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Transcript of By Rahat Aziz SA Associates Corporate Consultants & Trainers.
By
Rahat AzizS A A s s o c i a t e s
Corporate Consultants & Trainers
LISTING REGULATIONS OF KSE (GUARANTEE)
LTD
Background
Concepts
Links
BACK GROUND AND CONCEPT/LINK:
Companies Ordinance 1984
Security Exchange Ordinance 1969
Criteria Appendix 2Procedure Reg. 1-15Documents Appendix 1The Companies (Issue of Capital) Rules 1996 Appendix 3.Book Building Appendix 4.CCG Reg. 35De-Listing Reg. 30-31
REGULATION’S STRUCTURE:
IN CASE OF COMPANIES
A Company should be a Public Company.
Minimum paid up Capital is 200 (m).
Not less than 500 Applications.
INITIAL PUBLIC OFFERING – (IPO)
PUBLIC ALLOCATIONMinimum Paid-up Capital Rs.500 Million (50%) More than Rs.500 Million
Example:
Capital is 700M, then:
Rs.250M
or
25%=175M
CRITERIA APPENDIX 2
250 m can be offered
250m or 25% of Capital (whichever is higher)
250 is higher
Capital is 1200M, then:Rs.250M or25%=300M
300 is higher
Rahat Aziz KTBA Workshop – 23 Jan 2014 SA Associates
IN CASE OF MODARBA:
30% to sponsors, associates, friends and associated undertaking
70% to General public.
Where 25% shares allocated sponsor etc, shares shall not be salable for a period of 6 months from the date of public subscription.
Running company:
Shares do not qualify, if its equity is eroded by 40% or more.
APPENDIX -1
Copy of the certificate of incorporation. Copy of the conversion certificate of commencement of business. Copy of Feasibility Report, in case of a new project. Auditor’s Certificates under section 53 read with clause 28(1) of
section 2 of Part-1 of the second schedule to the Companies Ordinance, 1984. The certificate shall also state Earning Per Share of the company for the last 5 years or for a shorter period if 5 years of the commencement of business are not completed.
No Objection Certificates from the Underwriter(s) to the Issue/Offer, if any, on Form 4.
Copies of all material contracts and agreements relating to the public issue/offer of shares and project, if any.
Copy of consent letters from bankers to the issue/offer.
SOME IMPORTANT DOCUMENTS:
APPENDIX 4
BRIEF ABOUT BOOK-BUILDING
Book-Building is a process used by companies raising capital through Public Offerings. It is the practical mechanism for the quick and efficient management of public offerings.
In general, it is an innovative method of marketing securities involving price determination and quantum of securities on the basis of the demand from the prospective shareholders.
IPO THROUGH BOOK BUILDING
Rahat Aziz KTBA Workshop – 23 Jan 2014 SA Associates
SECP guidelines defines Book-Building as “a mechanism of price determination through which indication of interest for investment in the shares offered by an issuer/offeror is collected from Institutional Investors and HNWI and a book is built which gives a picture of demand for the shares at different price levels. The strike price is determined based on the price at which demand for the share at the end of book building period is sufficient to raise the minimum capital required”.
DEFINITION:
BOOK-BUILDING PROCESS
TOTAL PUBLIC ISSUE
(i.e., net offer to the public)
BOOK BUILDING METHOD
not more than 75% of the total offer
shall be allocated to institutional investors
and HNWI
FIXED PRICE METHOD
not less than 25% of the total offer shall be allocated
to the general public
A public limited company or a body corporate which intends to issue shares to the general public under Section 57 of the Companies Ordinance, 1984 and makes an application to a stock exchange for listing of its shares or an Offeror who intends to offer shares under Section 62 of the Companies Ordinance, 1984 and makes an application to a stock exchange for listing of such shares, where applicable, and is in compliance with Listing Regulations of the stock exchange, is eligible to issue/offer its shares through Book Building process subject to the following conditions
not more than 75% of the total offer shall be allocated for offer through book building process to institutional investors and HNWI; and
not less than 25% of the total offer shall be allocated for offer to the general public.
ELIGIBILITY
DIFFERENCE BETWEEN FIXED PRICE PROCESS AND BOOK-BUILDING PROCESS
Features
Fixed Price Process
Book-Building Process
Pricing Price at which the securities are offered is known in advance to the investors.
Price at which the securities are offered is not known in advance to the investors. Investors decide the price through tender method.
Demand
Demand for the securities is not known until the close of the issue.
Demand for the securities offered can be known every day as the book is built.
Payment
100% advance payment is required to be made by the investors at the time of application.
Margin for bidding placed by :HNWIs ---------- Up to 100% of application moneyInstitutions ------ not less than 25% of application money Successful bidders shall deposit the balance amount within seven working days of the close of bidding period.
PROCESS FLOW Appoint Lead Manager & Book Runner
Submit Preliminary Prospectus to KSE & SECP for approval
Circulate approved Preliminary Prospectus to Institutional Investors & HNWIs
Publish advertisements & Conduct Awareness Campaign
Open Escrow Account for the collection of Bid’s amount
Ask for Bids on Price & Quantity of Securities
Maintain an Order Book
Determine the Strike Price in Consultation with the Issuer
Firm up Underwriting CommitmentsCont…
PROCESS FLOW
Intimate Successful Bidders & make Provisional Allotment
Collect the balance amount form successful Institutional Bidders
Make Final Allotment of Securities
Publish Final Prospectus containing the Offer Price
Offer to General Public for subscription of securities
Completion of Formalities
Securities Issued & Listed on the Exchange
Commencement of Trading
Regulation 16-19 Dividends.Regulation 20 & 21 Meetings.Regulation 32 & 34 Fee.Regulation 36 Compliance with
these regulations.
COMPLIANCE:
The Formation Timeline
The Financial Reporting Council (FRC)
1990
The Greenbury Committee
The Combined Code on Corporate Governance
Code of Best Practice of the Cadbury Committee
1992
1995
Report of the Hampel Committee
1998
2003
2008
The Formation Timeline
1996Sarbanes–Oxley Act
2002
Report of the NACD blue ribbon commission on director professionalism
Code at a Glance (Clause Reference)
BOD STRUCTURE
BOD COMMITTE
ES
BOD RESPONSIBIL
ITIES, POWER,
FUNCTION
REPORTING FRAMEWOR
K
OTHER ROLES
I, II, III XXIV, XXV, XXVII, XXVIII, XXIX, XXX
IV, V, IX, XI, XIV, XV, XVII (a), XL, XLI, XLII
X, XVI, XVII(b), XVIII, XIX, XX, XXI, XXII, XIXII
VI, VII, VIII, XII, XIII, XIV, XXXI, XXXII, XXXIII, XXXIV, XXXV, XXXVI, XXXVII, XXXVIII, XXXIX
3 : 7% 6 : 14% 10 : 24% 9 : 19% 15 : 36%
CODE STRUCTURE:
• Board Composition (Br.Cp.)• Board Responsibilities, Powers & function (Br.R.P.F)• Board Meeting (Br. M)• Board Related Management (Br.R.M)• Board Committees (Br.Cm)• Corporate Compliance & financial reporting frame work (Cr.Com &
Fin.Rep.FW)
At-least OneIndependentPreferably 1/3 of BOD
Executive not more than 1/3 of elected Dr.
Non-Executive-Remaining
Br. Cp.
Fiduciary DutyProfessional standard & Corporate
value.Vision/Mission StatementSignificant PoliciesSound Internal Control SystemDecision on Material Transaction
Br. R.P.F
ChairmanChief Executive OfficerChief Financial OfficerCompany SecretaryHead of Internal Audit
Br. R.M
Audit Committee – its composition
H.R. & Remuneration Committee – its composition
Term of Reference
Br. Cm.
Director ReportDirectors
RemunerationFrequency of Fin. Rep.External AuditorCompliance with CG
Cr. Com & Fin. Rep. F.W
31
STRUCTURE OF BOARD
CHAIRMAN OF BOARD
AUDIT COMMITTEE
HUMAN RESOURCE AND REMUNERATION
COMMITTEE (HR&R)
CHIEF EXECUTIVE
OFFICER (CEO)
BOARD OF DIRECTORS
33
STRUCTURE OF BOARD OF CRESCENT STEEL (Annual Report 2011)
BOARD OF DIRECTORS
Mazhar Karim Chairman Non-Executive DirectorAhsan M. Saleem Chief Executive & Managing DirectorMohammad Anwar Non-Executive DirectorMuhammad Abdul Aleem Non-Executive Director (Independent)Nasir Shafi Non-Executive DirectorS.M. Ehtishamullah Non-Executive DirectorSyed Zahid Hussain Non-Executive Director (Independent)Zahid Bashir Non-Executive Director
AUDIT COMMITTEE Muhammad Abdul Aleem Chairman Non-Executive Director (Independent)Nasir Shafi Member Non-Executive DirectorS.M. Ehtishamullah Member Non-Executive Director
08 – Directors 01 – Executive Director(CEO)02 – Independent Directors 05 – Non-Executive Directors (including Chairman of Board)
08 – Directors 01 – Executive Director(CEO)02 – Independent Directors 05 – Non-Executive Directors (including Chairman of Board)
03 – Members.01 – Independent Directors (as Chairman)02 – Non-Executive Directors
03 – Members.01 – Independent Directors (as Chairman)02 – Non-Executive Directors
34
CRESCENT STEEL (Annual Report 2011)….contd
HUMAN RESOURCE COMMITTEE
Ahsan M. Saleem Chairman Chief Executive & Managing DirectorNasir Shafi Member Non-Executive Director
02 – Members.01 – Executive Directors (as Chairman)01 – Non-Executive Directors
02 – Members.01 – Executive Directors (as Chairman)01 – Non-Executive Directors
Must have 3 members at least and the Chairman
should be a non-executive or independent director
Must have 3 members at least and the Chairman
should be a non-executive or independent director
36
STRUCTURE OF BOARD OF JS GLOBAL CAPITAL LTD (Annual Report 2011)
BOARD OF DIRECTORS
Mr. Adil Matcheswala Chairman Non-Executive Director (Independent)Mr. Shahid Hameed Vice Chairman Non-Executive Director Mr. Kashif Shafi Khan Non-Executive Director (Independent)Mr. Naief Abdullatif S A Mohammad Non-Executive Director Mr. Aslam Khaliq Non-Executive Director (Independent)Syed Nadir Shah Non-Executive Director (Independent)Mr. Ahsen Ahmed Non-Executive Director (Independent)Mr. Muhammad Kamran Nasir Chief Executive Officer
AUDIT COMMITTEE Mr. Adil Matcheswala Chairman Non-Executive Director (Independent)Mr. Shahid Hameed Member Non-Executive Director (Independent)Mr. Ahsen Ahmed Member Non-Executive Director (Independent)
08 – Directors 01 – Executive Director(CEO)02 – Non-Executive 05 – Non-Executive(Independent) Directors (including Chairman)
08 – Directors 01 – Executive Director(CEO)02 – Non-Executive 05 – Non-Executive(Independent) Directors (including Chairman)
03 – Members.03 – Non-Executive (Independent) Directors (including Chairman)
03 – Members.03 – Non-Executive (Independent) Directors (including Chairman)
37
JS GLOBAL CAPITAL LTD (Annual Report 2011)……cont
COMPENSATION COMMITTEE
Mr. Aslam Khaliq Chairman Non-Executive Director (Independent)Mr. Mohd Kamran Nasir Member Chief Executive Officer Mr. Shahid Hameed Member Non-Executive Director (Independent)
03 – Members.01 – Executive Directors02 – Non-Executive (independent) Directors (including Chairman)
03 – Members.01 – Executive Directors02 – Non-Executive (independent) Directors (including Chairman)