall also be disclosed in offer for sale. Due diligence report forming part of material contracts.
In case of firm No. of Partners
If a Co. contravenes the above provisions the responsible person of the Co. shall be punishable with simple imprisonment for a term which may extends to 3 months or fine or both
Legal Formalities
Every Co. shall obtain certificate from legal advisor once a year that he or they are not engage in more than 3 companies as legal advisor The Co. within 15 days of appointment of legal advisor furnish to the Registrar particulars of legal advisor (Just like form 29)
The Companies (Buy Back Of Shares) Rules 1999

Co. shall have sufficient cash available Co. shall have following ratios Debt Equity Ratios 75:25 Current Ratio 1:1 The above ratios shall be disclosed in the explanatory statement annexed with the notice of meeting.
Offer for sale by a privatized co.

Where a Co. has been privatized by the Federal Govt. or the Provincial Govt. the new management shall not offer shares to the public for a period of 3 years from the date of privatization at a price higher than a purchased price per share. Purchase Price per share may be adjusted by right or bonus shares or similar distribution made out of pre acquisition reserves.
Decision of Purchase
The Directors of the Co. in a meeting shall take decision of Purchase Purchase price Number of shares to be purchased They shall fix a date for General Meeting of the Co. to pass Special Resolution. The decision of the Directors shall be communicated to the SECP and SE on the date of decision.
SECP shall relax these rules for reason to be recorded, if requirements of these rules dont seem
to be practicable. Penalty.-Whoever fails or refuses to comply with, or contravenes any provision of these rules, or knowingly and
Corporate Laws Abridged Form The tender notice shall contain the following information: Maximum No. of shares to be purchased. The manner in which offer to be communicated. The last date by which the offer to sell shall be made by the shareholder. The names and addresses of the designated branches of the authorized banks.
Purchase Procedure
1. A shareholder interested to sell his share to the Co. in response of the tender notice shall make offer to sell in writing to the designated branches of the authorized banks providing following information: Name of the shareholder Father name / Husband name NIC No Address No. of shares offered Shares distinctive number [If shares are not in CDS] Folio number [If shares are not in CDS] The account number[If shares are in CDS] 2. The Co. shall take a decision within 10 days of the closing date. 3. In case the offer exceeds the required purchase the acceptance shall be made by the Co. on pro-rata basis in lots of 500. 4. The acceptance of the offer shall be communicated to the shareholder within 10 days of the decision. 5. The shareholder whose offer has been accepted shall submit to the bank share certificates along with verified transfer deed within seven days of the receipt of the acceptance of the Co.. Where the shares are in CDS a confirmation from the CDC about the availability of shares along with authorization to transfer the shares to the designated bank. 6. In case the Co. bank (Designated) does not receipt the shares within 7 days the acceptance of the Co. shall be deemed to have been revoked. 7. Co. shall pay the price of shares purchased within 7 days of the receipt of shares.
Voting right disproportionate to the paid up value of shares Voting right for specific purpose No voting right Different right of entitlement of: Dividend Right shares Bonus shares Receiving of notices of meeting and to attend those meetings Right & Privileges for period: Indefinite period Definite period Period determined by members from time to time in special resolution The Co. has to pass to pass special resolution if it intends to issue different kinds of capital No Co. shall issue further capital of any kind except with the approval of SECP Offer of further capital of any kind shall be made to each existing share holder proportionately without any discrimination. If any of the existing share holder decline to accept the offer of further capital, the shares so declined shall be disposed off by the directors in such manner as may be provided in the AOA or special resolution. If the capital of different kind is offered to general public this fact shall be distinctly mentioned in offering documents together with respective rights & privileges.
OTHER CONDITIONS

NBFC Rules 2003

Eligibility Conditions for establishment of NBFC
An NBFC may be established if each of its Promoters Proposed Directors Chief Executive Chairman of BOD fulfills terms & conditions mentioned in Fit & Proper Criteria & complies with Ordinance, NBFC Rules & Regulations Permission & conditions to form NBFC
Other Formalities
The purchase shall be disclosed in the Balance Sheet as reduction of capital and necessary details would be provided in the Notes to the Account. Co. shall submit to SECP & Registrar concerned a Return & Declaration of Solvency within 30 days of purchase in manner set out in schedule to these rules.
Separate application for different forms of businesses SECP may grant license if satisfied that person seeking permission have fulfilled following conditions: Application made on Form I + Annexures + Non Refundable Fee 100,000 Company is incorporated as Public Company Company shall have separate minimum capital requirement for each business The company has allocated at least 25% of the capital to the sponsors/promoters The promoters & director of the company shall give an undertaking that they shall not dispose off their shares for a period of 3 years except with the prior approval of SECP Deposit their share in CDC in account marked as Blocked For physical shares jumbo lot stamped as Not to be sold/transferred without approval
1)
2) 3) 4)
Companies Share Capital (Variation in Rights & Privileges) Rules 2000

KINDS & CLASSES OF CAPITAL
A Co. limited by shares may have more than one kind of share capital and may have different classes of share under each kind. Where a Co. intends to have different kinds of share capital it shall specifically so provide in its MOA & AOA.
5)
NATURE OF RIGHT & PRIVILEGES

Different voting rights
Corporate Laws Abridged Form Shares shall be free from any lien and charge 6) The chief executive shall not held any similar position in any other company, [ Except for a fund being managed by such company with prior approval of SECP ] 7) The company shall give undertaking that conditions set out in these rules, regulations and any directions given by NBFC shall be duly complied with. 8) License granted by SECP shall be valid for 1 year from date of issuance and shall be renewable annually on application of NBFC at least 1 month before expiry of 1 year, If NBFC fails to commence business within 1 year of issuance of license or fails to apply for renewal before 1 month of expiry of validity, License shall be deemed cancelled. 9) Company has furnished an undertaking that within 90 days of grant of certificate of registration, it shall provide evidence to the satisfaction of SECP, that person appointed for executive posts , and researches etc possess sufficient educational qualifications for business. 10) Company is not part of a Group of Companies already holding license for same type of business
Disclose all the facilities exceeding 20% of its equity in its accounts Furnish annual audited accounts to SECP within 3 months of close of accounting period Furnish to SECP quarterly accounts, whether audited or not, within 1 month of close of 1st & 3rd Quarter and within 2 months of close of 2nd Quarter Obtain Credit rating & management quality rating, when it becomes eligible for such ratings Rating be updated at least once in every financial year Within 1 year of decrease in its rating, from grade specified by SECP, obtain fresh rating Publish these ratings in its annual & quarterly reports and in advertisements & Brochures Acquire & maintain membership of relevant association & follow its code, approved by SECP NBFC engaged in deposit taking shall, within 3 months of close of its financial year, pay to the SECP an annual monitoring fee as may be specified by SECP by notification in official Gazette Appoint at least 1/3rd of its directors as independent directors and at least 2 of its directors excluding CEO shall have relevant experience of at least 5 years in Financial Sector at senior management level Follow directions issued to protect NBFC against their involvement in money laundering and other unlawful trades Opening and closure of bank accounts or account with broker or branches of an NBFC shall be approved in meeting of BOD after carefully analyzing its merit & Financial impact. Reasons must be recorded in minutes and such minutes shall be communicated to SECP within 14 days of meeting Obtain sufficient Insurance coverage on its own/clients benefits against any losses that may incur due to employees fraud or gross negligence. Make satisfactory arrangements to isolate itself from fluctuation risks associated with foreign currency obligations & transactions Appoint a person as internal auditor having minimum 3 years of experience as internal auditor, who is CA ACMA Certified internal auditor Certified Information System auditor Member of recognized foreign accountancy organization M. Com MBA (Finance CA Firm having satisfactory QCR, not being its statutory auditor Appoint a person as compliance officer to ensure reporting to SECP & compliance with regulations Appoints its Financial/Chief Accounting Officer having at least 3 years experience who is a: CA ACMA Member of recognized foreign accountancy organization
Permission granted shall be valid for 6 months, or further extension of 3 months on application of promoters in exceptional circumstances; during this period promoters shall get NBFC incorporated as Public Company An NBFC seeking permission to undertake Investment advisory or investment management services or both shall not be eligible for seeking license for any other form of business. NBFC licensed to carry asset management services shall be eligible to undertake pension fund scheme. An NBFC seeking permission to undertake Leasing, IFS, HFS or Discounting services or all of these shall not be eligible for seeking license for any other form of business. SECP may while granting license, impose such additional conditions as deemed fit by it.
Conditions Applicable to NBFC

NBFC shall:
Maintain proper books of account and retain them not less than 10 years; books includes Journals, cash books & other records Ledgers reflecting assets, liabilities, income & expenses Ledgers / comparable records showing securities in portfolio Record of transactions with banks Records of meetings of BOD & all relevant committees(audit, investment & credit committees) Original record of all reports, analysis & memoranda containing Investment advices distributed. Prepare its accounts according to IAS & technical releases issued by ICAP
Corporate Laws Abridged Form M. Com MBA (Finance) NBFC shall not: Transfer ownership of controlling shares, merge with, acquire or takeover any other company without SECP approval Make investment in subsidiaries, except out of its surplus equity. Enter into transaction with any broker exceeding 10% of total brokerage expense in 1 accounting year. Have a common director/officer/employee of broker. Remove any record/documents out of Pakistan without prior approval. Make investment in unquoted shares in excess of 20% of its equity. Offer any of its securities for consideration otherwise than in cash Raise funds in any form from individual except where specified by SECP Provide unsecured facilities or exposures Hold, deal or Trade in Real Estate except for its own use or where specified by SECP Undertake brokerage business except forming a separate company. Encumber/mortgage/pledge/transfer clients assets deposited as security with NBFC for securing own obligation. Appoint directors who hold such office in any other NBFC licensed for same form of business. [Not applicable to nominees of Federal/Provincial Government or any other specified exception] Appoint or change its Chief Executive or director not fulfilling Fit & Proper Criteria (NBFC & Notified Entities Regulations, 2008)
notified by SECP under the Ordinance and the Technical Releases issued by ICAP, time to time. NBFC shall review, at least on a quarterly basis, the recovery of their loans, advances and lease portfolio & shall properly document the evaluations so made: Shortfall in provisioning, if any, determined as a result of quarterly assessment, shall immediately be provided in the books. Rescheduling Facility / Restructuring of Non-Performing
Status of classification of a rescheduled/restructured non-performing Facility shall be changed only when: Terms and conditions of rescheduled/restructured Facility are fully met for a period of at least 6 months (excluding grace period, if any) from date of such rescheduling/ restructuring; and At least 20% of the outstanding amount is recovered in cash: Condition of 6 months retention period shall not apply if the Borrower repays or adjusts at least 50% of the restructured or rescheduled loan amount in cash. NBFC shall ensure that status of classification & provisioning of a rescheduled/restructured non-performing Facility is not changed in its reports to SECP merely due to rescheduling/restructuring of a Facility and rescheduled/restructured loans shall be reported to the Credit Information Bureau (CIB) as such and not as default. Where the Borrower subsequently defaults (either on principal or mark-up) after the rescheduling / restructuring, the NBFC shall classify the loan or lease in the same category as it was in at the time of rescheduling / restructuring and NBFC may further downgrade the classification after taking into account the time based criteria stated in Schedule X or XI. At the time of rescheduling / restructuring an NBFC shall reconsider and re-examine the viability of the project or business and shall accordingly secure its interests. Valuation of Security and Realizable Value Before making any provision an NBFC may avail the benefit of leased assets, or additional collaterals held against lease, or collaterals held against advances or loans, it can consider the realizable value of mortgaged or pledged or leased or collaterally held assets for deduction from the outstanding principal amount of loans or advances or lease against which such assets are leased, mortgaged, pledged or collaterally held: The value of the mortgaged, pledged assets, other than Liquid Assets, to be considered for this purpose shall be the FSV FSV once determined, shall remain valid for 3 years from the date of the valuation during which period the underlying collateral or leased assets will not be revalued for provisioning purpose. The adjustment factors of 80%, 70% and 50% shall be applied on the value so determined for the purpose of determining provisioning requirement in 1st, 2nd and 3rd year of valuation, respectively. Thereafter, the assets shall be revalued and the adjustment factor of 50% shall be applied for all subsequent years. The FSV of the collateral shall be restricted to fresh revaluation or previous value, whichever is less. In case of NBFCs, licensed by SECP to undertake housing finance services, FSV once determined, shall remain valid for a period of 10 years from the date of valuation
Regulation 25: Classification and Provisioning For Non-Performing Assets.

A Leasing Company, Investment Finance Company and Housing Finance Company shall observe the criteria for classification of its assets and provisioning as provided in Schedule X till June 30, 2010 and Schedule XI with effect from July 01, 2010. Subjective Evaluation of Loans & Advances In addition to time based criteria provided in Schedule X & Schedule XI subjective evaluation of performing & nonperforming advances, loans and lease port-folio shall be made for risk assessment Where considered necessary the category of classification determined on the basis of time based criteria shall be further downgraded: Such evaluation shall be carried out on the basis of adequacy of security inclusive of its realizable value, cash flow of the Borrower or lessee, operations in the account and records covering advances and credit worthiness of the Borrower or lessee. Subjective evaluation of investment portfolio and other assets shall also be carried out by NBFC. Classification of such assets and provisioning required against them shall be determined keeping in view the risk involved and the requirements of the International Accounting Standards as
Corporate Laws Abridged Form [Adjustment factor of 70% shall be applied on the value so determined]
NBFCs shall observe the following criteria for determining the realizable value of mortgaged, pledged, leased or collaterally held assets, namely:a) Only assets having registered mortgage, equitable mortgage (where NOC for creating further charge has not been issued by NBFC) and pledged or collaterally held assets shall be considered; b) Assets having pari-passu charge shall be considered on proportionate basis; c) Hypothecated assets & assets with second / floating charge shall not be considered; d) Valuations shall be carried out by an independent professional valuer listed on the panel of valuers maintained by Pakistan Banks Association or Leasing Association of Pakistan; e) The valuers while assigning any values to the mortgaged, pledged, leased or collaterally held assets, shall take into account all relevant factors affecting the salability of such assets including any difficulty in obtaining their possession, their location, their condition and the prevailing economic conditions in the relevant sector, business or industry; f) Realizable value of mortgaged, pledged, leased or collaterally held assets determined by the valuers must take into account the amount that can be realized from the asset if sold in a forced or distressed sale condition; g) Valuers shall in their report explain the assumptions, calculations, formula and method adopted in determination of the realizable values; h) Valuations shall be conducted at least once in three years: Provided that, except for a Housing Finance Company, if a valuation is older than three years, a fresh re-valuation shall be done failing which the valuation shall be taken as nil. The categories of mortgaged, pledged, leased or collaterally held assets which are considered for valuation and the discounting factors to be applied shall be as under and no other assets shall be taken into consideration: Liquid Assets: Valuation of Liquid Assets shall be determined by NBFC & verified by external auditors. Values of pledged shares of a listed company shall be taken at their market value on balance sheet date & as per method, if any, specified by ICAP . Pledged Stocks: In the case of pledged stocks of perishable and nonperishable goods, FSV provided by valuers shall not be more than 6 months old, at each balance sheet date; The goods shall be perfectly pledged; The operation of the godowns shall be in control of the NBFC; Regular and valid insurance and other records should be available; and In case of perishable goods, the valuers should also give the approximate date when these are expected to be of no value.
Do not appear to have been professionally carried out and values determined are unreasonable, or Are not backed by valid documentation of mortgage, pledge, leased or collaterally held asset, and are not supported by legal opinion wherever required. The external auditors as a part of the annual audit of the NBFC shall verify that all requirements under these Regulations or any other circular issued by the Commission for classification of assets and determination of provisions required against them have been complied with. NBFC and Notified Entities Regulations, 2008 Schedule IX (Fit & Proper Criteria) Fit and Proper Criteria (FPC) in relation to NBFC is applicable on the following persons: 1. 2. 3. 4. Promoters and major shareholders of the NBFC, Director of NBFC Chief Executive (CE) of NBFC Key Executives of NBFC.
Proposed Directors or CE of NBFC shall not assume the charge of their respective offices until their appointments have been approved by SECP. The application for seeking approval of SECP shall be submitted by the NBFC along with the requisite information required under Annexure A and an Affidavit as specified in Annexure B. All persons subject to Fit and Proper Criteria must submit any change in the submitted information through the company secretary of the NBFC to the SECP. Key Executive means key executives of the NBFC and includes, inter alia, the persons discharging the following functional responsibilities Any executive, including the chief executive or any officer acting as second to chief executive officer including chief operating officer or by whatever name called; Chief financial officer, head of accounts or head of finance; Head of internal audit, information technology, credit or risk management, human resource, operations, marketing, research, treasury, law, company secretary or compliance officer; Investment analyst; Chief Investment Officer Fund manager; and Any other functional responsibility which the SECP may include. Appointment of Key Executives shall not require prior approval however an NBFC shall ensure at the time of appointing a Key Executive that such person qualifies the Fit and Proper Criteria. The fitness & propriety of any person will be assessed taking into account all the relevant factors including but not limited to the following 4 broad elements: Provided that last 2 elements may not be considered while assessing the fitness & propriety of promoters and major shareholder of the NBFC. 1. Integrity and Track Record 2. Financial soundness 3. Competence and Capability
Values of mortgaged, pledged, leased or collaterally held assets determined by valuers shall be subject to verification by external auditors, who may reject cases of valuation, which in their opinion
Corporate Laws Abridged Form 4. Conflict of interest 1. Integrity and Track Record A person shall not be considered Fit and Proper if he: Has been convicted of an offence involving moral turpitude; Has been involved in the mismanagement of investments, financial or business misconduct, fraud, etcetera; Has been the subject to adverse findings, after conducting an inquiry, by the SECP or any other regulatory or professional body or government agency; Has been actively involved in the management of a company or firm whose registration or license has been revoked or cancelled or which has gone into liquidation or other similar proceedings due to mismanagement of affairs, financial misconduct or malpractices; Is ineligible, under the ordinance or any other legislation or regulation, from acting as a director or serving in a managerial capacity of an NBFC or a company; Has entered into a plea bargain arrangement with the national accountability bureau; In case of promoters or major shareholder of NBFC, does not have the requisite disclosed and verifiable financial resources; and In case of promoters or major shareholders of NBFC, does not have an established and proven track record of successfully running a business enterprise for 3 to 5 years, preferably a public listed company.
Should be individuals having business/mgmt experience of at least 5 years at senior level Shall have experience and knowledge in any profession such as banking, Collective Investment Scheme, accounting, law, internal audit or information technology etc; For CE Should have a minimum experience of 7-10 years in a senior management position, preferably in the regulated financial services sector. Should have demonstrated, through his qualifications and experience, the capacity to successfully undertake the cognate responsibilities of the position; For Key Executives Must be qualified professionals possessing relevant experience and degrees relating to the job/ assignment
4. Conflict of interest The directors or chief executive of NBFC shall not: Be a director in any other NBFC engaged in a similar business in Pakistan. Provided that this condition shall not apply to nominees of the Federal or Provincial Governments on the board of any NBFC; Be a director, chief executive, chief financial officer, chief internal auditor, research analyst or a trader (by whatever name or designation called) in a stock brokerage house or in any company or entity owned and controlled by a member of a stock exchange; and Be a member of a stock exchange engaged in the business of brokerage or is a spouse of such member or in control of more than 20% shareholding, directly or indirectly through his close relatives. In case of Key Executives, the NBFCs must ensure that no Key Executive shall head more than one functional area that give rise to conflict of interest within the organization. For example, the departments of audit and accounts shall not be headed by the same person. Further, a key executive shall not hold directorship in his or her personal capacity: In a business concern which is also a client of the NBFC, and In any other financial institution. The Fit and Proper Criteria is perpetual in nature and an NBFC shall ensure compliance with the provisions of Fit and Proper Criteria. And any violations or circumvention of the Fit and Proper Criteria shall be dealt with under the provisions of the Ordinance
2. Financial soundness In determining a persons financial soundness, the following shall be considered: Whether such persons financial statements or record including wealth statements or income tax returns or assessment orders are available; Whether the person has been declared by a court of competent jurisdiction as defaulter in repayment of loan to a financial institution exceeding Rupees one million; Whether the latest Credit Information Bureau report of the person shows overdue payments or default to a financial institution; Whether the person has applied to be adjudicated as an insolvent and his application is pending; Whether the person is an un-discharged insolvent; and Whether the person has been declared a defaulter by a stock exchange.
3. Competence and Capability Directors:
Schedule x (Long, Medium And Short Term Financing Facilities) A): Short Term Financing Facilities
CLASSIFICATION DETERMINANT TREATMENT OF INCOME Unrealized mark-up, interest or profit to be put in Suspense Account and not to be credited to Income Account except when realized in cash. PROVISIONS TO BE MADE [N-1] No Provision
1. OAEM (Other Assets Especially Mentioned)
Where Rental, mark-up, interest, profit or principal is overdue by 90 days or more from the due date.
Corporate Laws Abridged Form 2. Substandard. Where Rental, mark-up, interest, profit or As above. 20% [N-1]: Rate of Provision to be appliedoverdue difference resulting from outstanding balance of principal against the principal is at the by 180 days or more . facility less the amount of Liquidthe due date. from Assets realizable without recourse to a Court of Law and adjusted FSV of mortgaged, pledged, leased or collaterally heldRental, mark-up, interest, profit or As above. valuers 3. Doubtful. Where assets as valued by independent professional Valuer listed on the panel of50% maintained by the Pakistanprincipal is overdue or the Leasing Association of Pakistan. Banks Association by
Foreign 4. Loss.
or principal is overdue by two years or currency loan by FCCs: Foreign more from the due date. FCCs (b): Where Trade Bills (Import, Export or are allowed to contract foreign currency loans from Foreign Controlled Co. means a Bills) branch or office adjusted within As above. Inland firm, are not paid or of a Co. or a firm which is: 180 days of the due date. Banks or financial institutions abroad In case of (c): In case of Credit Cards where Rental, Their head offices Co. incorporated outside Pakistan, a branch office. interest, profit or principal is Other overseas branches/associates markup, In case of Co. incorporated inside Pakistan from the Following are conditions in this behalf: overdue by 180 days or more due 50%date. the shares or more is of Loans are obtained for working capital subscribed by foreign nationals or requirements B): MEDIUM AND LONG TERM FINANCING FACILITIES 50% of the directors or more are Repayment period should not exceed 12 foreign nationals Rental, mark-up, interest, profit or Unrealized mark-up, interest or No Provision 1. OAEM Where months. Assets case of equal shareholding, In principal is overdue by 90 days or more profit to be put in Suspense (Other Rate of interest should not exceed 1% over Chief Especially Mentioned)executive is foreign national. from the due date. Account and not to be credited LIBOR. In case of partnership Income Account except when to Such loan can be rolled over for further 50% or more of the capital is realized in cash. period not exceeding 12 months. owned by foreign nationals or 2. Substandard. profit or As of foreign companies in Pakistan are not 20% The Where Rental, mark-up, interest, Branches above. majority of the partners are Principal is overdue by . allowed to pay interest on such loans. foreign nationals 1 Year or more from due date. Foreign contractors are not allowed to pay interest. No loan to Co. controlled by persons resident 3. Doubtful. Where profit or As above. 50% outside Pakistan (i.e. FCC) Rental, mark-up, interest, Procedure for obtaining and repayment of such loan: Principal is overdue by FCC approaches Authorized dealer. Lending to FCC for working capital: 2 Rupee more from due meet Authorized dealer gets satisfaction that applicant is Authorized dealers can give year or loan to FCC to date. FCC. 4. Loss. capital requirements subject to Prudential Where Rental, markup, interest, profit or As above. 100% working Principal is overdue by On confirmation, FCC can contract loan and Regulations. 3 years or more from due date. repatriate the amount for credit to their Rupee Lending for Capital expenditure: account with authorized dealer. FCCs are normally required to meet their capital On receipt of loan, Authorized dealer issues a expenditure requirements out of proceeds realization certificate and record the 1. Their Rupee resources particulars of loan. 2. From loans raised abroad with the On maturity having received inward remittance, permission of FG/State bank. authorized dealer will allow payment of Interest tax In special circumstances, such companies are and Principal. allowed to raise Rupee loans through medium and While reporting remittance of interest a certificate long-term local borrowing. confirming applicable LIBOR and Payment of tax will FCC engaged in manufacturing are permitted to be attached with Form-M. meet their requirements of capital expenditure by: While reporting remittance of Principal, a copy of 1. Taking loans from banks, DFI and other proceeds realization certificate will be attached with financial institutions Form-M. 2. Issuing participation term certificates.
(Loan) Rupee Loan
Exchange Regulations interest, profit 5. AsRepayment period of such loans should not (a): Where Rental, mark-up, above. 100% be less than five years.
1 year or more from the due date.
Foreign Private Loan

No loan from abroad:
Borrowing from abroad is prohibited except with approval of SBP. SBP has given general permission to private sector entrepreneurs to obtain foreign currency loans subject to following conditions: 1. Loans are obtained from i. Banks or financial institutions abroad ii. Parent companies of multinationals iii. Suppliers as supplier credit including credit under PAYE Scheme. 2. Loans do not involve government guarantee 3. Obtained for financing the foreign currency cost of projects covered by Govt.s Industrial/Investment Policy. 4. Loans should be contracted on best possible terms.
Foreign currency loan for working capital by Pakistani firms and companies functioning in Pakistan:
Pakistani firms or companies (except banks) can obtain foreign currency loan on: Non-Repatriable basis Repatriable basis
Conditions for non-repatriable loan:

Loan would be treated as rupee loan to the extent of rupees generated out of inward remittance. Principal and interest will be paid in Pakistan and will not be remitted to abroad.
Conditions for repatriable loan:

Loan is interest free. Period of loan is not less than one year. No bank guarantee for securing such loan from Pakistan. No forward cover. No facility of absorption of exchange risk by Govt. of Pakistan.
Corporate Laws Abridged Form Agreement for repatriable loan will be provided to SBP for registration. Repayment Schedule will also be provided to SBP for registration along with proceeds realization certificate (after remittance).
Foreign currency purpose:
loan
for
any
other
Individuals, firms, companies resident in Pakistan, FCC and branches of FCC (except banks) are allowed to obtain loans from abroad in foreign currency on repatriable basis for any purpose subject to following conditions:
To send abroad for sale/transfer, he should apply to State Bank through Authorized dealer for export license. Permission will be granted if authorized dealer declares that o Security will be received back in Pakistan within specified time. o If sold, sale proceeds will be repatriated to Pakistan. (Application may also be given for exchange of Pakistani securities with foreign securities)
Transfer of securities to non-resident:

Transfer of securities to non-resident is prohibited except with permission of State Bank. It includes transfer of: o Pakistani securities (held by person resident in or out of Pakistan) o Foreign securities (held by Pakistani national) Pledge or hypothecation to non-resident is also prohibited. Concerned Co./non-resident should apply to State Bank through authorized dealer.
For Principal:
There is no ceiling on amount of loan. Repayment period should not be less than 5 years. Repayment should be made in equal installments.
For Interest:
Interest rate will not exceed LIBOR+1.5% Interest will be paid in arrears on half yearly or yearly basis. Borrower shall be free to pay tax at a fixed or floating rate according to above formula. Payment will be subject to deduction of Pakistani taxes.
Exemption to rule no transfer of securities outside Pakistan

Issue/transfer/export allowed on repatriation basis to: 1. Non-resident Pakistani 2. Pakistani having dual nationality 3. Foreign national 4. A firm or trust or mutual fund Regd. and functioning outside Pakistan Conditions to be satisfied: i. Price must be paid in foreign exchange through normal banking channel or out of foreign currency account in Pakistan. ii. Purchase price is not less than a. Price quoted on stock exchange (in case of listed shares) b. Break up value of shares (in case of unlisted shares) This exemption applies in following cases: 1. Issue of shares out of new public offer (irrespective of nature of business) 2. Transfer of listed shares (irrespective of nature of business) 3. Placement of new/initial shares with foreign investors by a public or private listed Co. which is: a. A manufacturing Co. b. A service organization in sectors open for foreign investors as per Investment Policy of government. 4. Transfer of shares of above companies (3b) 5. Issue of right and bonus shares to nonresident holding shares under exemption. 6. Issue of government securities to foreign nationals
Others:
Exchange risk will be borne by borrower. No forward cover will be provided by authorized dealer. No bank guarantee from Pakistan. Agreement will be provided to authorized dealer for registration who will handle all related transactions and on completion of disbursement, he will intimate details to Investment Division at Karachi along with proceeds realization certificate. Thereafter, authorized dealer will be free to remit installment of principal and interest on due dates.
Foreign Exchange Regulations (Securities)

Security includes shares, stocks, debentures, debenture stocks, govt. securities, deposit, deposit receipts in respect of deposit of securities and units or sub units of unit trusts but does not include bills of exchange or promissory notes other than govt. promissory note.
Foreign Security
A security issued elsewhere than in Pakistan and any security which is payable in foreign currency or elsewhere in Pakistan.
Person resident outside Pakistan (i.e. nonresident)

A foreign national, including a foreign national of indo-pak origin (resident in Pakistan) A Pakistani holding dual nationality resident in Pakistan A Co. Regd. in Pakistan which is controlled by a person resident outside Pakistan.
Import/Export of Securities:
Import of securities (Foreign and Pakistani):
No restriction on import into Pakistan whether Pakistani or foreign securities.
Export of Pakistani securities:

Specific/general prior approval of SBP through authorized dealer. Export of foreign securities: A Pakistani national can hold foreign securities.
Corporate Laws Abridged Form 7. Transfer of Pakistani securities by nonresident to eligible non-resident on same repairable basis. 8. Issue of NIT units to followings: a. Non-resident Pakistani b. Pakistani having dual nationality c. Foreign nationals
Special instructions regarding shares transferred under CDS of Central Depository Companies:
General:
Special account will be opened at CDC for each non-resident investors.
Procedure for issue of shares to nonresident:

Issued to non-resident out of new public offer:
Co. may open foreign currency account in Pakistan or abroad for collection. For unsuccessful applicants, money shall be refunded. For successful candidates, money shall be repatriated into Pakistan and account will be closed within one week. PRC is obtained from authorized dealer. In case of subscription directly received in Pakistan, shares may be issued for equivalent rupees as per PRC.
There shall be no netting or adjustment and payment/receipt in respect of sales/purchase will be settled independently.
Initial transfer in CDC:

While approving initial transfer: Co. will ensure that shares are Regd. on repatriation basis in the name of non-resident. If shares are not so Regd., Co. will obtain requisite documents issued in the name of nonresident e.g. brokers memo, PRC and transferees certificate (if shares purchased from another non-resident).
Subsequent transactions in CDC:

For investment involving SCRA, authorized dealer will maintain complete records of all transactions and statement of SCRA will be furnished to State Bank. For investment not involving SCR, original documents (brokers memo, PRCs) will be submitted to Co. by Participant along with certificate that shares are in the name of CDC and have been deposited/withdrawn from non-resident account at CDC. Co. will update non-residents record and will furnish to authorized dealer. Authorized dealer will keep it for onward submission to SBP.
Issue to non-resident against Plant and Machinery:

An application along with import documents shall be submitted to Exchange Policy Department for issue of Exchange Entitlement Certificate. Exchange Entitlement Certificate will be issued by State Bank at average of selected authorized dealers buying and selling rates on date of filing of Bill of Entry with Customs. Co. can issue shares to non-resident up to value mentioned in Exchange Entitlement Certificate.
Dividend, Bonus, Right shares:

CDC will issue to respective Co. a list of beneficial non-resident shareholders. For non-residents not investing through SCRA, Co. will verify holding from its records. For non-residents investing through SCRA, Co. will obtain undertaking cum certificate from authorized dealer.
Issued against Foreign currency:

If payment is made in foreign currency to foreign currency account with authorized dealer, authorized dealer will issue a certificate showing date wise deposit and buying exchange rates at separate dates. Co. issue securities on equivalent rupees at exchange rates shown on certificate.
Documents to be submitted on issue/transfer of securities to non-resident:

By Co. to authorized dealer within 30 days of transfer/issue. M/AOA/COI if not already submitted. SECPs approval State Banks Exchange Entitlement Certificate Encashment certificate and/or PRCs from authorized dealer Copy of Boards resolution Remittance to non-resident through authorized dealer: Co. may export securities to non-resident on Repatriation basis through authorized dealer. Authorized dealer may also allow remittance in respect of: Dividend (net of taxes) Disinvestment proceeds not exceeding the market value or breakup value
Trading of quoted shares by non-resident:

Non-residents are allowed to trade freely on stock exchanges in Pakistan. Non-residents will open Special Convertible Rupee Account with authorized dealer. Such account can be fed by: Remittance from abroad. Transfer from a Foreign currency account in Pakistan. Account will be debited on purchase of quoted shares. Account will be credited on proceeds of disinvestments and dividend. Fund available in SCRA can be transferred to: Another country Another foreign currency, without prior approval of State Bank. Authorized dealers will submit to State Bank, a statement showing position of balance in SCRA on each Saturday within 2 days of weekend.
Books and audit:

Authorized dealer shall maintain complete record of shares held by non-resident including proof and shall produce for audit by inspection team of State Bank. Record shall not be destroyed until audited.
Listing Regulations of Karachi Stock Exchange

Eligible Security
It means a security which the CDC has declared to be eligible for deposit with the CDS
At least 250,000,000 or 25% of the capital which ever is higher. Allocation of capital to overseas Pakistani Shall not exceed 20% of public offer. Allocation of capital to employee Shall not exceed 5% of the public offer
Defaulter Counter
It means a separate counter setup by the SE for trading of listed securities who have committed irregularities in respect of listing regulations.
In case of Modaraba applying for listing

30% of the capital of the Modaraba shall be subscribed by Modaraba Co., sponsors, friends, relatives and associates. Balance 70% shall be offer to the public as per Modaraba Rules. The allocation of capital to: a. Sponsors in excess of 25% b. Allocation of shares under pre-IPO placement including employees shall not be saleable for a period of six months from the date of public subscription.
Listed Security
Any Share, Scrip, Debenture, PTCs, Modaraba Certificates, Musharika Certificates, TFCs, Bonds, or such other instrument has the Federal Govt. may by notification specified and which is accepted for listing on the SE.
Listed Co.
A Co. which has listed on the SE. whose securities has listed on the SE and includes a provisionally listed Co..
Credit Information Bureau (CIB)

It is department in state Bank that provide information about the loan given to different companies
Prospectus, Allotment, Issue and Transfer of Shares

No Co. will be listed unless it is public Co. and has a minimum capital of Rs. 200 Million. Co. Regd. in AJK or in the Northern areas of Pakistan shall be eligible for listing and will be treated at par with the Co. Regd. in Pakistan. No Co. shall be listed unless the public issue has been subscribed by not less than 500 applicants. Co. may make public offer of security to be the eligible security in CDS. The application for shares shall be accepted only through Bankers to the Issue. The directors shall not participate in the public subscription. Co. shall inform the SE about the subscription receipt with in 3 working days of the closing of the subscription list. The Co. shall take decision about the acceptance of applications within 10 days of the closure of the subscription list. The Co. shall refund application money to the unsuccessful applicants within 10 days of above decision. [Afterward charges @ 1.5% per month.] In case of over subscription the Co. shall immediately file ballot register with the SE. The Co. shall dispatch share certificates to successful applicants in marketable lot within 30 days If the security is eligible security the CDC procedure will be followed. Co. shall consolidate / split, as may be required by security holder in writing, certificates into marketable lots within 30 days of application. The Co. shall verify signature of the share holder within 48 hours of the receipt of application. The Co. shall verify signature of the shareholder within 48 hours of the request. The Co. shall complete the transfer receipt immediately on receiving the share for transfer. Prospectus / offer for sale with Performa application shall be published at least in 1 English and Urdu newspaper of Karachi, Lahore & Islamabad between 7 & 30 days of opening of subscription lists. The Co. shall give minimum of 21 days notice to the SE prior to the closure of share transfer book for any purpose.
Listing Of Companies & Securities

No dealing in the securities of Co. shall be allowed on the SE either on ready quotations board or future counter unless the Co. and the securities have been listed and permission for such dealing has been granted in accordance with listing regulations. The above permission shall be granted upon an application made by the Co. in prescribe form. o The SE in granting such permission will consider among other things, sufficiency of public interest in the Co. or security. Board of SE will be sole authority to grant, refuse or defer such permission. Board shall decide permission within 3 months of application o If refused, the reasons shall be communicated to applicant & SECP within 2 weeks. o Applicant can reapply after 6 months with fresh application. Board may require additional documents other than prescribed If not provided, application deemed refused. Co. or authorized representative shall undertake that: Securities shall be quoted at the discretion of SE SE shall have right to suspend or remove any security without notice. Furthermore Co. cannot bind SE to remove its securities. The provision of listing regulations shall supersede the AOA that are not in conformity. SE can delist Co./security on non compliance.
Undertaking
The
Offer of Capital by Companies / Modarabas to the Public

The capital is up to Rs.500,000,000 At least 50% shall be offered to public Capital beyond 500,000,000
Corporate Laws Abridged Form Co. shall issue transfer receipts immediately after receiving shares for transfer Co. shall not charge any transfer fee. Duration for one time closure [7 days but not exceeding 15 days] Duration for total closure closures in year [Not exceeding 45 days]
Dividend & Entitlement

It is applied on only listed companies. a) The Co. shall inform SE regarding decision of the directors relating to the announcement of dividend, bonus issue, right issue, and other entitlement. at least 21 days before the book closure. b) Interim dividend warrant shall be dispatch within 45 days from the date of commencement of book closure. c) Final dividend warrants shall be dispatch to the shareholder within 45 days from the date of AGM at which it has approved. Dividend warrants are dispatched through Regd. post. d) The Co. shall inform the SE as soon as dividend warrants are posted to the share holders. e) All dividend warrants, in addition to the Regd. office of the Co. shall be encashable at Karachi, Lahore, Hyderabad, Sakkhar, Quetta, Multan, Faisalabad, Islamabad, Rawalpindi and Peshawar for the period of 3 months from the date of issue. f) Every Co. shall send to the SE 300 copies of annual report and interim report as soon as these are sent to the share holders.
A listed Co. distributing shares of its unlisted subsidiary Co. in the form of dividend, right issue etc (in kind) shall get such Co. listed on the SE. Co. shall immediately notify to the SE regarding any change in the BOD. Listed Co. shall obtain prior approval of the SE for any amendment in the M/AOA. Intimate SE regarding issue of Participation Term Certificate
De-listing, counter
Suspension
and
defaulter
A Co. may be de-listed, suspended or placed on the defaulter counter for any of the following reasons:
If the shares of a Co. are quoted below 50% of the face value for a continuous period of 3 years. If the Co. has failed to declare dividend or bonus: o For 5 years from the declaration of last dividend and bonus. o For 5 years from the date of commencement of production.[For manufacturing Co.] o For 5 years from the date of commencement of business [in all other case].
Annual General Meeting

a) b) c) Co. shall hold its AGM within 3 months of close of its financial year. The Modaraba shall hold its ARM (Annual Review Meeting) within 4 months of close of its financial year. The period holding of AGM may be extended for a period of maximum 60 days with SE approval. a. SE shall give that approval on production of similar approval from SECP. b. Fee : 1 st month / part => 10,000 nd 2 month / part => 12,500 The Co. shall obtain prior approval from the SE in respect of time and date of AGM. Co. shall furnish copies of minutes of AGM and every EOGM to the SE within 60 days of the meetings. Co. shall furnish a complete list of its shareholders as at 31st December each year, within 30 days. Every listed Co. shall advice the SE regarding all decisions taken by the BOD for changes in capital through issuance of right & bonus shares. Co. shall issue right letters in marketable lots within 30 days from the date of reopening of share transfer register. Co. shall issue bonus shares within 45 days from the date of reopening of share transfer register.
If the Co. has failed to holds its AGM for continues period of 3 years. If the Co. has failed to pay annual listing fee for 2 years. If the Co. has failed to comply with the listing regulations. If the Co. refuse to join CDS. Co. has gone into liquidation, voluntary or by court. Securities on default counter shall be affected separately, (prices quoted separately) Suspension or delisting shall be communicated to Co. and notified to trade by posting it on notice board of SE.
Voluntary De-Listing
A Co. intending to seek voluntary de-listing shall intimate to the SE immediately regarding Intention of the majority shareholders/sponsors to purchase all the shares from other shareholders with the purpose to de-list the Co.. Reasons of voluntary de-listing Minimum price at which the shares are proposed to be purchased. The minimum purchase price proposed by the sponsors will be the highest of benchmark price based upon any of the following: Current market price Average market price (Annual Average) Breakup value based historical cost where [Breakup Value = Equity / no. of shares] Earning multiplier approach Fair value of shares = Estimated Earning x PE Ratio *Estimated Earning= Average price/share of last 3 years. *Price Earning Ratio = Market Price per share / EPS The maximum price at which the sponsors had purchased shares from the market during the 12 months
d) e)
f)
Increase in capital
a)
b) c)
Listing of Subsidiary Co.

Corporate Laws Abridged Form Now SE shall determine the minimum percentage of shares to be purchased by the sponsors to qualify for de-listing. In case of disagreement of the sponsors on minimum percentage of shares to be purchased. The sponsors shall file an appeal with the SECP within 10 days of the decision of the SE. The decision of the SECP shall be final and binding. The sponsors cannot withdraw their offer to purchase their shares if such proposal has been approved by the Co. in a general meting by not less than 3/4th majorities through a special resolution. The SE may for any reasons refuse to accept the proposal of the Co.. The copy of the special resolution passed by the Co. for voluntary de-listing send to SE immediately along with complete list of the shareholders. Together with the application of de-listing the Co. shall submit an undertaking from a purchase agent (who may be commercial bank, investment bank or a member of SE.) The offer to purchase at the relevant price from the other shareholders shall remain open at least for a period of 60 days. The application for voluntary delisting shall be accompanied with the consent of purchase agent. The Co. after passing special resolution shall convey to all the shareholders the decision of the majority shareholders through a register post along with copy of special resolution. A notice in this regard shall also be published in two widely circulated news papers including one in Karachi. On completion of purchase, the Co. shall submit the following information. Total no. of shares issued Shares owned by majority shareholders before the offer Shares purchased under the offer Total shares currently owned by the majority shareholders Shares still outstanding with minority shareholders The sponsors shall continue to remain obliged to purchase the shares still outstanding with the minority from them at relevant price for a period of 12 months from the expiry of initial pay back period. The Co. once de-listed under listing regulation shall not be allowed to re-listing for a period of 5 years.
6. Basis or method for determining such consideration; 7. Detailed assumption and estimates underlying the transfer price and details of computation of transfer price; and 8. A statement whether, in managements opinion, such consideration is an arms length price. The record of all related party transaction shall also be placed before the Board of Directors at each Board meeting for formal approval and before the Audit Committee of the Co.. Transactions not executed as arms length shall be separately placed. The listed companies shall present the record of related party transactions together with all relevant documents, agreements, calculations and explanations to the statutory auditor for the purposes of the statutory audit. All listed companies shall publish and circulate a statement along with their annual reports to setout the status of their compliance with the best practices on Transfer Pricing All listed companies shall ensure that statement of compliance with the best practices of Transfer Pricing is reviewed and certified by statutory auditors.
Code of Corporate Governance

Board of Directors
Independent director
A director who is not connected with the listed Co. or its promoters or directors on basis of family relationship and does not have any other relationship with listed Co. or its associate or related party.
Executive and Non Executive directors

Executive directors are working whole time director and non-executive director, on the other hand include independent person who give outside view point to the BOD of the Co. and do not devote their whole working time to the Co.. The guiding factor distinguishing between executive and non-executive director is the extent of their involvement in the management of the Co.. ED can be defined as paid director and NED as non paid director All listed companies shall encourage effective representation of independent non-executive directors including directors representing minority interest on the BOD, so that, the board as a group includes core competence relevant to each listed Co.. Minority share holders as a class are facilitated to contest election of directors by obtaining proxies. a. The Co. shall annex to the notice of general meting at which director election are to be held, a statement (by the candidate from the minority share holders who seeks to contest election of the BOD). b. This statement shall include the profile of that candidate. c. Also annex, on request of candidate, an additional copy of proxy form duly filled by the candidate, and transmit the same to all shareholders. The directors of the listed Co. shall also include at least one independent director representing institutional equity interest of a banking Co., DFI (Development Financial Institute), NBFI (including
Independent Non Executive Directors
Transfer Pricing
No listed Co. shall use a price other than the arms length price Except in rare circumstances subject to the approval of the BOD, if it is in the interest of the Co. to do so. Directors shall approve transfer pricing policies for related party transaction. For each related party, Co. shall maintain following records: 1. Name of related party; 2. Nature of relationship with related party; 3. Nature of transaction; 4. Amount of transaction; 5. Terms and conditions of transaction, including the amount of consideration received or given;
Corporate Laws Abridged Form Modarabas, leasing companies or investment bank), mutual funds or insurance Co.. Directors nominated by creditors (sec 182) or Federal govt. or by foreign equity holders shall not be taken as independent director. Independent director representing an institutional investor shall be selected by such investors through a resolution of its BOD and the policy with regards to selection of such person for election on BOD of investee Co. shall be disclosed in directors report. Executive director shall not be more than 75% of the elected directors including chief executive, except a. Where relaxed by SECP b. Banking Co. which is required by prudential regulations not to have more than 25% directors as paid executive directors. The directors of listed Co. at the time of filing of their consent to act as director shall give a declaration that they are aware of their duties and powers under the relevant clause of MOA & AOA and Listing regulations of SE.
Qualification & Eligibility to act as director

A Co. shall not have a person a director who is a director of 10 other listed companies. No person shall be selected as director of listed Co. if a. His name not borne on register of National Tax Payers (except: non resident) b. He has been convicted as defaulter of Banking Co., DFI or NBFI. c. He being a member of SE has been declared as defaulter. That person or his spouse shall not be engaged in business of stock brokerage, Unless specifically exempted by SECP 3 Years Any casual vacancy shall be filled by directors within 30 days
Tenure of Office

Responsibilities, Powers & Functions of BOD

Directors shall exercise their powers/duties in best interest of the Co.. Every listed Co. shall ensure that a. A statement of ethics and business practices is prepared and signed by each director and employees in acknowledgment of their understanding and acceptance of the code of conduct, and the same is circulated annually by the directors to establish a standard of conduct for the director and employee. b. The director shall adopt of vision and mission statement and overall corporate strategy for the Co. and also formulate significant policies regarding to 1. Risk management 2. Human Resource Management, 3. Procurement of goods and services 4. Marketing 5. Determination of terms of credit and discount to customers 6. Write off bad debts 7. Acquisition and disposal of fixed assets 8. Investments 9. Borrowings of money 10. Donations and charities etc
11. Determination & Delegation of financial powers 12. Transactions with associated companies and related parties 13. Health safety and environment. A complete record of the significant policies along with dates on which they were approved or amended by the directors shall be maintained. BOD shall define level of materiality keeping in view circumstances of Co. and recommendations of any technical/executive sub-committee. The directors shall establish a system of sound internal control which is effectively implemented at all levels. The following powers shall be exercised by the BOD documented by a resolution passed at a board Meeting. Investment and dis-investment of funds, where, maturity period is 6 months or more [Except in case of Banking Co, DFI, NBFI, Trust & Insurance Co] Determination of nature of loans and advances Write off of bad debts & determination of provision on doubtful debts Write off of inventories and other assets Determination of terms & circumstances in which a law suit may be compromised and claim in favor of Co. may be waived, released etc. Appointment remuneration and terms and conditions of the employment of chief executive officer and other executive directors of the Co. shall be determined and approved by the BOD. In case of Modaraba or NBFI, whose main business is investment in listed securities, BOD shall approve and adopt an investment policy, which is stated in their annual report. All listed companies shall make appropriate arrangements to carry out orientation courses for their directors to acquaint them with their duties & responsibilities and to enable them to manage affairs of the Co..
Meetings of the BOD

The chairman of the listed Co. shall preferably be elected from the non-executive directors. BOD shall clearly define roles and responsibilities of chairman and chief executive, whether or not these offices are be held by separate individual or same individual Chairman shall, if present, preside over meetings of BOD. BOD shall at least meet once in every quarter of financial year. Written notices (including agenda) shall be circulated not less than 7 days before Except in case of emergency meetings where the period is reduced/waived The chairman will ensure that the minutes of meeting of the board are properly recorded and circulated to the directors and officers who entitled to attend meeting not later than 30 days of the meeting unless a shorter period specified in AOA... If director of the Co. is of the view that his dissenting notes have not been appropriately recorded in the minutes, he may refer to the Co. secretary to require him to append his dissenting notes with minutes of meeting. If Co. secretary fails to do so he may file an objection with the SECP.
Corporate Laws Abridged Form Significant issues to be placed for decision by BOD The following matters and significant issues shall be placed for information consideration and approval by the BOD: Annual business plan Cash flow projections and other forecasts Budgets along with variance analysis Quarterly operating activities Internal audit report, including cases of fraud and irregularity Management letter issued by external auditor Details of joint ventures and agreements with distributors and agents Promulgation or amendment of any law rules/regulations/accounting standards which may affect the listed Co. Status and implication of law suits by and against the Co. Any show cause notice, demand, prosecution etc from revenue regulatory authorities Default in payment of loans Failure to recover material amounts Significant accident, dangerous occurrence and instances of pollution involving the listed Co. Dispute with the labor and proposed solution. Payment of goodwill or brand statement duly endorsed by their signature for consideration and approval of the directors. The directors after consideration and approval shall authorize the signing of financial statement for circulation and issuance. The Co. secretary shall furnish a secretarial compliance certificate in a prescribed form as part of annual return filed with the registrar of Co. to satisfy that secretarial and corporate requirement of the Companies Ordinance 1984 has been complied with.
Directors Report (S-236)

The director shall include their statement to the following effect in the directors report prepared under section 236 of the Companies Ordinance, 1984
The financial statement prepared by the management of the listed Co., present fairly its state of affairs the results of operations, cash flow and changes in equity.
Proper books of account have been maintained. Appropriate accounting policies have been consistently applied in preparation of financial statement and accounting estimates are based on reasonable and prudent judgment.
Chief Financial Officer (CFO) and Co. Secretary (CS)

Appointment & Removal
The appointment, remuneration and terms and conditions of the employment of the CFO and CS and the head of internal audit shall be determined by CEO with the approval of the board. They shall not be removed except by the CEO with the approval of the board.
International accounting standard as applicable in Pakistan have been followed in preparation of financial statement and any departure there from have been adequately disclosed.
Internal control is sound and effectively implemented. There is no significantly doubt on the ability of Co. to continue or going concern. There is no material departure from the best practices of the corporate governance. The following matters shall also be disclosed in the directors report (if necessary): If the Co. is not considered to be going concern the reason shall be disclosed. Significant deviation from last year operating results along with reasons. Keep operating and financial data of last 6 years in summarized form. If the Co. has no declared dividend or issue bonus shares, the reason shall be given. Where any statutory payments (Taxes & Duties) are outstanding the reason shall be disclosed. Significant plans and decisions like corporate restructuring, business expansion and discontinuance of operations shall be given along with future prospects risks and uncertainty. Statement on the value of investment of provident fund, gratuity and pension fund shall be disclosed. Number of boards meeting held during the year and attendance by each director shall be disclosed. All trade in shares of Co., carried out by its directors, CEO, CFO, Co. Secretary and their spouses & minor children. The pattern of share holding shall be reported to disclose the aggregate number of shares (along with name wise detail) held by: o Associated companies and related parties (name wise)
Qualification
CFO Member of recognized body of professional accountant ; or Graduate from recognized university or equivalent having at least 5 years experience of financial and corporate affairs of a listed Co. or a bank or a financial institution. CS Member of recognized body of professional accountants Member of recognized body of corporate chartered secretary MBA, M.COM, LLB having at least 5 years of relevant experience
Requirement to attend Board Meetings

The CFO and Co. secretary shall attend the meeting of BOD and would not be deemed to be directors and cast vote at the meeting 2. They shall not attend such part of meeting of BOD which involves consideration of agenda items relating to CFO, CS, CEO or any director. Corporate & financial Reporting Framework 1.
Responsibility of Financial Reporting and Corporate Compliance

Responsibility
No listed Co. can circulate its financial unless the CFO and CEO present the financial
Corporate Laws Abridged Form o NIT and ICP (name wise) o Directors, CEO and their spouses & minor children (name wise) o Executives; [Employee of Co. other than CEO & Directors whose annual basic salary > 500,000] o Public sector Co. and corporations (Government owned) o Banks, DFI, NBFI, insurance companies, Modarabas and mutual funds o Share holders holding 10% or more voting rights
For companies having share capital < 500 million, at least 50 % shall be offered
Divestiture of Shares Sponsors/Controlling Interest
by
Frequency of Financial Reporting

Quarterly un-audited financial statements having directors review on affairs of Co. be published and circulated within 1 month. Half yearly statements shall have auditors limited review and shall be circulated within 2 months.
Annual reports shall be circulated within 4 months.(Now 3 in Companies Ordinance 1984) Listed companies shall immediately disseminate information to Stock exchange and SECP which affects their share price. This information may include but shall not be restricted to information regarding a joint venture, merger or acquisition or loss of any material contract; purchase or sale of significant assets; any unforeseen or undisclosed impairment of assets due to technological obsolescence, etc.; delay/ loss of production due to strike, fire, natural calamities, major breakdown, etc.; issue or redemption of any securities; a major change in borrowings including any default in repayment or rescheduling of loans; and change in directors, Chairman or CEO of the listed Co..
In the event of divestiture of not less than 75% of the total shareholding of a listed Co., other than A divestiture by non-resident shareholders in favor of other non-resident shareholders; or A disinvestment through the process of privatization by the Federal or Provincial Government at a price higher than the market value ruling at the time of divestiture, then Directors shall allow the transfer of shares after it has been ascertained that an offer in writing has been made to the minority shareholders for acquisition of their shares at the same price at which the divestiture of majority shares was contemplated. Where the offer price to minority shareholders is lower than the price offered for acquisition of controlling interest, such offer price shall be subject to the approval of the SECP
Audit Committee
Composition
The director shall establish an audit committee which shall comprise not less than three members including chairman Majority of members shall be from Non-Executive directors (NED). Chairman of the committee shall be preferably from NED. The names of the members of audit committee shall be given in the annual report. The audit committee shall meet at least once every quarter of the financial year. These meetings shall be held a. Prior to approval of interim results of the Co. b. Before and after the completion of external audit. A meeting of the audit committee shall also be held if requested by external auditor or the head of internal audit. The CFO and the head of internal audit and a representative of external audit shall attend meetings of the audit committee at which issues relating to the accounts and audit are discussed. Provided, that at least once a year the audit committee shall meet alone with the i. External auditor [without presence of CFO and head of internal audit.] ii. Head of internal audit [without presence of CFO and external auditor.]
Frequency of Meetings

Auditors not to hold shares

Auditors (partners, spouse, minor children) can not sale, purchaser hold shares in listed Co. or its associate. If they hold prior to appointment, they will notify in 14 days and will dispose those in 90 days.
Disclosure of interest by directors holding Co.s shares

Where any director/CEO sells/buys share of its Co., he shall notify Co. Secretary immediately and also deliver written record of price, No. of shares/certificates within 4 days to Co. Secretary. This notice shall be presented by Co.s secretary at immediate next Board Meeting If there is default in giving notice by director etc, Co.s secretary shall place this matter before immediate Board meeting. Every listed Co. shall determine a closed period prior to announcement of interim/final results and any business decision which may materially affect share price. No director/CEO/Executive shall deal in shares of that Co. whether directly on indirectly, during that closed period.
Attendance at Meetings
Reporting Procedure
Audit committee shall appoint a secretary who shall circulate the minutes of the meeting to the members of committee, directors and CFO within the fortnight.
Offer of shares by Co. proposed to be listed

Every Co. proposed to be listed at time of public offer shall comply with the requirement as given in the related listing regulations According to listing regulation of KSE, Co. shall offer higher of i. 250 million or ii. 25% of share capital.
Terms of Reference of Audit Committee

The BOD of the Co. shall determine the terms of reference of audit committee Audit committee shall inter alia (along other things) be responsible for recommending to the BOD, the appointment of external auditor and shall consider any question of resignation or removal of external auditor, audit fee and other services by external auditors.
Internal Auditor

The terms of reference also includes the following: 1. Determination of appropriate measures to safe guard Co.s assets 2. Review of preliminary announcements of results prior to publication 3. Review of quarterly, half yearly and annual financial statement prior to approval of BOD, focusing on: Major judgment areas Significant adjustment resulting from the audit Going concern assumption Changes in accounting policies Compliance with applicable accounting standards Compliance with listing regulations & other statutory requirement 4. Facilitating the external auditor and discussion with them on their major observations. 5. Review of management letter issued by external auditor and management response thereto. 6. Ensuring coordination between internal and external auditor 7. Review of scope, extent and resources of internal audit function. 8. Consideration of major finding of the internal investigation 9. Ascertaining that the adequacy and affectivity of internal control system including financial and operational controls and accounting system and reporting structure 10. Monitoring compliance with the best practices of the corporate governance 11. Instituting special projects, value for money studies or other investigations on any matter specified by BOD in consultation with CEO. 12. Any other matter as may be assigned by the BOD In listed companies, there should be an internal audit function. Head of internal audit shall have access to the chair of audit committee. Co. shall ensure providence of Internal auditors reports for review by external auditors. Auditors shall discuss any major findings with relation to the reports with audit committee, which shall report significant matters to BOD. No listed Co. shall appoint as external auditor who is not been given satisfactory rating under the QCR program of ICAP. The external auditor shall be compliant with IFAC guidelines on code of ethics as adopted by ICAP. The BOD shall recommend the appointment of external auditors for one year as suggested by audit committee. The recommendations shall be included in the director report. If change of auditor recommended before 3 consecutive years, reasons should be included in Directors Report. No listed Co. shall appoint external auditor to provide services in addition to audit Except in accordance with the IFAC guidelines. All listed Co. in the financial sector shall change their external auditor every five years.
Financial sector include Banks, NBFCs, Modaraba and Insurance companies. All listed companies other than these financial sector companies shall at minimum rotate the engagement partners every 5 years. No listed Co. shall appoint as CEO, CFO, Internal auditor or director who was at any time during the preceding 2 years a. Partner of the firm of external auditor; or b. An employee who is involved in the audit of the Co.; or c. Close of relation of such partner or employee. The Co. shall acquire the external auditor to furnish the management letter to its board of directors not later than 30 days of audit report. Every listed Co. require a partner of the firm of auditor to attend the AGM at which accounts are approved.
Compliance with the Codes
The listed Co. shall publish in the annual reports a statement of compliance with the best practice of the code of corporate governance. This statement shall be reviewed by the external auditors. SECP may relax any of best practices, if it is impracticable to comply, for reasons to be recorded.
Banking Companies Ordinance, 1962

Accounts
The provisions of BCO relating to preparation of accounts are applicable to: Every banking Co. incorporated in Pakistan Every banking Co. incorporated outside Pakistan in respect of business transacted through branches in Pakistan The accounts are prepared on the expiry of every calendar year The accounts are also published in the prescribed manner in newspaper The accounts shall be signed by
In case of banking Co. incorporated in Pakistan

Manager or principal officer and at least 3 directors (if directors < 3, then all)
External Auditor
In case of banking outside Pakistan
Co.
incorporated
Manager or principal officer in Pakistan and by another officer next in seniority The requirement of Companies Ordinance, 1984 in respect of preparation, transmission and filling of accounts etc shall be applicable B/S and P & L prepared in accordance with provisions of BCO shall be audited by a CA who is borne on penal of auditors maintained by SBP. Auditors shall hold office for 3 years [cannot be removed before expiry of term except approval by SECP] Accounts & Audit report shall be furnished as returns to SBP within 3 months of close of period to
Audit
Corporate Laws Abridged Form which they relate. [ further extension of 3 months in special circumstances ] Every banking Co. incorporated outside Pakistan is required to display at a prominent place in the principal office and in every branch in Pakistan, copy of latest accounts not later than 1st Monday of August. These accounts shall remain displayed until replaced by subsequent accounts. Audit is conducted as per direction of SBP 3 copies of accounts shall be sent to Registrar
Group Accounts are used by the clients who do not want to utilize the facility of sub-accounts. Each group account contains securities owned by the group of clients. The detailed break up of securities held by each member is maintained outside CDS
Cash Accounts
The participants who opts DVP facility are required to deposit a rolling settlement fund to be used for settlement of DVP obligations. Balance of that fund would be stored in that account
Corporate Actions
Central Depository Act, 1997

Overview
The CDS is an electronic book entry system to record the transfer of securities. Central Depository Co. (CDC) has implemented it that works similar to a Bank. Securities will be deposited in CDS and transaction would be completed electronically, thereby, removing the difficulties of counting, verification, storage and transportation of certificates including settlement on the stock exchange. 3 main reasons for implementation of CDS o Exceptional growth in Stock market of Pakistan during the last several years o Problems of manual delivery, settlement & transfer procedures o Recommendation by Group of Thirty (Private International Body)
Meetings
CDS will provide a list of beneficial owners to enable the issuer to issue notices of general meetings under the Companies Ordinance, 1984. When shares are in CDS the beneficial owner has to produce original NIC or passport while attending the meeting. When proxies are appointed; the form of proxy shall be witnessed and enclosed by attested copies NIC or passport of the both appointer and the proxy. Form of proxy shall contain CDS A/C # of appointer. The CDC will prepare a list of beneficial owners who are entitled to receive the dividend on the date of book closure. This list shall contain necessary information like particulars, no. of shares, face value of shares, gross dividend, income tax, Zakat and net dividend etc. The Co. and the issuer or its appointed Registrar will prepare dividend warrant on the basis of above information and dispatch to beneficial owners.
Dividend
Basic Operations of CDS

Deposit of existing securities into CDS Withdrawal of security from system Free transfer or book entry transfer without physical movement Pledge and de-pledge of securities DVP delivery vs. payment facility Various corporate actions under Companies Ordinance, 1984 Account Holder Participant (Just like members of Stock Exchange) Issuer Eligible pledge DVP (Delivery Verses Payment) A/c Holder Main Account House Account Sub Account Group Client Account (Omnibus Account) Cash Account / DVP Account
Bonus shares
In case of bonus shares the CDC, on receipt of intimation from the Co. shall increase the holding of each beneficial owner with the bonus shares.
Right shares
The CDC shall provide list of beneficial owners to the Co. together with right entitlement. The Co. shall prepare letter of right and dispatch to the beneficial owner. The CDC accounts of beneficial owners shall be credited after subscription of right money. CDC will calculate new share balance on the basis of existing share holding. A program will run which will replace the old balances with the new balances.
Elements of CDC

Consolidation and sub division of capital
Account Structure
Establishment of CDC
Eligibility for Registration
Co. must be Public Co. The Co. must have entered into technical collaboration agreement for equity participation with international institution. At least one stock exchange must be a shareholder of CDC. Directors shall fulfill prescribed criteria and the promoters must be person of means and integrity and have special knowledge of the matters which the Co. has to deal. Promoters, directors & employees etc shall be free from any default. Application on prescribe form [Form I] to SECP. Application fee is Rs. 500,000. If the SECP is satisfied from the information and applicant is eligible for registration & it would be
Main Account
Each participant in the CDS is allocated a main Account by virtue of being participant in system. This account is mainly used as transit account for movement of securities and settlement of deliveries by the participant.
House Account
It is used for securities beneficiary owned by the participant
Sub Account (Client Account)

It is used for keeping the securities belonging to the client of the participant. A participant is allowed to open any number of subaccounts
Registration

Group Client Account

Corporate Laws Abridged Form in the interest of capital market it shall grant registration certificate. The registration is valid for one year and renewable on payment of fee of 100,000.
Modarabas Companies and Modaraba (Floatation & Control) Ordinance, 1980

Modaraba
Means a business in which a person participates with his money and another with his efforts or skills or both his efforts and skills and includes unit trusts and mutual funds by whatever name called.
3. Documents to be attached
General particulars Names of associated Co. and the Co. where they have directors in the past Financial standing Professional qualification Experience along with supported documents Affidavit of each person
Modaraba Fund
Means a fund raised through floatation of Modaraba.
Modaraba Certificate
Means a certificate of definite denomination issued to the subscriber of the modaraba acknowledging receipt of money subscribe by him.
Modaraba Co.
Means a Co. engaged in the business of floating and managing modaraba.
The application shall be accompanied by following documents: Five copies of MOA & AOA Five copies of certificate of incorporation Five copies of latest audited accounts Precise description of business being done The undertaking that any change made by the Co. in the MOA & AOA and the BOD as may be required by the Registrar If the Registrar is satisfied that the applicant shall be eligible for registration and it is in the public interest to do so, it may grant registration.
Types of Modaraba
A modaraba having one specific purpose or objective
Registrar
Means the Registrar of modaraba and Modaraba Co. appointed by the Federal Govt. for the purpose of this Ordinance.
Specific Purpose Modaraba

A modaraba having more than one specific purpose or objectives
Religious Board
The Federal Govt. has constituted a religious board which consists of three members one of whom is chairman and two members are religious scholars and chairman shall be a person who is to be qualified for a Judge of High Court.
Multi Purpose Modaraba

A modaraba may be either for a fixed period or for an indefinite period.
Business Objects of Modaraba

The business objects of modaraba must not be opposed to the injunction of Islam. The Registrar shall not permit the floatation of modaraba unless the Religious Board has certified in writing that the modaraba is not a business opposed to the injunction of Islam. The business objects of modaraba are contained in prospectus and being not a Co. it has not any MOA & AOA.
Registration
No Co. shall operate as Modaraba Co. with out registration to Registrar (Modaraba)
Eligibility for Registration

1. 2. Co. must be incorporated Minimum capital requirement: If the Co. is only engaged in floatation and management of Modaraba, not less than 2.5 million If the Co. is engaged in other business, at least Rs. 7.5 million of which Rs. 2.5 million must be set aside for modaraba management. 3. The directors and officers must fulfill the following conditions: Normal criteria (as mentioned in Companies Ordinance, 1984) The promoters and directors should be in the opinion of Registrar persons of means and integrity and have special knowledge of the matters which the modaraba Co. has to deal.
Modaraba to be Legal Person

Modaraba shall sue and to be sued in its own name but through the modaraba Co.. The assets and liabilities of each modaraba shall be separate and distinct from another modaraba and also from the modaraba Co..
Capital of Modaraba
The capital of modaraba shall be called certificate capital. There is no provision in the Modaraba Ordinance for the minimum capital required, however, modaraba is to be listed on SE it has to follow the Listing Regulations in this regard. (200 million) As per Modaraba Rules the modaraba Co. must subscribe 10% of the modaraba fund, however, through subsequent guideline the Registrar of modaraba has increase this requirement to 20%. Further more listing requirement has provided that 30% of the modaraba fund shall subscribe by Modaraba Co., directors, sponsors, friends and relatives etc. The modaraba certificates do not carrying any voting rights and these are transferable like share through transfer deed.
Registration
A Co. which is eligible for registration as Modaraba Co. may make an application on prescribed form to registrar. (Form IX)
Contents of Application (Form IX)

1. Particulars of the Co.:
Name Status Date & placement of registration Address Authorized and Paid up Capital Details of persons or group controlling the Co. Names of subsidiary, holding and associated companies Description and place of business
Floatation and Authorization of Modaraba

A modaraba Co. Regd. under the Modaraba Ordinance can apply to the Registrar for obtaining permission to floating modaraba. It shall submit an application on prescribe form-I.
Contents of Form-I
Name and address of Modaraba Co. and its registration number
2. Particulars of Directors and Officers www.canotes.multiply.com
Corporate Laws Abridged Form Name and type of modaraba indicating exact purpose objectives and duration of modaraba Description of business operations, organizational set up, plans and prospects along with feasibility report Details showing how the business and operation shall be conducted and how the operation will no be opposed to the Principals of Islam Amount of modaraba fund to be floated, its division and conditions Amount to be subscribe by Modaraba Co. and amount to be set aside for modaraba management Form of modaraba certificate [Same as Share Certificate] The following documents shall be annexed with the application: Certified copy of the registration certificate of the modaraba Co. Five copies of prospectus signed by all directors of Modaraba Co.. Five copies of the latest audited accounts of the Co. The registrar after obtaining a certificate from the Religious Board and after being satisfied that it is in the public interest shall grant a certificate to the modaraba Co. authorizing it to float a modaraba.
Modaraba Co. shall maintain separate bank account, fund ,assets and liabilities of each Modaraba.
Remuneration of Modaraba Co.

The remuneration of Modaraba Co. shall be not more than 10% of the annual net profit of the modaraba on the basis of audited accounts
Accounts and Audit Accounts

A Modaraba Co. is responsible to ensure that proper books of accounts are kept for each Modaraba at the Regd. office of the Co.. Modaraba Co. shall be responsible to prepare, circulate and file accounts of Modaraba in a prescribe manner. (Accounts are maintained like listed companies, IAS are applicable, and Disclosures are prepared according to 3 rd schedule to the Modaraba Rules)
Authentication of Accounts
The accounts of Modaraba are authenticated by the chief executive and two directors of the Modaraba Co..
Audit
Qualification of Auditor
Same as provided in Companies Ordinance, 1984.
Appointment of Auditor
The appointment of auditor of Modaraba is made by a Modaraba Co. with the approval of Registrar. The auditor of Modaraba shall be independent of the auditor of the Modaraba Co.. The terms of appointment of the auditor of Modaraba and including fee etc. shall be approved by the Registrar annually.
Listing on the Stock Exchange

After getting authorization from Registrar Modaraba the Modaraba Co. shall take necessary steps for listing of Modaraba on SE inviting general public to subscribe to the modaraba certificate. (Listing procedure is same)
Prospectus of Modaraba
The disclosure requirement of the prospectus of modaraba are more or less the same as provided in the Companies Ordinance, 1984, however, the Modaraba Ordinance and Rules prescribe independent disclosure of the prospectus of Modaraba which are given in the forth schedule to the Modaraba Rules. The prospectus is signed by all the directors of Modaraba Co.. The copy of the prospectus is filed with registrar of Modaraba for registration. The business operations of Modaraba are provided in the prospectus which are vetted by the religious board. The Modaraba must be floated within 12 months of the date of authorization.
Removal of Auditor
A Modaraba Co. seeking to appoint auditor other than the existing auditor, must inform the existing auditor in writing given reasons of change and copy to Registrar. The Registrar, if he desires and after obtaining necessary clarifications and explanations from the existing auditor shall take the decision, which shall be final. An auditor may resign from his appointment with the approval of Registrar.
Profit Distribution of Modaraba

A Modaraba may distribute profit in cash or issue of bonus certificates out of capitalized reserves or profit. Dividend may be interim or final. (Same in case of Companies Ordinance, 1984). If 90% of profit is distributed to the modaraba certificate holders, the income of the modaraba shall be exempt from tax. The Modaraba Co. before declaring the dividend may set aside necessary reserves to comply with Prudential Regulation for Modaraba.
Conditions Applicable to Modaraba Co. and Modaraba

A Modaraba Co. shall not carry on any business which is carried on by Modaraba floated by it. Neither the Modaraba Co. nor any of its director/officer shall obtain any loan or advance from modaraba fund. No allotment of modaraba certificate is made unless a prospectus approved by Registrar has been issued and the minimum subscription has been received. All money received from the applicants of modaraba fund shall be deposited in a separate bank account. Modaraba Co. shall issue modaraba certificate within 30 days of allotment. Modaraba Co. shall maintain register of certificate holders.
Return of Allotment
Whenever the Co. makes any allotment of modaraba certificates it must file with the Registrar a return of allotment within one month of allotment.
Annual List of Certificate Holders

Every Modaraba Co. shall in respect of Modaraba prepare and file with the Registrar a list of certificate holders & summary in the following manner: Within 18 months from modaraba floatation and Thereafter, once at least in every year The above list is prepared on the date of reopening of the register of the certificate holders relating to final dividend and if there is no such date, 31 st December of the year. The list is filed with the Registrar within 30 days of the respective date.
Mortgage & Charges

All the charges created on the assets of Modaraba are to be Regd. with the registrar within 21 days of the creation of the charge. (procedure is same as in Companies Ordinance, 1984) iii.
Business of the Modaraba has been conducted for a fraudulent purpose The Tribunal of the opinion that it is just and equitable that Modaraba should be wound up. On application to Registrar of 10% or more certificate holders of Modaraba, there can be an inspection of modaraba or a particular transaction. A Modaraba Co. can also be replaced by a new modaraba Co. or by an administrator by Registrar.
Increasing the Modaraba Fund (Nominal Fund)

A Modaraba Co. may under the authority of a board resolution decide to increase the modaraba fund. The fund shall be increased after alteration of prospectus with the approval of Registrar. Before giving approval the registrar at the expense of Modaraba shall issue a notice in news paper for the proposed increase for knowing the opinion of modaraba certificate holders and others within the period not less than 14 days. After getting permission from Registrar Modaraba Co. shall be authorize to increase the authorize fund/nominal fund.
Misc.
Insurance Ordinance, 2000

Every insurer in respect of all insurance business and in case of insurer incorporated outside Pakistan in respect of insurance business transacted in Pakistan, shall maintain proper books of accounts A Register of records of policies( with particulars) A Register of records of claims( with particulars) Other books & Records as may be prescribed. Every Insurer shall furnish a statement of Assets & Liabilities. The accounts shall be signed in the following manner:
Further Issue of Modaraba Certificates in the Form of Right

Same as in case of Companies Ordinance, 1984
Annual Review Meeting of Modaraba (ARM)

Each Modaraba shall hold an ARM of its certificate holders in the town in which the Regd. office of the Modaraba Co. is situated. The purpose of meeting is to review the performance of Modaraba during the year. It is held within the 4 months of the close of financial year of Modaraba. There is no voting right of certificate holders in the meeting. For the purpose of notice of the meeting the provision of Companies Ordinance, 1984 is applicable mutatis mutandis.
Insurer incorporated in Pakistan; Chairman plus 2 directors
Winding up of Modaraba
Circumstances in which Modaraba may be wound up Voluntarily
i. A Modaraba may be wound up voluntarily under the following conditions: Time period for which the Modaraba was formed has been expired The specific purpose for which the Modaraba was formed has been achieved All the directors of Modaraba Co. shall make a declaration (Declaration of Solvency) that they have made full inquiry about the affairs of Modaraba and they have formed an opinion that Modaraba shall be able to discharge its liabilities and pay the amount of modaraba fund in full within the period of 12 months. The above declaration shall be supported by auditor certificate and it shall have no effect unless it is filed with the Registrar within 90 days expiry of period for which Modaraba has formed or accomplishing the purpose of Modaraba.
plus Principal Officers with names
Insurer incorporated outside Pakistan; Principal Officer in

Pakistan plus two directors or closest comparable officer equivalent thereto.
Audit
Every Insurance Co. shall appoint an auditor who shall be Approved by SECP to perform audit of Insurance Companies
ii.
Authorized by Companies Ordinance 1984 to perform audit of public companies. SECP may appoint an auditor (other than Co.s) to investigate such accounts, statements and books as SECP may direct. [Special Audit] Audited accounts shall be submitted to SECP within 4 months from end of period. [Further
iii.
extension 15 days]
Circumstances in which Modaraba may be wound up by Modaraba Tribunal

A Modaraba shall be wound up by the Tribunal on an application made by the Registrar if: i. In case of voluntary winding up the required declaration has not been filed ii. In case the registrar has declared that: Modaraba has unable to pay its liabilities Accumulated losses of the Modaraba exceeds 50% of the paid up fund
Following course grid is not covered in this portion..

Securities and Exchange SEC (Insurance) Rules 2002 including regulations and Format accounts. Broad understanding of the Code of Corporate Governance for listed and unlisted insurance companies Please refer to original sources for these regulations and code. (Available at www.canotes.multiply.com in Corporate Laws Complete Course 1/2)
Security & Exchange Ordinance, 1969 Security & Exchange Rules, 1971
LISTING OF SECURITIES (Section 9)
Any Issuer (Co.) who intends to get its securities listed on the Stock Exchange shall submit an application in a prescribed form to the Stock Exchange and a copy to SECP. Stock Exchange if satisfied may list the securities for dealing on the Stock Exchange. If the Stock Exchange refuses to list the securities then Co. can file petition with the SECP. SECP through an Order may direct the Stock Exchange to list the securities. Where after listing of the security the SECP or the SE find that The application is deficient in any material respect; or The issuer (Co.) has failed to comply with any prescribed conditions or rules The continued listing of the security would not be in public interest The SECP/SE may by order require the issuer to correct the deficiency or comply with the prescribed conditions or may revoke the listing. A listed security may be de-listed on the application of issuer. o The SE may deny or grant the delisting for the protection of investor. o Where SE refuses to de-list a security the SECP on the petition of issuer may direct the SE to de-list the security. The SECP or the SE, if thinks appropriate may suspend the trading of any listed security for a period of 60 days and the suspension period and the suspension period may be extended for another 60 days.
compensation to pay, which shall not less than the amount of loss sustained by the other person. Where the loss is not determined the amount of compensation equal to gain approved or loss avoided by a person shall be payable to SECP as arrears of Land Revenue.
In addition to the compensation a person shall be punishable to imprisonment for a term which may extend to 3 years or with a fine which may extend to 3 times of the gain approved or loss avoided or both.
Competition Ordinance, 2007 & Regulations

Taken from Notes of Sir Kashif Adeel available at www.financedoctors.net
DEFINITIONS [2 & REGULATIONS]

CCP means the Competition Commission of Pakistan established u/s 12; Chairman means the Chairman of the CCP and includes the Acting Chairman; Member means a member of the CCP
Minister means the Federal Minister for Finance and, in his absence, the Adviser to the Prime Minister on Finance; complainant means person or persons who provide such information to the CCP which is alleged having been concealed or omitted by the merger parties.
Prohibition of deal on Stock Exchange by Insider [ SECTION 15(A) ]

No person who is or has been at any time during preceding six months associated with a Co. shall directly or indirectly deal on SE in any listed security or cause any other person to deal in the security if he has the information which: 1. Is not generally available 2. Relates to a Co. 3. Would if become available it is likely to materially effect the price of that security.
undertaking means any natural or legal person, governmental body including a regulatory authority, body corporate, partnership, association; trust or other entity in any way engaged, directly or indirectly, in the production, supply, distribution of goods or provision or control of services and shall include an association of undertakings; acquisition means any change of control of an undertaking by way of acquisition of shares, assets or any other means;
agreement includes any arrangement, understanding or practice, whether or not it is in writing or intended to be legally enforceable; dominant position of one undertaking or several undertakings in a relevant market shall be deemed to exist if such undertaking(s) have the ability to behave to an appreciable extent independently of competitors, customers, consumers and suppliers and the position of an undertaking shall be presumed to be dominant if its share of the relevant market exceeds 40%; merger means the merger, acquisition, amalgamation, combination or joining of two or more undertakings into an existing undertaking or to form a new undertaking; and expression "merge" means to merge, acquire, amalgamate, combine or join, as the context may require; confidential means commercial or technical information the disclosure of which would, or might, in the opinion of the CCP, significantly harm the legitimate business information interests of the undertaking to which it relates.
Liab. for contravention of Section 15-A [SECTION 15(B) ]

Where a person contravenes the provision of S-15(A) the SECP shall issue a show cause notice. If the person to whom the notice has been issued satisfied the SECP that: Any dealing on SE or any information communicated was not made with the intention of making any profit or causing a loss to a person. The dealing on the SE or any information was communicated in good faith in discharge of legal responsibilities, then the SECP withdraw the notice. If SECP is not satisfied with the explanation of person, it may direct him to pay any other who suffered loss for any contravention of S-15(A)
a) b)
favorable means decision that a merger has not infringed, or that an intended merger if carried into effect, will not infringe this Ordinance. Decision merger refers to both mergers and
Corporate Laws Abridged Form intended mergers situation
relevant means the market which shall be determined by the CCP with reference to a product market and a geographic market and market a product market comprises all those products or services which are regarded as interchangeable or substitutable by the consumers by reason of the products' characteristics, prices and intended uses and a geographic market comprises the area in which the undertakings concerned are involved in the supply of products or services and in which the conditions of competition are sufficiently homogeneous and which can be distinguished from neighboring geographic areas because, in particular the conditions of competition are appreciably different in those areas; retailer in relation to the sale of any goods, means, a person who sells the goods to any other person other than for re-sale; wholesaler in relation to the sale of any goods, means a person who purchases goods and sells them to any other person for re-sale;
d) Limiting technical development for production and sales of goods or services. e) Collusive tendering or bidding for purchase and sale of goods and procurement of services. f) Applying different conditions for equivalent transactions to different parties. g) Making conclusion of contract subject to acceptance of others. EXEMPTIONS TO PROHIBITED AGREEMENTS [5to9]
INDIVIDUAL EXEMPTIONS
When it is granted? If request to CCP for exemption has been made by party to contract; or Practice meets the criteria for exemption. Exemption period The exemption shall be for a specified period and may have effect from an earlier date on which it is granted. The exemption period may be extended in the specified circumstances.
CANCELLATION OF INDIVIDUAL EXEMPTION
goods includes any item, raw material, product or by-product which is sold-for consideration; service means a service of any description whether industrial, trade, professional or otherwise;
When it is cancelled? If the CCP has reasonable grounds that the information was incomplete, false or misleading or the circumstance has changed upon which the exemption was granted Consequences and actions CCP may take the following action after a notice in writing: (i) Cancel the exemption. (ii) Vary or remove any conditions or obligations. (iii) Impose additional conditions or obligations.
BLOCK EXEMPTION
PROHIBITIONS
1. ABUSE OF DOMINANT POSITION [3] Abuse of dominant position is prohibited. An abuse of dominant position consists of practices which prevent, restrict, reduce or distort competition in the relevant market.
Examples of such practices include:
a) Limiting production, sale and unreasonable increase in prices or other unfair trading conditions. b) Charging different prices from different customers for the same goods or services without justification (price discrimination). c) Making sale conditional with purchase of other goods or services (tie-ins). d) Making the conclusion of contract subject to the acceptance of others. e) Dissimilar conditions for equivalent transactions for different parties (competitive disadvantage). f) Exit the competitor; prevent new entry and creating monopoly in the market by predatory prices. g) Boycott, exclude other undertaking from production, distribution or sale of goods or services. h) Refusal to deal. 2. PROHIBITED AGREEMENTS [4] An undertaking or an association of undertakings shall not enter into a contract or take a decision for production, supply, distribution or control of goods or services to prevent, restrict or reduce competition in the relevant market except when granted exemption under this Ordinance. A contract entered into in contravention of this section shall be void.
Prohibited agreements include:
Who may grant? CCP Scope Contracts meeting criteria for individual and block exemption both When it is cancelled? Breach of condition imposed by order. Failure to comply with the obligation imposed by order. A particular agreement does not meet the criteria for exemption. Pre-requisites Before making an order the CCP shall: (i) Publish the details of proposed order for bringing it to the attention of the affected. (ii) Consider any representation made in this respect. Retrospective The order may have effect from an earlier date.
CRITERIA FOR INDIVIDUAL AND BLOCK EXEMPT ION
CCP may grant individual & block exemption on application by undertaking in respect of following agreements: Improving production or distribution. Promoting technical or economic progress allowing consumers a fair share of resulting benefits. The benefits of that clearly outweigh the adverse effect of absence or lessening of competition. 3. DECEPTIVE MARKETING PRACTICES [10] An undertaking shall NOT enter into the deceptive marketing practices. Deceptive marketing practices shall be deemed to be continued in following circumstances: a) Distribution of false/misleading information capable of harming business interests of other undertaking. b) Distribution of false/misleading information to customers lacking reasonable basis about prices, character, method or place of production, properties, suitability for use or quality of goods c) False or misleading comparison of goods in advertising
a) Fixing prices / imposing restrictive trading conditions for purchase, sale and distribution of goods & services. b) Dividing market by territories, volume of sale, purchase or type of goods and services. c) Fixing quantity of goods for production, sale or means for services.
Corporate Laws Abridged Form d) Fraudulent use of anothers trademark, firm name, product labeling or packaging
REQUIREMENTS AS TO APPLICATION
4. Mergers Lessening Competition [11 & regulations]

PROHIBITION An undertaking shall NOT enter into a merger which substantially lessens the competition by creating or strengthening a dominant position in the relevant market.
WHAT IS MERGER?
Dispensing: The CCP may dispense with any particular information by giving a notice with to applicant. Compliance: The CCP may allow the part of application to be complied with in alternate and alternate manner if it is impossible to be complied with. The application may be manner rejected if it is not in compliance. No. of copies: 3 copies or as many copies and in such manner as required. Fee: The application shall be accompanied by fee paid by challan or draft.
Rates of fee:
Merger shall be deemed to have occurred if: 2 / more independent undertakings merge into new undertaking & cease to exist as separate legal entities 1 undertaking is absorbed by another with the latter retaining its legal entity and former ceasing to exist; 1 / more persons or other undertakings acquire direct or indirect control of the whole or part of one or more other undertakings; Acquisition by one undertaking of the assets or a substantial part of the assets, of another undertaking is to place the first undertaking in a position to replace or substantially replace the second undertaking; A collaborative arrangement by which two or more undertaking devote their resources to pursue a common objective.
REQUIREMENT FOR PRIOR CLEARANCE
Turnover (Rs in million) Upto 500 500-750 750-1,000 Exceeding 1,000

NOTICE TO OTHER PARTIES
Fees (Rs.) 250,000 400,000 500,000 750,000
Notice of intended merger is to be given to all other parties. CCP may specify to give notice to such other parties if the applicant is unable to contact other parties.
FACTORS FOR DETERMINAT ION OF SUBSTANTIAL LESSENING OF COMPETITION
An undertaking(s) shall apply for clearance of the intended merger if: (i) An undertaking intends to acquire shares or assets of other undertaking. (ii) Two or more undertakings intend to merge whole or part of their businesses. (iii) Undertaking(s) meet the pre-merger notification threshold.
THRESHOLD FOR APPLICAT ION
Application for clearance shall be made for intended merger which may substantially lessen the competition by dominant position. The undertaking(s) shall give notice of intended merger within 07 days of agreement of intended merger. The application shall not be made unless: The Value of Is at least Gross asset of undertaking excluding goodwill. Rs. 300 million Combined assets (all undertakings) Rs. 1 billion Annual turnover of undertaking in preceding year Rs. 500 million Combined turnover (all undertakings) Rs. 1 billion The CCP may change the thresholds from time to time after publication in Gazette.
PRE MERGER APPLICATION
The CCP shall asses the strength of competition and the probability that the parties after merger will behave competitively in the relevant market after taking into account the following factors: (a) the actual and potential level of import competition in the market; (b) the ease of entry into the market, including tariff and regulatory barriers; (c) the level and trends of concentration, and history of collusion, in the market; (d) the degree of countervailing power in the market; (e) the dynamic characteristics of the market, including growth, innovation, and product differentiation; (f) the nature and extent of vertical integration in the market; (g) whether the business or part of the business of a merger party or merger has failed or is likely to fail; and (h) whether the merger situation will result in the removal of an effective competitor
PHASEI ORDER BY CCP: Whether merger is dominance
Phase-I review shall entail a quick review and allow merger situation to proceed without delay which do not raise competition. The CCP shall decide on receipt of complete application whether the transaction falls within the meaning of merger and inform the applicant if the transaction is not within the meaning of merger. The CCP shall pass an order within 30 days of receipt of application whether the intended merger meets the threshold and presumption of dominance. Further, the CCP may require the undertaking to provide additional information for a second phase review. If order is not passed within 30 days of application, it shall mean that the CCP has no objection on intended merger.
PHASEII ORDER BY CCP: Whether dominance lessens the competition
Applicant Individual, Individual Company or body corporate Application to be filed by: Authorized officer Partnership firm Partner. Where application is made jointly, joint representatives may be authorized by CCP on behalf of joint applicants.
If the CCP is unable to determine on the basis of phaseI review that the situation does not raise competition it shall carry out a phase-II review. The CCP may require further information in phase-II review. On initiation of second phase review, the CCP shall assess and give decision within 90 days of receipt of additional information whether the merger will substantially lessen the competition by dominant position in the relevant market. The CCP may reject the application if the
Corporate Laws Abridged Form required information is not provided. If the decision is not made within 90 days, it shall mean that the CCP has no objection on intended merger.
APPROVAL OF MERGER
If the CCP determines in second phase review that intended merger will substantially lessen the competition by dominant position, still it may approve merger on the following grounds: (a) It substantially contributes to the efficiency, production and distribution of goods & services. (b) Such efficiency could not reasonably be achieved by a less restrictive means of competition. (c) The benefits of that clearly outweigh the adverse effect of lessening or absence of competition. (d) It is the least anti-competitive option for the failing undertakings assets when one undertaking is facing actual or imminent financial failure.
TRANSACTION NOT MEETING ABOVE CRITERIA
If CCP determines that transaction under review does not meet the above criteria, it may: (a) Prohibit the consummation of transaction. (b) Approve the transaction by imposing conditions. (c) Approve the transaction on condition that undertaking shall not enter into legally enforceable agreements.
MERGERS WITHOUT APPROVAL
a concise explanation of the reasons and details of the complaint, including details of the merger situation to which the complaint relates, when and how the complainant became aware of the merger situation, and the relative market positions of the parties named in the complaint; evidence directly related to the facts set out in the complaint, including appropriate copies of relevant correspondence, statistics or data which relate to the facts set out in the complaint. The CCP will consider each complaint on its merits to determine if an investigation is warranted. If the CCP decides to pursue the complaint, it will seek further information from the merger parties. The complainant should make clear to CCP if he does not wish to be identified. However, sometimes it is necessary to reveal information which may identify the source of complaint for effective handling of complaint. When providing information or documents to the CCP, complainants shall provide a non-confidential version of complaint & of any other information or documents which complainant may furnish. The CCP may recognize the importance of complainants voluntarily supplying information and also their interest in maintaining confidentiality. If the CCP proposes to disclose any of the information over which confidentiality has been claimed, it may consult the complainant providing the information.
DIRECTIONS AND LITIGATION
If the undertaking(s) consummate merger without approval of CCP, the CCP shall pass order against such merger (under section 31) after giving opportunity of being heard.
REVIEW OF CONDITIONS OF EXEMPTION
The CCP may review the conditions subject to which the exemption was granted either on its own motion or on application made by undertaking within one year of exemption. If the CCP finds that exemption was based on false or misleading information or the conditions has not been fully complied with, it shall, after providing opportunity of being heard: (a) Undo such merger or acquisition. (b) Prescribe modification or additions in the original order.
HEARING AND DECISIONS
The CCP shall provide opportunity of being heard before passing an order. An ex-prate decision may be made if the undertaking does not afford opportunity. The hearing shall be private, however, in exceptional circumstance the hearing may be conducted in public. If the CCP make a favorable decision it may impose conditions and shall give notice to undertaking(s). The CCP may specify the period of the decision within which the merger shall be carried out in effect depending on the circumstances. The CCP will not take further action in this period unless the circumstance arise which lead to the subsequent review. The decision may be placed on website. When the CCP makes unfavorable decision it shall issue a notice to the parties stating the fact and objections. The CCP may issue directions to remedy, mitigate or eliminate the effects of merger. The decision may be placed on website.
COMPLAINTS ABOUT MERGERS
If the CCP concludes that the situation may prevails after an intended merger which substantially lessens competition in the relevant market, the CCP may give appropriate written directions to remedy, mitigate or prevent the effects of merger. The directions may include the following: (a) Prohibiting an intended merger from being carried into effect or requiring a merger to be dissolved or modified in required manner; (b) requiring the merger parties to enter into such legally-enforceable agreements specified to prevent or lessen the anti-competitive effects which have arisen; (c) requiring the merger parties to dispose of such operations, assets or shares of such undertaking in required manner; (d) providing a performance bond, guarantee or other form of security on required terms and conditions. The persons suffering loss from the merger are entitled to commence civil action seeking relief against relevant undertaking(s). Such right shall arise on the decision of appeal or expiry of period of appeal.
TRANSNATIONAL MERGERS
Complainants shall provide following information to the CCP while making the complaints: Name and address of the complainant; the relationship between the complainant and the merger parties or merged entity;
Where the merger situation is subject to review under merger laws in more than one jurisdiction, the CCP shall: (a) without compromising effective enforcement of the domestic law seek to cooperate its reviews of transnational mergers in appropriate cases; (b) consider actions by which they can eliminate or reduce the impediments to cooperation and coordination; (c) encourage merging parties to facilitate coordination among competition authorities, in particular with respect to timing of notifications and voluntary waivers of confidentiality rights, without drawing any negative inferences from a partys decision not to do so; (d) give the merging parties, the opportunity to consult with the concerned competition authority at key stages of investigation with respect to any significant or
Corporate Laws Abridged Form practical issue that may arise during the course of investigation; (e) give an opportunity to third parties, with a legitimate interest, in the merger review as recognized under reviewing countrys merger laws, to express their review under the merger review process. (f) treat foreign undertakings, no less favorably than domestic undertakings in like circumstances. (g) endeavor in reaching, in so far as possible, consistent, or at least non-conflicting outcomes
ISSUANCE OF GUIDELINES
to restore the competition and not to repeat prohibitions merger -authorize the merger subject to conditions. -authorize merger after second phase review. -prohibit merger only after second phase review.
INTERIM ORDER
The CCP may issue guidelines in respect of the merger frame work. The guidelines shall be illustrative and not exhaustive and shall not set a limit on the investigation and enforcement powers of the CCP. The guidelines shall not be a substitute for the Ordinance, the rules, regulations and orders.
CCP may pass an interim order after giving the undertaking an opportunity of being heard if it appears that: (a) Final order will take time. (b) There is a situation that may cause serious or irreparable damage. (c) Issuing interim order is in public interest. The CCP may direct the undertaking to do or refrain from doing any act specified in the order. An interim order shall remain in force until cancelled by CCP or final order is passed.
POWERS OF CCP IN PROCEEDINGS or INQUIRY [33]
Functions And Powers Of CCP [28]

The following are functions and powers of CCP: (a) To initiate proceedings in accordance with procedures of this Ordinance and make orders in respect of contravention of provisions of this Ordinance. (b) To conduct studies for promoting competition in all sectors of commercial economic activity. (c) To conduct inquiries into affairs of undertakings. (d) To give advice to undertakings whether action taken by undertaking is within provisions of this Ordinance. (e) To engage in competition advocacy. (f) To take all other actions necessary of purpose of this ordinance.
COMPETITION ADVOCACY [29]
The CCP shall promote competition through advocacy which shall include: (a) Awareness, training and other necessary actions for the promotion of competition. (b) Reviewing the policy for fostering competition and making recommendations to FG or PG for amendments in the laws affecting competition. (c) Holding open hearings and expressing opinion on the issues affecting state of competition or commercial activities. (d) Posting all decisions made, inquiries under review and completed, merger guidelines and educational material on its website.
PROCEEDINGS IN CASE OF CONTRAVENTION [30]
In case of inquiry or proceedings the CCP shall have the powers of Civil Court under the Code of Civil Procedures, 1908 while trying a suit in the following matters: (a) Summoning and enforcing attendance of witness and examining him on oath. (b) Discovering and production of documents or material object as evidence. (c) Accept evidence on affidavit. (d) Requisitioning of any public record from any court or office. (e) Issuing of a commission for the examination of any witness or document. Any proceedings before the CCP shall be deemed to be judicial proceedings. The CCP may require the undertaking to produce any books, accounts, documents or information to be examined and kept by any officer of the CCP.
POWER TO ENTER AND SEARCH PREMISES [34]
The CCP may authorize any officer to enter and search premises of an undertaking. The CCP: (a) shall have full and free access to premises, place accounts, documents and computer. (b) may stamp or make extracts or copy of accounts, documents or computer stored information. (c) may impound any accounts or documents and retain for necessary period. (d) may impound and retain computer for necessary period where a hard copy of computer stored record is not made available.
PROCEDURE
The CCP may pass orders(s) as it deem appropriate in case of contravention of prohibitions under this Ordinance. The CCP may impose penalty in all such contraventions after giving notice and opportunity of being heard. In case the undertaking does not avail the opportunity, the CCP shall pass ex-prate order. The CCP shall publish its order along with basis of order in its Official Gazette. An order shall have effect notwithstanding anything contrary contained in any other law or any contract or memorandum or articles.
ORDERS OF CCP [31, 32]
The CCP may pass following orders: In Case of abuse of dominant position: require the undertaking to take actions necessary to restore the competition and not to repeat prohibitions and not to engage in the similar practices. prohibited agreement: annul or amend the agreement or related practices and not to repeat prohibitions or enter into similar contract or practices deceptive marketing require the undertaking to take actions specified in the order necessary
An officer appointed in this behalf shall provide authority of the CCP to the undertaking. The CCP may authorize a valuer to enter into premises and inspect accounts and documents necessary for his valuation. Any owner, manager or person present in premises shall provide all facilities and reasonable assistant to the officer. The authorized officer shall give receipt of documents and computer impounded or retained. The undertaking shall have right to examine impounded accounts and computer and make an extract or copy during regular office hours and under supervision.
FORCIBLE ENTRY [35]
If an undertaking refuses an officer of CCP to enter into premises without reasonable cause, an investigating officer may enter into premises by force. The order shall be in writing and signed by two members of the CCP. If an officer exercises his powers which are vexatious, excessive or mala fide intent, such officer shall be
Corporate Laws Abridged Form punishable with a fine upto Rs. imprisonment upto one year or both.
500,000
and
GRANT OF IMMUNITY
When a criminal court passes an order imposing fine, it may order that a sum equal to whole or part of fine recovered shall be paid to complainant and in case the fine is not recovered, the sum shall be paid out of Fund. The amount paid shall not prejudice the right of aggrieved person to avail any remedy under any other law. And awarding compensation in subsequent proceedings in the same matter the court shall take into account the sum already recovered and paid.
POWER TO CALL FOR INFORMATION [36] The CCP, by general or special order, may call from the undertaking periodical information concerning activities of undertaking including information relating to organization, accounts, business, trade practices, management and connection with other undertaking. ENQUIRY AND STUDIES [37] The CCP may conduct inquiry on its own motion or on a reference by FG or an application made by undertaking or registered association of consumers unless such application is not based on insufficient facts, frivolous or vexatious. If it is in the public interest, the CCP may initiate proceedings. The CCP may outsource studies by hiring consultants on contract.
CCP may grant an undertaking total immunity from financial penalties if the following conditions are satisfied: (a) The undertaking is the first to provide with evidence of any activity leading to violations of section 3-11 provided that the CCP does not already have such information. (b) The undertaking: (i) provides all the information, documents and evidence available to it regarding the prohibited activity; (ii) maintains continuous and complete cooperation throughout the proceedings until the conclusion of any action; (iii) refrains from further participation in the alleged activity from the time of its disclosure to the CCP; (iv) must not have been the one to initiate the prohibited activity; and (v) must not have coerced another undertaking to take part in prohibited activities.
GRANT OF 100% REDUCTION IN PENALTY
Penalties And Appeals

PENALTY [38]
The CCP may pass order directing the undertaking, director, officer or employee of the undertaking to pay penalty after giving opportunity of being heard where the undertaking: (a) has been engaged in prohibited activity (b) failed to comply with order of CCP (c) failed to supply with the copy of required document or information (d) has furnished false or inaccurate information or statement (e) knowingly abuses, interferes with, impedes, imperils or obstructs the process of CCP in any manner Provided that fair comments made in good faith and public interest on working or order of CCP after completion of proceeding shall not be subject to penalty. RATES OF PENALTY In case of Penalty (depending upon circumstances) contravention of prohibitions: -amount not exceeding Rs. 50 million; or -amount not exceeding 15% of the turnover non-compliance of order, notice or requisition of CCP or failure -amount not exceeding Rs. 1 million to supply copy of agreement, document or information continuing default of order of CCP: -an amount not exceeding Rs. 1 million for every day after the first day The CCP may vary the amount and rate of penalties in public interest after approval of FG.
PROCEEDINGS IN COURT
An undertaking may benefit 100% reduction in penalty if: (a) the undertaking is the first to provide with evidence of prohibited activities; (b) information is given after CCP has started proceedings but before sufficient information to issue a written notice that it proposes to make a decision; (c) the conditions prescribed are satisfied.
GRANT OF 50% REDUCTION IN PENALTY
An undertaking may benefit 50% reduction in penalty if it provides evidence of prohibited activities before the CCP issues a written notice but are not the first to come forward.
FACTORS FOR CONSIDERING REDUCTION
Any reduction in penalty under these circumstances is discretionary. The CCP shall take into account the following in exercising its discretion: (a) the stage at which the undertaking comes forward; (b) the evidence already in the CCPs possession; and (c) the quality of the information provided by the undertaking.
PROCEDURE FOR REQUESTING REDUCTION IN PENALTY IMMUNITY OR
The failure to comply with the orders of the CCP shall constitute a criminal offence punishable with imprisonment of 01 year and fine of Rs. 25 M. The CCP may also initiate proceedings in a court of competent jurisdiction.
An undertaking or person empowered by it seeking leniency shall contact the CCP. The initial contact may be made by telephone. The application for leniency shall be in writing and supported with evidence. The application shall be submitted within 8 weeks of initial contact. Initial contact may be without disclosure of identity. However, the application shall contain relevant information along with the name of undertaking. The undertaking may provide the evidence with the application or a list of proposed evidences to be provided later. It may provide the type and duration of infringement of provisions, product affected and identity of those involved. If the applicant does not fulfill the obligations, any subsequent applicant shall move up from him in priority.
CONFIDENTIALITY
Leniency [39 & Relevant Regulations]

LESSER PENALTY
The CCP shall keep confidential the identity of undertaking coming with the evidence throughout the proceedings. Immunity granted by CCP shall not affect the right of third parties. Third parties can pursue their claim in the competent court.
REVOCATION OF LENIENCY
If the CCP is satisfied that the undertaking being a party to the prohibited agreements alleged to have violated this Ordinance has made a full and true disclosure, it may impose a lesser penalty.
If the CCP finds that the undertaking has given false evidence or failed to comply with the condition upon which the reduced penalty was impose, it may revoke the leniency and impose penalty at normal rates.
EFFECT OF LENIENCY
Corporate Laws Abridged Form Immunity granted by the CCP cannot exclude claims by third parties who may have suffered loss as a result of the activities in respect of which immunity is granted. Third parties, therefore, shall have the right to pursue the private claims for damages before the Court.
RECOVERY OF PENALTIES [40]
Target Co. A listed Co. whose voting shares or

control is directly or indirectly acquired or intended to be acquired. Public Offer It means public offer for acquisition of voting shares of a target Co. and includes any competitive bid. Offer Period From date of public announcement to closure date of public offer Public Announcement It means public announcement of public offer for acquisition of voting shares and includes public announcement of competitive bid. Persons acting in concern Means a person who cooperates with the acquirer to acquired voting shares or control of target Co.. Manager to the offer Before making public announcement, acquirer shall appoint a Bank/Financial Institution or member of Stock Exchange to act as so.
The CCP may serve notice on concerned person, undertaking, chief executive or director of the undertaking to pay the said amount within prescribed time. If the penalty is not paid within the prescribed time, the CCP may recover such amount in any of the following ways: (a) Attachment of moveable and sale of immoveable property including bank accounts. (b) Appointment of receiver for management of moveable or immoveable property. (c) Recovery of the amount as arrears of land revenue through District Revenue Officer. (d) Require any of the following by notice to deduct and pay the sum specified in notice before specified date: (i) from whom any money is due or may become due to the undertaking. (ii) who holds or controls the receipt and disposal of money belonging to undertaking (iii) who is responsible to pay any sum to the undertaking. Any bank, receiver, District Revenue Officer or undertaking who has paid any sum to the CCP shall be deemed to have paid on behalf of the undertaking. A receipt of the CCP shall discharge the liability of such person to the extent of amount so paid. If a bank, receiver or DRO or undertaking fails to deduct sum specified in the notice, such person shall be treated as defaulter and money shall be recoverable from him. APPEALS [41, 42]
THE APPELLATE BENCH OF CCP
This Ordinance not to be applied to certain transactions

Shares issued under pre-IPOs Right issue Shares allocated under underwriting arrangements. Acquisition of shares by financial institution as enforcement of securities. Acquisition of shares by succession inheritance. Schemes of mergers & reconstruction of companies.
Acquisition of more than 10% of voting shares of Co. (S 4)

Any acquirer who acquires voting shares (taken together with existing shares), which would entitled to acquires more than 10% voting shares in a listed Co. shall disclosed the aggregate of his shareholding to the Stock Exchange. The above disclosure shall be made within 3 working days of the acquisition. If he acquires more shares but remain below 25%, he shall not be liable to disclose if additional acquisition is within 12 months.
Any person aggrieved by the order of CCP or Member or authorized officer of the CCP may submit an appeal before appellate bench of CCP within 30 days of passing the order. The appellate bench shall comprise of at least 02 members. The decision of the appellate bench shall be made unanimously or by majority where the bench comprises more than two members. In case of a tie, the order appealed against shall have effect of final order. The member who passed the order appealed against shall not be member of the appellate bench. The appeal shall be in prescribed form and with prescribed fee.
THE COURT
Substantial acquisition of voting share and acquisition of control of a listed Co.

Additional acquisition (S 5 & 6)
No person shall directly or indirectly acquire Voting shares (taken together with existing shares) which would entitled such person to more than 25% of voting shares in a listed Co.; or Control of a listed Co.. Unless such person makes a public announcement of the offer to acquire voting shares or control of listed Co.. Before making public announcement the person shall make necessity disclosure to the Target Co. and stock exchange. No acquirer (who has acquired more than 25% but less than 50% of the voting shares or control) shall acquire additional voting shares or control unless such persons makes a public announcement of the offer. Provided such acquire shall not be required to make a fresh public announcement of the offer within period of 12 months from the previous announcement.
Any person aggrieved by the order of the appellate bench may prefer an appeal to Supreme Court within 60 days of communication of the order.
Listed Companies (Substantial Acquisition of Voting Shares & Takeover) Ordinance, 2000
Acquirer Any person who directly and indirectly
acquires or has proceeded to acquire voting shares in the target Co., or control of the target Co. either by himself or through any person acting in concern. Control Includes the right to appoint majority of directors or to control management or policy decisions whether by virtue of shareholding, management right, shareholder agreement or voting agreement.
Number of shares to be acquired
Corporate Laws Abridged Form Offer by acquirer shall be a %age of Total Capital If no of shares offered for sale by shareholders are more than shares offered to be acquire, acquirer shall in consultation with manager to the offer accept shares on proportional basis. o Provided that acquisition shall not be less than minimum marketable lot or entire shares, if they are less than marketable lot.
Public announcement
1. The announcement shall be published at least in one Urdu and one English newspaper. 2. The public announcement shall contain prescribed information. 3. Copy of announcement shall be submitted to SECP through manager to the offer at least 2 days before issuance. 4. The announcement shall also be sent to all stock exchange where Co. has Regd. and to target Co.. 5. It shall not contain any misleading information.
In case the acquirer does not get proportionate representation on the board of Target Co. or the number of casual vacancies created is not sufficient, he may serve a notice to target Co. for holding fresh directors election and a copy of notice to SECP. The BOD of Target Co. shall hold the election within 30 days of the receipt of above notice. The BOD so elected shall hold the office during the remainder period of outgoing directors. Any irregularity in the election of directors may be brought to the notice of SECP within 7 days of such election. The SECP may declare the election null & void and order for fresh election under supervision of SECP. SECP may appoint inquiry officer to undertake an inquiry for following purposes: o To inquire into the complaints received from investors holding not less than 10% of the total voting power in the Target Co. regarding any irregularity in substantial acquisition process. o To inquire suo moto (upon its own knowledge or information) in the best interest of security market o To ascertain whether the provision of this Ordinance is complied with. The inquiry officer as soon as possible shall submit a report to SECP SECP shall communicate the findings to the acquirer, seller the Target Co. and manger to the offer. On receipt of reply from the respective parties, SECP may pass following appropriate directions and take appropriate measures in the best interest of security market Directing the persons concern not to further deal in the securities Prohibiting the concerned person from disposing off the securities acquired in violation of provisions of this Ordinance. Directing the concerned person to sell the securities acquired in violation of provisions of this Ordinance. Taking any other action.
Inquiry & Action by SECP
General obligation of acquirer

Within 2 working days of public announcement, the acquirer shall send to the target Co., a copy of proposed offer letter along with copy to SECP. The acquirer shall ensure that the offer letter is sent to all the shareholders of Target Co. whose name appears on register of members on date specified in Public Announcement. Date of acceptance of public offer shall not be later than 60th day from day of Public Announcement. The acquirers shall complete all the procedures including the payment to shareholders who had accepted the public offer within 30 days from the date of closure of public offer
General Obligations of the vote of target Co.

The board of directors of Target Co. shall not during the offer period: a. Sell or transfer undertaking of Co. or any of its subsidiary. b. Encumber the assets of Co. or its subsidiary c. Issue any right or bonus shares d. Enter into any material contract The Target Co. shall furnish to the acquirer a list of its shareholders for sending offer letter. During the offer period, the board of directors shall not appoint additional directors or fill any casual vacancy by person representing acquirer. BOD may, if think fit, give their unbiased comments & recommendations to shareholders on public offer. Target Co. shall facilitate transfer in name of acquirer, the shares. The acquirer who has acquired 30% of voting shares shall be entitled to the proportionate representation on the board of directors. a. The acquirer shall serve a notice to the target Co., the copy of which shall be sent to stock exchange. b. On receipt of notice, the BOD of Target Co. shall cause a Board meeting within 10 days. c. BOD of Target Co. shall fill the casual vacancy created by the resignation of 1 or more existing directors to accommodate the acquirer.
Penalties
If any person contravenes the provision of this ordinance he may debarred as acquirer for next 3 years. In case the BOD or management of Target Co. contravenes any provision of this Ordinance the directors, chief executive and Co. secretary shall stand disqualify to hold such offices in a listed Co. for next 2 years. Fine = Rs.1,000,000 + Rs.10,000 / day for continuing default
Listed Companies (Prohibition Of Insiders Trading) (Guidelines 2000) Issued By SECP

INSIDERS
Means Directors, Chief Executive, Managing Agent, Chief Accountant, Co. Secretary or Auditor of a listed Co.
Corporate Laws Abridged Form or a beneficial owner of not less than 10% shares in a listed Co. or A person who is or was connected or is deemed to have been connected with a Co. and who is reasonably expected to have access to unpublished price sensitive information (UPSI) by virtue of his connection.
Prohibition on dealing, communication and counseling regarding Insiders Trading

No person who is or has been at any time during the preceding six months associated with a Co. shall: Deal in security of a listed Co. on a SE on the basis of UPSI. [Either on his own behalf or on behalf of any other person] Communicate any UPSI to any person with or without his request. Counsel any other person to deal in the security on the basis of UPSI. A person who deals, communicates or counsel in contravention of above provisions shall be liable to Pinal action under section 15-B of the SECP Ordinance 1969.
CONNECTED PERSONS
It means ant person who is a director or occupies the position as an Officer or an Employee of the Co. or holds a position involving a professional or business relationship with a Co. and who may be reasonably expected to have an access to the unpublished price sensitive information in relation to the Co..
PERSONS DEEMED TO BE CONNECTED

1. 2. 3. 4. 5. 6. Companies under the same management or groups. Members of stock exchange. Banks Mutual funds Employees of self regulatory organization. e.g. Tax Department Relatives of aforesaid persons.
INVESTIGATION BY SECP
Where SECP is opinion that it is necessary to investigate and inspect the records of an insider it may appoint an inquiry officer. The inquiry officer shall furnish an inquiry report to SECP. SECP shall communicate the findings in the report to the insider who shall be provided an opportunity of hearing. On receipt of explanation from the insider the SECP may call upon the insider to take such measures as the SECP may deem fit to protect the interest of investor. The SECP may without prejudice to its right to initiate criminal prosecution under section 15-B of the Ordinance, gives such directions as it may deem fit which includes the followings: Directing the insider not to deal in securities in any particular manner. Prohibiting the insider from disposing off the securities acquired in violation of these regulations. Restraining the insider to communicate or counsel any person to deal in the securities.
UNPUBLISHED PRICE INFORMATION (UPSI)
SENSITIVE
UPSI means any information which relates to the following matter relating to the Co. and which is not generally knowing or published but if it is published or known, it may materially affects the price of securities of that Co. in the market. 1. Financial results of the Co.. (Interim or Final) 2. Intended declaration of dividend. (Interim or Final) 3. Issue of Bonus or Right Shares. 4. Any major expansion plan. 5. Any amalgamation, Merger or Takeover. 6. Disposal of major part of undertaking. 7. Any other information which may affect EPS. 8. Any change in policies, plans, and operations.

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Setting of Papers May Be Expected.: Corporate Laws - Abridged Form

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Corporate Laws Abridged Form

Corporate Laws Abridged Form

Corporate Laws Abridged Form

Corporate Laws Abridged Form

Investigation and Related Matters (263 - 281)

Proceedings for recovery of damages & property

Imposition of restriction on shares debentures and prohibition on transfer:

Enquiries and investigation against Co. shall not be effected by

Non Banking Finance Companies (282 A N)

Section 282-(D) [Power to issue Directions]

Section 282-(B) [Powers to make rules]

Section 282-(E) [Powers to remove]

Section 282-(C) [Incorporation of NBFC]

Section 282-(J) [Penalty for failure, refusal to comply with provisions]

Section 282-(F) [Power to supersede BOD]

Section 282-(G) [Powers to require to furnish information]

Section 282-(H) [Special Audit]

Section 282-(I) [Inquiry by SEC]

Corporate Laws Abridged Form

Section 282-(K) [Penalty for making false statements]

Section 282-(M) [Punishment or adjudication of fine or penalty]

Section 282-(N) [Rehabilitation of NBFCs and NEs]

Section 282-(L) [Procedure for amalgamation of NBFC]

Corporate Laws Abridged Form

Arbitration, Arrangements and Reconstruction (SEC 283 to 289)

Arrangement involves reorganization of capital by

Power of companies to refer matters to Arbitration:

acquire shares of from scheme or

Information as to compromise arrangement with Creditors/Members:

Oppression, Mismanagement and Rehabilitation (SEC 290 to 296)

Provisions relating to Administrator

Rehabilitation of sick units by Federal Govt.

Voluntary Under supervision of court

Liab. of contributories as past and present members

Introduction to winding up (SEC 297 to 304)

Liabilities of director whose liab. is unlimited:

Contributories in case of death, insolvency or winding up of member.

Corporate Laws Abridged Form

Winding up by Court (SEC 305 to 357)

Appointment of Official Liquidator (OL)

Resignation, removal & Filling Vacancy:

Circumstances in which Co. may be wound up by Court

Co. when deemed unable to pay its debts.

General provisions as to Official Liquidator

Powers of Official Liquidator

Report by Official Liquidator

Certain obligations of Official Liquidator

Settlement of List of Contributories

Distribution by official liquidator

Voluntary Winding up (SEC 358 to 395)

Powers of the Court

Consequences of winding up:

Duty of Liquidator to call general meeting at end of each year:

Final meeting and Dissolution:

Members Voluntary winding up

Powers to accept consideration:

CO84 or AOA or court may determine

Calling creditors insolvency

Liquidator shall call a meeting of creditors where

Voluntary Winding up by Creditors

Provisions same in voluntary winding up

Final meeting and dissolution