Companies Rules Volume I

8/13/2019 Companies Rules Volume I

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Securities and Exchange

Commission of Pakistan

Companies Rules

Volume I

Statutes

(Updated up to 5 December 2013)


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Companies Rules

Volume I

Statutes

(Updated up to 5 December 2013)

Securities and Exchange

Commission of Pakistan


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VOLUME I

STATUTES

Insurance Act, 1938 (Repealed)

Securities and Exchange Ordinance, 1969

Companies (Appointment of Trustees) Act, 1972 (Repealed)

Companies (Appointment of Legal Advisors) Act, 1974

Foreign Private Investment (Promotion & Protection) Act, 1976 (Repealed)

Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980

Companies Ordinance, 1984

Central Depositories Act, 1997

Securities and Exchange Commission of Pakistan Act, 1997

Insurance Ordinance, 2000

Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002

Anti-Money Laundering Act 2010

Stock Exchanges (Corporatisation, Demutualisation and Integration) Act, 2012

VOLUME II

RULES

Securities and Exchange Rules, 1971

Investment Companies and Investment Advisors Rules, 1971 (Repealed)

Companies Profits (Workers Participation) Rules, 1971

Economic Reforms (Acquisition and Compensation) Rules, 1973 (Repealed)

Companies (Appointment of Trustees) Rules, 1973

Companies (Appointment of Legal Advisors) Rules, 1975

Modaraba Companies and Modaraba Rules, 1981


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Corporate Law Authority Rules, 1984 (Repealed)

Companies (General Provisions and Forms) Rules, 1985

Forms

Companies (Invitation and Acceptance of Deposits) Rules, 1987

Companies (Management by Administrator) Rules, 1993

Credit Rating Companies Rules, 1995

Asset Management Companies Rules, 1995 (Repealed)

Companies (Issue of Share Capital) Rules, 1996

Venture Capital Companies and Fund Managers Rules, 1995 (Repealed)

Employees Provident Fund (Investment in Listed Securities) Rules, 1996

Companies (Issue of Capital) Rules, 1996

Central Depository Companies (Establishment and Regulation) Rules, 1996

Companies (Court) Rules, 1997

Companies (Audit of Cost Accounts) Rules, 1998

Companies (Rehabilitation of Sick Industrial Units) Rules, 1999

Companies (Buy-back of Shares) Rules, 1999

Companies (Asset-Backed Securitization) Rules, 1999

VOLUME III

Companies' Share Capital (Variation in Rights and Privileges) Rules, 2000

Leasing Companies (Establishment and Regulation) Rules, 2000 (Repealed)

Members' Agents and Traders (Eligibility Standards) Rules, 2001

Stock Exchange Members (Inspection of Books and Record) Rules, 2001

Public Companies (Employees Stock Option Scheme) Rules, 2001

Brokers and Agents Registration Rules, 2001

Balloters Transfer Agents and Underwriters Rules, 2001

Insurance Rules, 2002


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Non-Banking Financial Companies (Establishment and Regulation) Rules, 2003

SECP (Appellate Bench Procedure) Rules, 2003

Single Member Companies Rules, 2003

Margin Trading Rules, 2004 (Repealed)

Commodity Exchange and Futures Contract Rules, 2005

Voluntary Pension System Rules, 2005

Clearing Houses (Registration and Regulation) Rules, 2005

Takaful Rules, 2005 (Repealed)

Anti Money Laundering Rules, 2008

Securities (Leveraged Markets and Pledging) Rules, 2011

Takaful Rules, 2012

Public Sector Companies (Corporate Governance) Rules, 2013

Microinsurance Rules, 2013

VOLUME IV

REGULATIONSSecurities and Exchange Policy Board (Conduct of Business) Regulations, 2000

Regulations for the Karachi Stock Exchange, 2001

Code of Corporate Governance, 2002

Companies (Registration Offices) Regulations, 2003

Prudential Regulations for Modarabas, 2004

Regulations Governing System Audit of Brokers of Exchanges, 2004

Real Estate Investment Trust Regulations, 2008

Private Equity and Venture Capital Fund Regulations, 2008

Private Equity & Venture Capital Fund Regulations, 2008 - Forms and Schedules

Group Companies Registration Regulations, 2008

Anti-Money Laundering Regulations, 2008


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NBFCs and Notified Entities Regulations, 2008

Prudential Regulations for NBFCs undertaking the Business of Leasing only

Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2008

Code of Corporate Governance, 2012

Debt Securities Trustee Regulations, 2012

Insurance Accounting Regulations, 2012

Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2012

Third Party Administrators for Health Insurance Regulations, 2013

Centralised Information Sharing Solution for Life Insurance Industry Regulations, 2013

VOLUME V

GUIDELINES

Guidelines for Issue of Certificates of Musharika for Modarabas, 1994

Listed Companies (Prohibition of Insider Trading) Guidelines, 2001

Guidelines for Preparation of Prospectus, 2002

Equity Issues (Checklist of Documents for Approval of Prospectus or Offer for Sale Document), 2002

Guidelines for Appointment on the Board of Directors of the Stock Exchanges, 2002

Term Finance Certificates (TFCs) Issues (Checklist of Documents for Approval of Prospectus, 2002

Guidelines for the Issue of TFCs to General Public, 2002

Guidelines on Issue of Shares at Discount, 2004

Internet Trading Guidelines, 2005

Guidelines for Issue of Commercial Paper, 2006

Guidelines for Bancassurance, 2010

Corporate Social Responsibility Voluntary Guidelines, 2013

Guidelines on Quarterly Accounts


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ORDERS

Vegetable Ghee and Cooking Oil Companies (Cost Accounting Records) Order, 1990

Cement Industry (Cost Accounting Records) Order, 1994

Sugar Industry (Cost Accounting Records) Order, 2001

Companies Cost Accounting Records (General Order), 2008

Companies (Corporate Social Responsibility) General Order, 2009

Fertilizer Industry (Cost Accounting Records) Order, 2011

Chemical Fertilizer Industry (Cost Accounting Records) Order, 2012

Synthetic and Rayon Companies (Cost Accounting Records) Order, 2012

Electric Power Generation Industry (Cost Accounting Records) Order, 2012

Pharmaceutical Industry (Cost Accounting Records) Order, 2013

DIRECTIVES

Feb 17, 2005 - Directive under the Credit Rating Companies Rules, 1995

Feb 7, 2003 - Directive to Brokers on Conduct of Business 2003

Jul 18, 2002 - Directive to Brokers or Brokerage Firms or Incorporated Brokerage House Regd.

under the Broker & Agents Registration Rules 2001

GUIDE SERIES

A Guide on Accounts and Accounting Reference Dates

Change in Company Objects

Change of Company Name

Availability of Name Guide

Conversion of Status of Companies

Directors and Secretaries Guide

Filing of Statutory Returns

Foreign Companies Guide


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Appointment of Statutory Auditors and Ancillary Matters

Listing of Companies through Initial Public Offerings

Obtaining license by an Association not for profit

Further Issue of Shares otherwise than Rights

Issue of Preference Shares

Making Alteration in Memorandum of Association under Section 21 of Companies Ordinance, 1984

Incorporation of Company Information and Procedures

Investigation into the Affairs of a Company

Company Mortgages and Charges

List of sensitive/prohibited words

Promoters Guide

Modaraba Promoters Guide

Shareholders Rights

Single Member Company Guide (in Urdu)

Winding up / Dissolution of Companies

VOLUME VI

FORMS AND APPLICATIONS

Forms[See under Companies (General Provisions and Forms) Rules, 1985]

Applications

Application for Availability of Name

Application for File Inspection

Application for Refund of Fee

Application for Issuance of Certified To Be True Copy

Application for Availability of Name

Application for File Inspection


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Application for Refund of Fee

Application for Issuance of Certified To Be True Copy

NOTIFICATIONS (selected)

S.R.O. 282(I)/1986 Company Names Abbreviations and Urdu Equivalents

S.R.O. 865(I)/2005 IFAS 1 Murabaha

S.R.O. 431(I)/2007 IFAS 2 Ijarah

S.R.O. 640(I)/2011 Maintenance of Website

S.R.O. 289(I)/2011 Form of Statement in Lieu of Prospectus

S.R.O. 23(I)/2012 Accounting and Financial Reporting Standards for Medium Sized Enterprises

and Small Sized Enterprises

S.R.O. 25(I)/2012 Maintenance of Website by Listed Companies

S.R.O. 320(I)/2012 Amendments in Sixth Schedule to the Companies Ordinance, 1984

S.R.O. 753(I)/2012 Amendments in First Schedule Table A to the Companies Ordinance, 1984

S.R.O. 1354(I)/2012 Delegation of Powers of Commission

S.R.O. 130(I)/2013 Recovery of Gain

S.R.O. 182(I)/2013 Amendments in Fifth Schedule to the Companies Ordinance, 1984

S.R.O. 183(I)/2013 Amendments in Fourth Schedule to the Companies Ordinance, 1984

S.R.O. 194(I)/2013 Amendments in First Schedule Table A and C to Companies Ordinance, 1984

S.R.O. 210(I)/2013 Amendments in Companies (Registration Offices) Regulations, 2003

S.R.O. 211(I)/2013 eService of SECP

S.R.O. 387(I)/2013 Delegation of Powers of Commission

S.R.O. 479(I)/2013 Amendments in Public Sector Companies (Corporate Governance) Rules, 2013

S.R.O. 571(I)/2013 IFAS 3 Profit and Loss Sharing on Deposits

S.R.O. 677(I)/2013 Amendments Public Sector Companies (Corporate Governance) Rules, 2013

CIRCULARS (selected)

Circular 8/2001 Companies Regularisation Scheme


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Circular 1/2002 Adoption of International Accounting Standards 22, 36 and 39

Circular 2/2002 Companies Regularisation Scheme

Circular 3/2002 Adoption of International Accounting Standards 40

Circular 4/2002 Adoption of International Accounting Standards 22, 36 and 39

Circular 15/2002 Transfer off Regulatory Supervision of Non-Banking Financial Institutions and

Submission of Periodical Returns/Statements

Circular 16/2002 Submission of Quarterly Accounts by Listed Companies

Circular 17/2002 Information on Current Credit Rating and COIs/CODs being maintained by

NBFCs

Circular 18/2002 Submission of Quarterly Accounts by Listed Companies

Circular 19/2002 - Appointment of External Auditors by the Listed Companies

Circular 1/2003 Appointment of Sole Proprietor Chartered Accountants as Auditor by Business

Name

Circular 2/2003 International Accounting Standard 40 Investment Property

Circular 7/2003 Appointment of Directors/Chief Executive in the Modaraba Companies

Circular 8/2003 Checklist for Appointment of Directors

Circular 9/2003 Preparation and Transmission of Second Quarterly Accounts by the Listed

Companies

Circular 10/2003 Fresh License(s) to be obtained by Existing Companies in terms of Section 282C

of the Companies Ordinance, 1984 for Business(es) being carried out by existing NBFCs

Circular 12/2003 Fresh License(s) to be obtained by Existing Companies In terms of Section 282C

of the Companies Ordinance, 1984

Circular 13/2003 Maintenance of Website by the Listed Companies

Circular 15/2003 Appointment of Whole Time Company Secretary

Circular 18/2003 Rules of Business for NBFIs and Submission of Periodic Returns/Statements

Circular 19/2003 Applicability of IAS 39 and IAS 40 to NBFCs providing investment financeservices (Investment Banks), discounting services and housing finance services

Circular 24/2003 Assets provided on Lease/loan basis to the Employees (Excluding CEO and

Directors)

Circular 25/2003 Use of word Bank or any of its derivatives

Circular 26/2003 Circular No. 26 of 2003


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Circular 29/2003 Corporate Agriculture Farming (CAF) Policy

Circular 30/2003 Attendance of Directors in the Board Meetings through Video Conferencing

Circular 6/2004 Appointment of Sole Proprietor Chartered Accountants as Auditors by Business

Name

Circular 7/2004 Authentication of Statutory Returns

Circular 8/2004 Compliance with IAS 12 (Revised)

Circular 3/2005 Holding of Election of Directors Pursuant to Companies (Amendment) Ordinance

2002

Circular 6/2005 Conditions for Issuance of Foreign Currency Certificate of Deposits (CODs) and

Certificate of Investment (COIs)

Circular 8/2005 Investment Policy under Rule 24(3) and Prescribed Allocation Policy for

Selection by the Individual Participants under Rule 14(3) & 14(4) of the Voluntary Pension System

Rules 2005

Circular 10/2005 Application(s) made under the NBFCs (Establishment and Regulation) Rules,

2003 and the Prudential Regulations for NBFCs

Circular 11/2005 Rating of NBFCs and Collective Investment Scheme(s) managed by NBFCs

Circular 12/2005 Appointment as a Director on the Board of an NBFC

Circular 13/2005 Exemption from Requirements of Clause 3C of Part II of Fourth Schedule to the

Companies Ordinance, 1984

Circular 15/2005 Sale of Assets by NBFCs to its Employees

Circular 17/2005 Violation of Section 143 of the Companies Ordinance, 1984 by mentioning

Incomplete Name

Circular 18/2005 Attendance of Directors in the Board Meetings through Tele-Video Conferencing

Circular 19/2005 Regulation for Housing Finance Applicable to Individual Borrowers

Circular 24/2005 Rotation of External Auditors by Insurance Organizations

Circular 3/2006 Holding of Election of Directors

Circular 1/2008 Publication of Notices etc in Urdu Newspaper

Circular 11/2008 Revision of Fourth and Fifth Schedules to the Companies Ordinance, 1984

Circular 16/2008 Submission of Daily Statement of Assets and Liabilities

Circular 3/2009 Available for Sale Investment


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Circular 14/2010 United Nations 1267 Committee's Consolidated List of Individuals and Entities

regarding Freezing of Funds and Other Resources

Circular 14/2010 Amendments dated September 8, 2010

Circular 14/2010 Amendments dated November 2, 2010

Circular 14/2010 Amendments dated December 22, 2010

Circular 15/2010 Related Party Assets

Circular 16/2010 Categorization of Open-End Collective Investment Schemes

Circular 17/2010 Notice Period for Holding Extraordinary General Meeting to pass Resolution for

Filing Application under Companies Easy Exit System (CEES)

Circular 18/2010 Additional Condition to the Modaraba Authorization Certificate

Circular 21/2010 Clarification on Clause 3(ii) of Part II of the Third Schedule to the Modaraba

Companies and Modaraba Rules, 1981

Circular 22/2010 Revised Second Schedule to Modaraba Companies and Modaraba Rules, 1981

Circular 26/2010 Application for Refund of Fees received under Sixth Schedule to the Companies

Ordinance, 1984

Circular 28/2010 Application for Refund of Fees received under Sixth Schedule to the Companies

Ordinance, 1984

Circular 3/2011 Amendments in Circular 36 of 2009 dated December 10, 2009 Investment and

Allocation Policies for Pension Funds Authorized under the VPS Rules, 2005


Circular 5/2011 Appointment of a Member of the Religious Board by the Federal Government

under Section 9 of Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980

Circular 6/2011 Withdrawal of Circular 20/2010 dated 30 July 2010

Circular 7/2011 Maximum Management Expense Limits for Life Insurers under Sections 22(9)

and 23(9) of the Insurance Ordinance, 2000

Circular 10/2011 Constitution of Modaraba Tribunal-II, Karachi under the Modaraba Companies

and Modaraba (Floatation and Control) Ordinance, 1980

Circular 11/2011 Sharing of Costs of Insurance Ombudsman's Secretariat by Insurance/Takaful

Companies

Circular 12/2011 Conditions for Grant of License to Associations not for Profit under Section 42

of the Companies Ordinance, 1984

Circular 14/2011 Meetings of the Board of Directors (Abroad)


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Circular 15/2011 Additional Condition to the Modaraba Authorization Certificate

Circular 17/2011 Annual Supervision Fee for 2012

Circular 18/2011 Product Information on websites

Circular 19/2011 Legal Duties of Agents

Circular 1/2012 Reporting of Suspicious Transaction Reports (STR) Currency Transaction

Reports (CTR) to FMU under Anti Money Laundering (AML) Act, 2010

Circular 2/2012 Conditions for Grant of License to Associations not for Profit under Section 42 of

the Companies Ordinance, 1984

Circular 3/2012 Product Publicity Information

Circular 4/2012 S.R.O. 16(I)/2012 dated 9 January, 2012 Amendments in the Securities and

Exchange Commission [Insurance) Rules, 2002

Circular 5/2012 S.R.O. 29(I)/2012 dated 13 January 2012 Takaful Rules, 2012

Circular 7/2012 Enlistment/Categorisation of Auditors on the Approved List pursuant to Section

48(1) of the Insurance Ordinance, 2000

Circular 08/2012 Shariah Compliance and Shariah Audit Mechanism (SCSAM) for Modarabas

Circular 9/2012 Term of Office of Directors

Circular 10/2012 Transmission of Notice of Annual General Meetings (AGM) and Extra-Ordinary

General Meetings (EOGM) through Electronic Medium

Circular 11/2012 Enlistment/Categorisation of Auditors on the Approved List pursuant to Section48(1) of the Insurance Ordinance, 2000

Circular 12/2012 Launching of Fast Track Registration Services (FTRS)

Circular 13/2012 Approval of Short Term Ijarah (Lease) Agreement

Circular 14/2012 Launch of Inter-CRO Electronic Inspection Service

Circular 15/2012 Minimum Requirement for Exchange Traded Funds to be managed by Asset

Management Companies


Circular 17/2012 Additional Disclosures for Workers Welfare Fund (WWF) Liability for

Collective Investment Schemes

Circular 18/2012 Dividend Mandate under Section 250 of the Companies Ordinance, 1984

Circular 19/2012 Procedure for Convening Meeting of the Unitholders of Open-End and Close-

End Collective Investment Schemes


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Circular 20/2012 Reporting of STRs/CTRs to FMU under the AML Act, 2010

Circular Restriction on sharing of management fee by Asset Management Companies with

Unitholders

Circular 21/2012 Filing of Returns through Insurance Companies Return Submission (ICRS)

System

Circular 22/2012 Relaunching of Companies Regularisation Scheme (CRS)

Circular 23/2012 Relaunching of CEES

Circular 31/2012 Extension in time period of CRS and CEES


Circular 37/2012 New Insurance Accounting Regulations 2012; and Amendments in the SEC

(Insurance) Rules, 2002

Circular 39/2012 Clarification on Circular 14/2011 regarding Meetings of Board of Directors(Abroad)

Circular 40/2012 Extension in Time Period of CRS and CEES

Circular 41/2012 Annual Supervision Fee for the year 2013

Circular 42/2012 Filing of Monthly Returns through Specialised Companies Return System (SCRS)

Circular SECP registered 274 companies in August 2012

Circular 1/2013 Rate of Return Assumptions for Life Insurance and Family Takaful Illustrations

Circular 2/2013 Training of Insurance Agents

Circular 2 of 2/2013 Clarification on the Circular No.2 of 2013 on Training of Insurance Agents

Circular 3/2013 Launching eSInsuranceSurveyors: Online Surveyors Licensing and Registration

System

Circular 5/2013 Examination or Test for Grant of Registration as Authorized Surveying Officer

Circular 6/2013 Amendments in Circular No. 36 of 2009 dated December 10, 2009 Investment

and Allocation Polices for the Pension Funds Authorized under the VPS Rules, 2005

Circular 7/2013 Clarification on Filing of Revised Annual Audited Accounts by Non-ListedCompanies


Circular 11/2013 Amendment to Circular No. 9 of 2005 on Group Insurance Premium Rates

Circular 12/2013 Publication of Public Announcements


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Circular 13/2013 Clarification regarding Circular No. 36 of 2009 dated December 10, 2009

Circular 17/2013 Mortality Rates as a Part of the Minimum Valuation Basis for the Determination

of Minimum Actuarial Reserves for PolicyholdersLiabilities

Circular 18/2013 Draft Bancassurance Regulations, 2013

Circular 19/2013 Appointment of Qualified Auditors

Circular 20/2013 Maximum Management Expense Limits for Life Insurers

Circular 21/2013 Life Insurance Product Submission Requirements


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THE INSURANCE ACT, 1938

ACT NO. IV OF 1938

[26th February, 1938]

An Act to consolidate and amend the law relating to the business of insurance.

WHEREAS it is expedient to consolidate and amend the law relating to the business ofinsurance ; It is hereby enacted as follows : -

PART I PRELIMINARY

1.-(1) This Act may be called the Insurance Act, 1938.(2) It extends to the whole of Pakistan.(3) It shall come into force on such date 3 as the Central Government may, bynotification in the official Gazette, appoint in this behalf.

2. In this Act, unless there is anything repugnant in the subject or context,-

(1) "actuary" means an actuarypossessing such qualifications as may be prescribed

(3) "approved securities" means Government securities, and any other security chargedon the revenues of the Central Government or of a Provincial Government, or guaranteedfully as regards principal and interest by the Central Government or a ProvincialGovernment ; and any debenture or other security for money issued under the authority ofany Act of the Central Legislature or any Provincial Legislature by or on behalf of thetrustees of the port of Karachi and any security issued by the Government of an AccedingState or a non-Acceding State and specified as an approved security for the purposes ofthis Act by the Central Government by notification in the official Gazette ;

(3A) "approved investments" means such investments as the Central Government may,by notification in the official Gazette, specify as approved investments for the purposes

of this Act ;

(4) "auditor" means a person qualified under the provisions of section 144 of theCompanies Act, 1913, to act as an auditor of companies ;

(5) "certified" in relation to any copy or translation of a document required to befurnished by or on behalf of 9[an insurer or a provident society as defined in Part III


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means certified by a principal officer of to such insurer or provident society to be a truecopy or a correct translation, as the case may be ;

(5A) "company" has the meaning assigned to it in clause (2) of section 2 of theCompanies Act, 1913 ;

(5B) "Controller of Insurance" or "Controller" means the officer appointed by the CentralGovernment to perform the duties of the Controller of Insurance under this Act;

(6) "Court" means the principal Civil Court of original jurisdiction in a district, andincludes the High Court in exercise of its ordinary original civil jurisdiction ;

(6A) "employer of agents" means a person certified under section 42A who procuresinsurance business for an insurer whether wholly or in part by employing or causing to beemployed insurance agents on behalf of the insurer ;

(6B) "fire insurance business" means the business of effecting, otherwise thanincidentally to some other class of insurance business, contracts of insurance against lossby or incidental to fire or other occurrence customarily included among the risks insuredagainst in fire insurance policies ;

(6C) "general insurance business" means fire, marine or miscellaneous insurancebusiness, whether carried on singly or in combination with one or more of them;.

(7) "Government securities" means Government securities as defined in the SecuritiesAct, 1920 ;

(8) "insurance company" means any insurer being a company, association or partnershipwhich may be wound up under the Companies Act, 1913, or to which the PartnershipAct, 1932, applies ;

(8A) "insurance surveyor" means a person (certified under 1 section 44A) who examinesthe goods, property or any interests insured under a policy of general insurance toascertain the cause, extent and location of any loss and to determine the amount of suchloss and the amount which is payable to the insured by the insurer or insurers or anyperson liable in respect of such loss ;

(9) "insurer" means------

(a) any individual or unincorporated body of individuals or body corporate incorporatedunder the law of any country or State outside Pakistan, carrying on insurance business notbeing a person specified in sub-clause (c) of this clause which-

(i) carries on that business in Pakistan ; or

(ii) has his or its principal place of business or is domiciled in Pakistan ; or


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(iii) with the object of obtaining insurance business, employs a representative, or main-tains a place of business, in Pakistan ;

(b) any body corporate not being a person specified in sub-clause (c) of this clause

carrying on the business of insurance, which is a body corporate incorporated under anylaw for the time being in force in Pakistan ; or stands to any such body corporate in therelation of a subsidiary company within the meaning of the Companies Act, 1913, asdefined by sub-section (2) of section 2 of that Act, and

(c) any person who in Pakistan has a standing contract with underwriters who aremembers of the Society of Lloyd's whereby such person is authorized within the terms ofsuch contract to issue protection notes, cover notes, or other documents grantinginsurance cover to others on behalf of the underwriters,

but does not include an insurance agent licensed under section 42 or a provident society

as defined in Part III ;

(10) "insurance agent" means an insurance agent licensed under section 42 being anindividual who receives or agrees to receive payment by way of commission or otherremuneration in consideration of his soliciting or procuring insurance business ;

(11) "life insurance business" means the business of effecting contracts of insurance uponhuman life including any contract whereby the payment of money is assured on death(except policies for death by accident only) or the happening of any contingencydependent on human life or which is subject to payment of premiums for a termdependent on human life and shall be deemed to include-----

(a) the granting of disability and double or triple indemnity accident benefits, if soprovided in the contract of insurance ;(b) the granting of annuities upon human life ; and(c) the granting of superannuation allowances and annuities payable out of any fundapplicable solely to the relief and maintenance of persons engaged or who have beenengaged in any particular profession, trade or employment or of the dependents of suchperson;(12) "manager" and "officer" have the meanings assigned to those expressions in clauses(9) and (11) respectively of section 2 of the Companies Act, 1913;(13) "managing agent" means a person, firm or company entitled to the management ofthe whole affairs of a company by virtue of an agreement with the company, and underthe control and direction of the directors except to the extent, if any, otherwise providedfor in the agreement, and includes any person, firm or company occupying such positionby whatever name called.

Explanation.-If a person occupying the position of managing agent calls himselfmanager or managing director, he shall nevertheless be regarded as managing agent forthe purposes of section 32 of this Act ;


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(13A) "marine insurance business" means the business of effecting contracts ofinsurance upon vessels of any description, including cargoes, freights and other interestswhich may be legally insured, in or in relation to such vessels, cargoes and freights,goods, wares, merchandise and property of whatever description insured for any transit

by land, water or air, or by any combination thereof and whether or not includingwarehouse risks or similar risks in addition or as incidental to such transit, and includesany other risks customarily included among the risks insured against in marine insurancepolicies ;

(13B) "miscellaneous insurance business" means the business of effecting contracts ofinsurance which is not principally of any kind included in clauses (613), (11) and (13A) ;

(13C) "Pakistan Insurance Corporation" means the Corporation established under thePakistan Insurance Corporation Act, 1952 ;

(13D) "policy-holder" includes a person to whom the whole of the interest of thepolicy-holder in the policy is assigned once and for all, but does not include an assigneethereof whose interest in the policy is defeasible or is for the time being subject to anycondition;

(14) "prescribed" means prescribed by rules made under section 114 ; and

(14A) "private company" has the meaning assigned to it in clause (13) of section 2 of theCompanies Act, 1913 ;

(14B) "public company" means a company incorporated under the Companies Act, 1913or under the Indian Companies Act, 1882, or under the Indian Companies Act, 1866, orunder any Act repealed thereby, which is not a private company or a subsidiary of aprivate company; and

(15) "scheduled bank" has the meaning assigned to it in clause (m) of section 2 of theState Bank of Pakistan Act, 1956.

.

PART II PROVISIONS APPLICABLE TO INSURERS

3.-(1) No person shall, after the commencement of this Act, begin to carry on any class ofinsurance business in Pakistan], and no insurer carrying on any class of insurancebusiness in Pakistan shall, after the expiry of three months from the commencement ofthis Act, continue to carry on any such business, unless he has obtained from the


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Controller of Insurance a certificate of registration for the particular class of insurancebusiness;

Provided that in the case of an insurer who was carrying on any class of insurancebusiness in Pakistan at the commencement of this Act, failure to obtain a certificate of

registration in accordance with the requirements of this sub-section shall not operate toinvalidate any contract of insurance entered into by him if before such date as may befixed in this behalf by the Central Government by notification in the official Gazette, hehas obtained that certificate.

(2) Every application for registration shall be accompanied by-----

(a) a certified copy of the memorandum and articles of association, where the applicant isa company and incorporated under the Companies Act, 1913 or under the IndianCompanies Act, 1882, or under the Indian Companies Act, 1866, or under any Actrepealed thereby, or, in the case of any other insurer specified in sub-clause (a) (ii) or

sub-clause (b) of clause (9) of section 2, a certified copy of the deed of partnership or ofthe deed of constitution of the company, as the case may be, or, in the case of an insurerhaving his principal place of business or domicile outside Pakistan, the documentspecified in clause (a) of section 63 ;

(b) the name, address and the occupation, if any, of the directors where the insurer is aCompany incorporated under the Companies Act, 1913, or under the Indian CompaniesAct, 1882, or under the Indian Companies Act, 1866, or under any Act repealed thereby,and in the case of an insurer specified in sub-clause (a) (ii) of clause (9) of section 2 thenames and addresses of the proprietors and of the manager in Pakistan, and in any othercase the full address of the principal office of the insurer in Pakistan, and the names ofthe directors and the manager at such office and the name and address of some one ormore persons resident in Pakistan authorized to accept any notice required to be servedon the insurer ;

(c) a statement of the class or classes of insurance business done or to be done, and astatement that the amount required to be deposited by section 7 or section 98 beforeapplication for registration is made has been deposited together with a certificate from theState Bank of Pakistan showing the amount deposited ;

(d) where the provisions of section 6 or 97 apply, a statement duly certified by an auditorshowing the total paid up capital or the total working capital of the insurer and adeclaration verified by an affidavit made by the principal officer of the insurer authorizedin that behalf that the provisions of those sections as to paid up capital or working capital,as the case may be, have been complied with;

(e) in the case of an insurer having his principal place of business or domicile outsidePakistan, a statement verified by an affidavit madeby the principal officer of the insurersetting forth the requirements (if any) not applicable to nationals of the country in whichsuch insurer is constituted, incorporated or domiciled which are imposed by the laws or


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practice of that country upon Pakistan nationals as a condition of carrying on insurancebusiness in that country ;

(f) a certified copy of the published prospectus, if any, and of the standard policy formsof the insurer and statements of the assured rates, advantages, terms and conditions to be

offered in connection with insurance policies together with a certificate in connectionwith life insurance business by an actuary that such rates, advantages, terms andconditions are workable and sound;

Provided that in the ease of marine, accident and miscellaneous insurance business otherthan workmen's compensation and motor car insurance the Controller of Insurance mayexempt any insurer from the above requirements regarding prospectus, forms andstatements to such extent and for such period as he may deem fit ; and

(g) the receipt showing payment in the prescribed manner of the prescribed fee whichshall not be more than five hundred rupees for each class of business.

(3) In the case of any insurer having his principal place of business or domicile outsidePakistan, the Controller of Insurance shall withhold registration or shall cancel aregistration already made, if he is satisfied that in the country in which such insurer hashis principal place of business or domicile Pakistan nationals are debarred by the law orpractice of the country relating to, or applied to insurance from carrying on the businessof insurance , or that any requirement imposed on such insurer the provisions of section62 is not satisfied.

(4) The Controller of Insurance shall cancel the registration of an insurer either wholly orin so far as it relates to a particular class of insurance business, as the case may be,-----

(a) if the insurer fails to comply with the provisions of section 7 or section 98 as todeposits, or

(b) if the insurer is in liquidation or is adjudged an insolvent, or

(c) if the business or a class of the business of the insurer has been transferred to anyperson or has been transferred to or amalgamated with the business of any other insurer,or

(d) if the whole of the deposit made in respect of a class of insurance business has beenreturned to the insurer under section 9; or

(e) if, in the case of an insurer specified in sub-clause (c) of clause (9) of section 2, thestanding contract referred to in that sub-clause is cancelled or is suspended and continuesto be suspended for a period of six months,

and the Controller of Insurance may cancel the registration of an insurer----


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(f) if the insurer makes default in complying with, or acts in contravention of, anyrequirement of this Act or any rule or order made thereunder, and

(g) if the Controller of Insurance has reason to believe that any claim upon the insurerarising in Pakistan under any policy of insurance remains unpaid for three months after

final judgment in regular course of law.

(5) When the Controller of Insurance withholds or cancels any registration undersub-section (3) or clause (a), clause (e), clause (f) or clause (g) of sub-section (4), he shallgive notice in writing to the insurer of his decision, and the decision shall take effect onsuch date as he may specify in that behalf in the notice, such date not being less than onemonth nor more than two months from the date of the receipt of the notice in the ordinarycourse of transmission.

(5A) When the Controller of Insurance cancels any registration under clause (b), clause(c) or clause (d) of sub-section (4) the cancellation shall take effect on the date on which

notice of the order of cancellation is served on the insurer.

(5B) When a registration is cancelled the insurer shall not, after the cancellation has takeneffect, enter into any new contracts of insurance, but all rights and liabilities in respect ofcontracts of insurance entered into by him before such cancellation takes effect shall,subject to the provisions of sub-section (5D), continue as if the cancellation had not takenplace.

(5C) Where a registration is cancelled under clause (a), clause (e), clause (f), or clause (g)of sub-section (4),] the Controller of Insurance may at his discretion revive theregistration, if the insurer makes the deposits required by section 7 or section 98, or hashis standing contract restored or has had an application under sub-section (4) of section3A accepted, or satisfies the Controller of Insurance that no claim upon him such as isreferred to in clause (g) of sub-section (4) remains unpaid or that he has complied withthe requirement for the non-compliance or contravention of which the registration wascancelled under clause (f) of subsection (4) as the case may be, and complies with anydirections which may be given to him by the Controller of Insurance.

(5D) Where the registration of an insurance company is cancelled under sub-section (4),the Controller of Insurance may, after the expiry of six months from the date on whichthe cancellation took effect, apply to the Court for an order to wind up the insurancecompany, or to wind up the affairs of the company in respect of a class of insurancebusiness, unless the registration of the insurance company has been revived under sub-section (5C) or an application for winding up the company has been already presented tothe Court. The Court may proceed as if an application under this sub-section were anapplication under sub-section (2) of section 53, or sub-section (1) of section 58, as thecase may be.

(6) 5[Subject to compliance with the provisions of sections 2C, 5, sub-section (2A) ofsection 10 and section 32 and of any order made under section 3B, the Controller of


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Insurance shall, on being satisfied that the applicant has fulfilled all the requirements ofthis section applicable to him, register the insurer and grant him] a certificate ofregistration.

(7) The Controller of Insurance may, on payment of the prescribed fee which shall not

exceed twenty-five rupees, issue a duplicate certificate of registration to replace a certi-ficate lost, destroyed or mutilated, or in any other case where he is of opinion that theissue of a duplicate certificate is necessary.

PART II PROVISIONS APPLICABLE TO INSURERS

4. Minimum limits for annuities and other benefits secured by policies of life insurance.Omitted by the Insurance (Amdt.) Act, 1958 (XXVII of 1958), s. 8.

5.-(1) An insurer shall not be registered by a name identicalcal with that by which aninsurer in existence is already registered, or so nearly resembling that name as to becalculated to deceive except when the insurer in existence is in the course of beingdissolved and signifies his consent to the Controller of Insurance.

(2) If any insurer, through inadvertence or otherwise, is without such consent as aforesaidregistered by a name identical with that by which an insurer already in existence whetherpreviously registered or not is carrying on business or so nearly resembling it as to becalculated to deceive, the first-mentioned insurer shall, if called upon to do so by theController of Insurance on the application of the second-mentioned insurer, change hisname within a time to be fixed by the Controller of Insurance;

Provided that nothing in this section shall apply to any insurer carrying on businessbefore the 27th day of January, 1937, under the Indian Life Assurance Companies Act,1912 Provided further that in the application of this section to any insurer who begins tocarry on insurance business after the commencement of the Insurance (Amendment) Act,1946, the references to an insurer in existence in sub-section (1) and this sub-section shallbe construed as including references to a provident society (as defined in Part III) inexistence, whether or not the society is in the course of being dissolved.

(3) No insurer other than a provident society as defined in Part III, who begins to carry oninsurance business after the commencement of this Act, shall adopt as its name and no

such insurer carrying on business before the commencement of this Act shall continueafter the expiry of six months from the commencement thereof to use as its name anycombination of words which includes the word "provident".

6. No insurer other than an insurer who was registered or any class of insurance businessimmediately before the commencement of the Insurance (Amendment) ordinance, 1961,shall be registered unless he has a paid up capital of not less than ten lakhs of rupees.


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7.-(1) Every insurer not being an insurer specified in sub-clause (c) of clause (9) ofsection 2 shall, in respect of the insurance business carried on by him in Pakistan, depositand keep deposited with the State Bank of Pakistan, in one of the offices in Pakistan ofthe Bank for and on behalf of the Central Government the amount hereafter specified,

either in cash or in approved securities estimated at the market value of the securities onthe day of deposit, or partly in cash and part in approved securities so estimated

(a) where the business done or to be done is life insurance only, two hundred thousandrupees ;(b) where the business done or to be done is fire insurance only, one hundred and fiftythousand rupees;(c) where the business done or to be done is marine insurance only, one hundred and fiftythousand rupees ;(d) where the business done or to be done is miscellaneous insurance only one hundredand fifty thousand rupees ;

(e) where the business done or to be done is life insurance and any one of the threeclasses specified in clauses (b), (c), and (d), three hundred thousand rupees of which twohundred thousand rupees shall be the deposit for life insurance business ;(f) where the business done or to be done is life insurance and any two of the threeclasses specified in clauses (b), (c) and (d), four hundred thousand rupees of which twohundred thousand rupees shall be the deposit for life insurance business ;

(g) where the business done or to be done is life insurance and all three classes specifiedin clauses (b), (c) and (d), four hundred and fifty thousand rupees of which two hundredthousand rupees shall be the deposit for life insurance business ;

(h) where the business done or to be done does not include life insurance but falls underany two of the classes specified in clauses (b), (c) and (d), two hundred and fifty thousandrupees ;

(i) where the business done or to be done does not include life insurance but falls underall three classes specified in clauses (b), (c) and (d), three hundred and fifty thousandrupees ;

Provided that, where the business done or to be done is marine insurance only and relatesexclusively to country craft or its cargo or both, the amount to be deposited under thissub- section shall be ten thousand rupees only.

(2) Where the insurer is an insurer specified in sub-clause (c) of clause (9) of section 2,he shall be deemed to have complied with the provisions of this section as to deposits, ifin respect of any class of insurance business carried on by him in Pakistan under astanding contract of the nature referred to in sub-clause (c) of clause (9) of section 2, adeposit of an amount one-and-a-half times that specified in sub-section (1) as the depositfor that class of insurance business has been made in the State Bank of Pakistan in one ofthe offices in Pakistan of the Bank for and on behalf of the Central Government in cash


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or approved securities estimated at the market value of the securities on the day ofdeposit by or on behalf of the underwriters who are members of the Society of Lloyd'swith whom he has his standing contract.

(5) The deposit may be made in instalments of not less than one-fourth the total amount

before the application for registration is made, not less than one-third the balance beforethe expiry of one year from the commencement of business in Pakistan and not less thanone-half the residue before the expiry of two years from the commencement of businessin Pakistan, and the balance before the expiry of three years from the commencement ofbusiness in Pakistan.

Provided that in the case of any insurer not being an insurer specified in sub-clause (a)(ii) or sub-clause (b) of clause (9) of section and incorporated before the commencementof the Insurance (Amendment) Ordinance, 1961, the deposit shall be made in full beforethe application for registration is made.

(6) No class of insurance business in addition to the class or classes in respect of whichan insurer is already liable to make a deposit under sub-section (1) or sub-section (2)shall be undertaken by the insurer until the deposit to which he is already liable has beenmade in full, and the additional deposit required in respect of the additional class ofbusiness or so much thereof as under the provisions of sub-section (5) is to be madebefore the application for registration, has also been made in full.

(8) A deposit made in cash shall be held by the State Bank of Pakistan to the credit of theinsurer and shall except to the extent, if any, to which the cash has been invested insecurities under sub-section (9A), be returnable to the insurer in cash in any case in whichunder the provisions of this Act a deposit is to be returned ; and any interest accruing dueand collected on securities deposited under sub-section (1) or sub-section (2) shall bepaid to the insurer, subject only to deduction of the normal commission chargeable forthe realization of interest.

(9) The insurer may at any time replace any securities deposited by him under this sectionwith the State Bank of Pakistan either by cash or by other approved securities or partly bycash and partly by other approved securities, provided that such cash, or the value of suchother approved securities estimated at the market rates prevailing at the time ofreplacement, or such cash together with such value, as the case may be, is not less thanthe value of the securities replaced estimated at the market rates prevailing when theywere deposited.

(9A) The State Bank of Pakistan shall, if so requested by insurer,-

(a) sell any securities deposited by him with the Bank under this section and hold thecash realised by such sale as deposit, or

(b) invest in approved securities specified by the insurer the whole or any part of adeposit held by it in cash or the whole or any part of cash received by it on the sale of or


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on the maturing of securities deposited by the insurer, and hold the securities in whichinvestment is so made as deposit, and may charge the normal commission on such sale oron such investment.

(9B) Where sub-section (9A) applies,----

(a) If the cash realised by the sale of or on the maturing of the securities (excluding in theformer case the interest accrued) falls short of the market value of the securities at thedate on which they were deposited with the Bank, the insurer shall make good the defi-ciency by a further deposit either in cash or in approved securities estimated at the marketvalue of the securities on the day on which they are deposited, or partly in cash and partlyin approved securities so estimated, within a period of two months from the date onwhich the securities matured or were sold and unless he does so the insurer shall bedeemed to have failed to comply with the requirements of this section as to deposits ; and

(b) if the cash realised by the sale of or on the maturing of the securities (excluding in the

former case the interest accrued) exceeds the market value of the securities at the date onwhich they were deposited with the Bank, the Central Government may, if satisfied thatthe full amount required to be deposited under sub-section (1) is in deposit, direct theState Bank to return the excess.

(10) If any part of a deposit made under this section is used in the discharge of anyliability of the insurer, the insurer shall deposit such additional sum in cash or approvedsecurities estimated at the market value of the securities on the day of deposit, or partly incash and partly in such securities,) as will make up the amount so used. The insurer shallbe deemed to have failed to comply with the requirements of sub-section (1), unless thedeficiency is supplied within a period of two months from the date when the deposit orany part thereof is so used for discharge of liabilities.

8. (1) Any deposit made under section 7 or section 98 shall be deemed to be part of theassets of the insurer but shall not be susceptible of any assignment or charge ; nor shall itbe available for the discharge of any liability of the insurer other than liabilitiesarising out of policies of insurance issued by the insurer so long as any such liabilitiesremain un-discharged ; nor shall it be liable to attachment in execution of any decreeexcept a decree obtained by a policy-holder of the insurer in respect of a debt due upon apolicy which debt the policy-holder has failed to realise in any other way.

(2) Where a deposit is made in respect of life insurance business the deposit made inrespect thereof shall not be available for the discharge of any liability of the insurer otherthan liabilities arising out of policies of life insurance issued by the insurer.

9.(1) Where an insurer has ceased to carry on in Pakistan any class of insurance businessin respect of which a deposit has been made under section 7 or section 98 and hisliabilities in Pakistan in respect of business of that class have been satisfied or are


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otherwise provided for, the Court may, on the application of the insurer, order the returnto the insurer of so much of the deposit as does not relate to the classes of insurance, ifany, which he continues to carry on.

(2) An application under this section shall, if the applicant is carrying on any insurance

business in any Acceding State or a non-Acceding State notified in this behalf by theCentral Government in the official Gazette, be accompanied by a statement to that effect,and in such a case the Court shall not order the return of any deposit under this sectionunless it is satisfied, after giving notice to the chief insurance authority of that State, thatthe liabilities of the applicant to that State in respect of the class of business concernedhave been satisfied or are otherwise provided for.

10.-(1) Where the insurer carries on business of more than a~ one of the classes specifiedin clauses (a), (b), (c) and (d) of sub- a, section (1) of section 7, he shall keep a separateaccount of all receipts and payments in respect of each such class of insurance businessand where the insurer carries on business of the class specified in clause (d) of that

sub-section whether alone or in conjunction with business of another class, he shall,unless the Controller of Insurance waives this requirement in writing, keep a separateaccount of all receipts and payments in respect of each such sub-class of the classspecified in clause (d) as may be prescribed in this behalf;

(2) Where the insurer carries on the business of life insurance, all receipts due in respectof such business, shall be carried to and shall form a separate fund to be called the lifeinsurance fund the assets of which shall be kept free from all encumbrances and distinctand separate from all other assets of the insurer and the deposit made by the insurer inrespect of life insurance business shall be deemed to be a part of the assets of such fund ;and every insurer shall furnish to the Controller of Insurance along with the returnsreferred to in section 11, a statement showing in detail such assets as at the close of evercalendar year duly certified by an auditor;Provided that an insurer may show in such statement all the assets held in his lifedepartment and any deductions on account of general reserves and other liabilities of thatdepartment;

Provided further that the Controller may call for a statement similarly certified of suchassets as at any other date specified by him to be furnished within a period of threemonths from the date with reference to which the statement is called for.

(2A) No insurer carrying on life insurance business shall be entitled to be registered forany class of insurance business in addition to the class or classes for which he has beenalready registered unless the Controller of Insurance is satisfied that the assets of the lifeinsurance fund of the insurer are adequate to meet all his liabilities on policies of lifeinsurance maturing for payment.

(3) The life insurance fund shall be as absolutely the security of the life policy-holders asthough it belonged to an insurer carrying on no other business than life insurancebusiness and shall not be liable for any contracts of the insurer for which it would not


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have been liable had the business of the insurer been only that of life insurance and shallnot be applied directly or indirectly for any purposes other than those of the life insurancebusiness of the insurer.

11.-(1) Every insurer, in the case of an insurer specified in sub-clause (a) (ii) or

sub-clause (b) of clause (9) of section 2 in respect of all insurance business transacted byhim, and in the case of any other insurer in respect of the insurance business transactedby him in Pakistan, shall at the expiration of each calendar year prepare with reference tothat year------

(a) in accordance with the regulations contained in Part I of the First Schedule, abalance-sheet in the form set forth in Part II of that Schedule ;

(b) in accordance with the regulations contained in Part I of the Second Schedule, a profitand loss account in the forms set forth in Part II of that Schedule, except where theinsurer carries on business of one class only of the classes specified in clauses (a), (b) and

(c) of sub-section (1) of section 7 and no other business ;

(c) in respect of each class or sub-class of insurance business for which he is requiredunder sub-section (1) of section 10 to keep a separate account of receipts and payments, arevenue account in accordance with the regulations, and in the form or forms, set forth inthe Third Schedule applicable to that class or subclass of insurance business.

(2) Unless the insurer is a company as defined in clause (2) of sub-section (1) of section 2of the Companies Act, 1913, the accounts and statements referred to in sub-section (1)shall be signed by the insurer, or in the case of a company by the chairman, if any, andtwo directors and the principal officer of the company, or in the case of a firm by twopartners of the firm, and shall be accompanied by a statement containing the names anddescriptions of the persons in charge of the management of the business during the periodto which such accounts and statements refer and by a report by such persons on theaffairs of the business during that period.

12. The balance-sheet, profit and loss account, revenue At account and profit and lossappropriation account of every insurer, in the case of an insurer specified in sub-clause(a) (ii) or sub-clause (b) of clause (9) of section 2 in respect of all insurance businesstransacted by him, and in the case of any other insurer in respect of the insurancebusiness transacted by him in Pakistan, shall, unless they are subject to audit under theCompanies Act, 1913, be audited annually by an auditor, and the auditor shall in the auditof all such accounts have the powers of, exercise the functions vested in, and dischargethe duties and be subject to the liabilities and penalties imposed on, auditors ofcompanies by" section 145 of the Companies Act, 1913.

13.-(1) Every insurer carrying on life insurance business shall, in respect of the lifeinsurance business transacted by him in Pakistan, and also in the case of an insurerspecified in sub clause (a) (ii) or sub-clause (b) of clause (9) of section 2 in respect

of all life insurance business transacted by him, once at least in every three years


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cause an investigation to be made by an actuary into the financial condition of the lifeinsurance business carried on by him, including a valuation of his liabilities in respectthereto and shall cause an abstract of the report of such actuary to be made in accordancewith the regulations contained in Part I of the Fourth Schedule and in conformity with therequirements of Part II of that Schedule.

(lA) In the case of an insurer who was registered under this Act on the date ofcommencement of the Insurance (Amendment) Act, 1958, the date with reference towhich such investigation and valuation shall be made shall be;----

(i) the 31st December, 1957, in the case of insurers who on the 31st December, 1957, hadcompleted three years from the last valuation or who have completed two calendar yearsfrom the date of commencement of business in Pakistan ;

(ii) the 31st December, 1958, in the case of insurers who on the 31st December, 1957,had completed two years from the last valuation or who have completed one calendar

year from the date of commencement of business in Pakistan ;

(iii) the 31st December, 1959, in the case of insurers who on the 31st December, 1957had completed one year from the last valuation or who have not completed one fullcalendar year from the date of commencement of business in Pakistan ;

(iv) the 31st December, 1960, in all other cases.

(1B) An insurer who undergoes a valuation with reference to the 31st December, 1957,shall undergo its next valuation with reference to the 31st December, 1960.

(2) The provisions of sub-section (1) regarding the making of an abstract shall applywhenever at any other time an investigation into the financial condition of the insurer ismade with a view to the distribution of profits or an investigation is made of which theresults are made public.

(3) There shall be appended to every such abstract as is referred to in sub-section (1) orsub-section (2) a certificate signed by the principal officer of the insurer that full andaccurate particulars of every policy under which there is a liability either actual orcontingent have been furnished to the actuary for the purpose of the investigation.

(4) There shall be appended to every such abstract a statement, in conformity with therequirements of Part II of the Fifth Schedule and prepared in accordance with theregulations contained in Part I of that Schedule, of the life insurance business in force atthe date to which the accounts of the insurer are made up for the purposes of suchabstract;

Provided that, if the investigation, referred to in sub-sections (1) and (2) is made annuallyby any insurer, the statement need not be appended every year but shall be appended atleast once in every three years.


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(5) Where an investigation into the financial condition of an insurer is made as at a dateother than the expiration of the year of account, the accounts for the period since theexpiration of the last year of account and the balance-sheet as at the date at which theinvestigation is made shall be prepared and audited in the manner provided by this Act.

(6) The provisions of this section relating to life insurance business shall apply also toany such sub-class of miscellaneous insurance business as may be prescribed in thisbehalf;

Provided that no sub-class of miscellaneous insurance business shall be prescribed underthis sub-section if the insurance business comprised in the sub-class consists of insurancecontracts which are terminable by the insurer at intervals not exceeding twelve monthsand under which if a claim arises, the insurer's liability to pay benefit ceases within oneyear of the date on which the claim arose;

Provided further that the Controller of Insurance may authorise such modifications andvariations of the regulations contained in Part I of the Fourth and Fifth Schedules and ofthe requirements of Part II of those Schedules as may be necessary to facilitate theirapplication to any such sub-class of miscellaneous insurance business;

Provided also that if the Controller of Insurance is satisfied that the number and amountof the transactions carried out by an insurer in any such sub-class of miscellaneousinsurance business is so small as to render periodical valuation unnecessary, he mayexempt that insurer from the operation of this sub-section in respect of that sub-class.

14. Every insurer, in the case of an insurer specified in sub-clause (a) (ii) or sub-clause(b) of clause (9) of section 2 in respect of all business transacted by him, and in the caseof any other insurer in respect of the insurance business transacted by him in Pakistan,shall maintain------

(a) a register or record of policies, in which shall be entered, in respect of every policyissued by the insurer, the name and address of the policy-holder, the date when the policywas effected and a record of any transfer, assignment or nomination of which the insurerhas notice, and

(b) a register or record of claims, in which shall be entered every claim made togetherwith the date of the claim, the name and address of the claimant and the date on whichthe claim was discharged, or, in the case of a claim which is rejected, the date of rejectionand the grounds therefor.

15.-(1) The audited accounts and statements referred to in section 11 or sub-section (5) ofsection 13 and the abstract and statement referred to in section 13 shall be printed, andfour copies thereof shall be furnished as returns to the Controller of Insurance in the caseof the accounts and statements referred to in section 11 or sub-section (5) of section 13


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within six months and in the case of the abstract and statement referred to in section 13within nine months from the end of the period to which they refer.

Provided that the said period of six months shall in the case of insurers having theirprincipal place of business or domicile outside Pakistan and in the case of insurers

constituted, incorporated or domiciled in Pakistan but also carrying on business outsidePakistan be extended by three months, and provided further that the Controller may inany case extend the time allowed by this sub-section for the furnishing of such returns bya further period not exceeding one month.

(2) Of the four copies so furnished one shall de signed in the case of a company by thechairman and two directors and by the principal officer of the company and, if thecompany has a managing director by that director in the case of a firm, by two partnersof the firm, and, in the case of an insurer being an individual, by the insurer himself andone shall be signed by the auditor who made the audit or the actuary who made thevaluation, as the case may be.

(3) Where the insurer's principal place of business or domicile is outside Pakistan, heshall forward to the Controller of Insurance, along with the documents referred to insection 11, the balance-sheet, profit and loss account and revenue account and thevaluation reports and valuation statements, if any, which the insurer is required to filewith the public authority of the country in which the insurer is constituted, incorporatedor domiciled, or, where such documents are not required to be filed, a certified statementshowing the total assets and liabilities of the insurer at the close of the period covered bythe said documents and his total income and expenditure during that period.

16. [Returns by insurers established outside the Provinces, etc.]. Omitted by the

Insurance (Amdt.) Act, 1958 (XXVII of 1958), s. 16.

17. Where an insurer, being a company incorporated under the Companies Act, 1913 orunder the Indian Companies Act, 1882, or under the Indian Companies Act, 1866, orunder VI any Act repealed thereby, in any year furnishes his balance 188 sheet andaccounts in accordance with the provisions of section 15, he may at the same time send tothe Registrar of Companies copies of such balance-sheet and accounts ; and where suchcopies are so sent it shall not be necessary for the company to file copies of thebalance-sheet and accounts with the Registrar as required by sub-section (1) of section134 of the first mentioned Act and such copies so sent shall be chargeable with the samefees and shall be dealt with in all respects as if they were filed in accordance with thatsection.

18. Every insurer shall furnish to the Controller of Insurance a certified copy of everyreport on the affairs of the concern which is submitted to the members or policy-holdersof the insurer immediately after its submission to the members or policy-holders as thecase may be.


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19. Every insurer, being a company or body incorporated under any law for the timebeing in force in Pakistan, shall furnish to the Controller of Insurance a certified copy ofthe minutes of the proceedings of every general meeting as entered in the Minutes Bookof the insurer within thirty days from the holding of the meeting to which it relates.

20.-(1) Every return furnished to the Controller of Insurance or a certified copy thereofshall be kept by the Controller and shall be open to inspection; and any person mayprocure a copy of any such return, or of any part thereof, on payment of a fee of six annasfor every hundred words or fractional part thereof required to be copied, any five figuresbeing deemed equivalent to one word.

(2) A printed or certified copy of the accounts, statements and abstract furnished inaccordance with the provisions of section shall, on the application of any shareholder orpolicy-holder made at any time within two years from the date on which the documentwas so furnished, be supplied to him by the insurer within fourteen days when the insureris constituted, incorporated or domiciled in Pakistan and in any other case within one

month of such application.

(3) A copy of the memorandum and articles of association of the insurer, if a company,shall on the application of any policyholder, be supplied to him by the insurer on paymentof one rupee.

21.-(1) If it appears to the Controller of Insurance that any return furnished to him underthe provisions of this Act is inaccurate or defective in any respect, he may-----

(a) require from the insurer such further information, certified if he so directs by anauditor or actuary, as he may consider necessary to correct or supplement such return ;

(b) call upon the insurer to submit for his examination at the principal place of businessof the insurer in Pakistan any book of account, register or other document or to supplyany statement which he may specify in a notice served on the insurer for the purpose ;

(c) examine any officer of the insurer on oath in relation to the return ;

(d) decline to accept any such return unless the inaccuracy has been corrected or thedeficiency has been supplied before the expiry of one month from the date on which therequisition asking for correction of the inaccuracy or supply of the deficiency wasdelivered to the insurer and if he declines to accept any such return, the insurer shall bedeemed to have failed to comply with the provisions of section 15, or section 28 relatingto the furnishing of returns.

(2) The Court may on the application of an insurer and after hearing the Controller cancelany order made by the Controller under clause (a), (b) or (c) of sub-section (1) or maydirect the acceptance of any return which the Controller has declined to accept, if theinsurer satisfies the Court that the action of the Controller was in the circumstancesunreasonable;


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Provided that no application under this sub-section shall be entertained unless it is madebefore the expiration of four months from the time when the Controller of Insurancemade the order or declined to accept the return.

22.-(1) If it appears to the Controller of Insurance f that an investigation or valuation towhich section 13 refers does not properly indicate the condition of the affairs of theinsurer by reason of the faulty basis adopted in the valuation, he may, after giving noticeto the insurer and giving him an opportunity to be heard, cause an investigation andvaluation as at such date as the Controller of Insurance may specify to be made at theexpense of the insurer by an actuary appointed by the insurer for this purpose andapproved by the Controller of Insurance and the insurer shall place at the disposal of theactuary so appointed and approved all the material required by the actuary for thepurposes of the investigation and valuation within such period, not being less than threemonths, as the Controller of Insurance may specify.

(2) The provisions of sub-sections (1) and (4) of section 13, and of sub-sections (1) and(2) of section 15 shall apply in relation to an investigation and valuation under thissection;

Provided that the abstract and statement prepared as the result of such investigation andvaluation shall be furnished by such date as the Controller of Insurance may specify.

23.-(1) Every return furnished to the Controller of Insurance, which has been certified bythe Controller to be a' return so furnished, shall be deemed to be a return so furnished.

(2) Every document, purporting to be certified by the Controller of Insurance to be a copyof a return so furnished, shall be deemed to be a copy of that return and shall be receivedin evidence as if it were the original return, unless some variation between it and theoriginal return is proved.

24. Summary of returns to be published. Omitted by the Insurance (Amdt.) Act, 1941(X111 of 1941), s. 16.

25.-(1) No insurer shall,-----

(a) make, issue, circulate or cause to be made, issued or circulated, any estimate,illustration, circular or statement misrepresenting the terms of any policy issued or to beissued or the benefits or advantages promised thereby or the bonuses, shareholders'dividends or share of the surplus to be received thereon, or make any false or misleadingstatement as to the bonuses, shareholders' dividends or share of surplus previously paidon similar policies or make any misleading representation or any misrepresentation as tothe financial condition of any insurer or use any name or title of any policy or class ofpolicies misrepresenting the true nature thereof or make any misrepresentation to anypolicy-holder insured in any company for the purpose of inducing or tending to inducesuch policy-holder to lapse, forfeit or surrender his insurance; and


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(b) make, publish, disseminate, circulate or place before the public, or cause, directly orindirectly, to be made, published, disseminated, circulated or placed before the public in anewspaper, magazine or other publication, or in the form of a notice, circular, pamphlet,letter or poster or in any other manner an advertisement, announcement or statement con-taining any assertion, representation or statement with respect to the business of

insurance, or the financial position of any insurer or with respect to any person in theconduct of his insurance business, which is false, untrue, deceptive, misleading or calcu-lated to injure any person engaged in the business of insurance;

Provided that nothing contained in this section shall prevent an insurer from publishingany return in a form in which it has been furnished to the Controller of Insurance or a trueand accurate abstract from such returns or any other factual statement for the purposes ofpublicity.

26. Whenever any alteration occurs or is made which affects any of the matters which arerequired under the provisions of sub-section (2) of section 3 to accompany an application

by an insurer for registration, the insurer shall forthwith furnish to the Controller ofInsurance full particulars of such alteration.

All such particulars shall be authenticated in the manner required by that sub-section forthe authentication of the matters therein referred to, and, where the alteration affects.the assured rates, advantages, terms and conditions offered in connection with lifeinsurance policies, the actuarial certificate referred to in clause (f) of the said sub-sectionshall accompany the particulars of the alteration.

PART II

INVESTMENT, LOANS AND MANAGEMENT

27.-(1) Every insurer shall invest and at all times keep Invest invested in the mannerprovided in sub-section (2) assets equivalent to not less than the sum of----

(a) the amount of his liabilities to holders of life insurance policies in Pakistan on accountof matured claims ; and

(b) the amount required to meet the liability on policies of life insurance maturing for

payment in Pakistan less-

(i) the amount of premiums which have fallen due to the insurer on such policies but havenot been paid and the days of grace for payment of which have not expired, and

(ii) any amount due to the insurer for loans granted on and within the surrender values ofpolicies of life insurance maturing for payment in Pakistan issued by him or by an insurerwhose business he has acquired and in respect of which he has assumed liability;


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Provided that where an insurer has accepted reassurance in respect of any policies of lifeinsurance issued by another insurer and maturing for payment in Pakistan or has cededreassurance to another insurer in respect of any such policies issued by himself, the saidsum shall be increased by the amount of the liability involved in such acceptance and

decreased by the amount of liability involved in such cession;

Provided further that the said sum shall not be decreased by the amount of any liability inrespect of any reinsurances ceded to an insurer not registered in Pakistan for lifeinsurance business except to the extent of the amount of the liability incurred up to the31st December, 1957.

(2) The investment required under sub-section (1) shall be made in the following manner,namely :-

(i) thirty per cent. of the sum referred to in the said sub- section shall be invested in

Government securities ;

(ii) a further ten per cent of the said sum shall be invested in Government or otherapproved securities ; and

(iii) the balance shall be invested in approved securities or, subject to such restrictions asmay, by notification in the official Gazette, be imposed by the Central Government inapproved investment.

Explanation.-For thepurpose of this sub-section the amount of any deposits made undersection 7 or section 98 by the insurer in respect of his life insurance business shall bedeemed to be invested or kept invested in Government securities.

(3) In computing the assets required by this section to be kept invested by an insurer, asum equal to the amount of his liabilities to persons who are not citizens of Pakistan inrespect of life insurance policies issued in Pakistan in favour of such persons butexpressed in a currency other than the Pakistan rupee may, if such sum is invested insecurities of, and guaranteed as to principal and interest by, the Government of thecountry in whose currency such policies are expressed, be taken into account.

(4) The assets required by this section to be kept invested by an insurer shall be depositedby the insurer in Pakistan for safe custody in the prescribed manner with a scheduledbank approved by the Central Government and the assets so deposited shall not bereleased or dealt with in any manner except in such circumstances and in such manner asmay be prescribed

Provided that the Central Government may, by notification in the official Gazette,exclude from the requirements of this subsection any approved investments which cannotbe deposited for safe custody with a scheduled bank on account of the nature of suchinvestments.


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28.- (1) Every insurer registered under this Act carrying on the business of life insuranceshall every year, within thirty-one days from the beginning of the year, submit to theController of Insurance a return showing as at the 31st day of December of the precedingyear the assets held invested in accordance with section 27, and all other particulars

necessary to establish that the requirements of that section have been complied with, andsuch return shall be certified by a principal officer of the insurer.

(2) Every such insurer shall also furnish, within fifteen days from the last day ofMarch, June and September, a return certified as aforesaid showing as at the end ofeach of the said months the assets held invested in accordance with section 27.

(3) The Controller of Insurance may at his discretion require any insurer to whomsub-section (1) applies to submit before the 1st day of August in each or any year a returnof the nature referred to in sub-section (1), certified as required by that sub-section andprepared as at the 30th day of June.

(4) In the case of an insurer having his principal place of business or domicile outsidePakistan, the Controller of Insurance may, on application made by the insurer, extend theperiods of fifteen and thirty-one days mentioned in the foregoing sub-sections to thirtydays and sixty days, respectively.

(5) The Controller of Insurance shall be entitled at any time to take such steps as he mayconsider necessary for the inspection or verification of the assets invested in compliancewith section 27 or for the purpose of securing the particulars necessary to establish thatthe requirements of that section have been complied with the insurer shall comply withany requisition made in this behalf by the Controller of Insurance, and if he fails to do sowithin two months from the receipt of the requisition he shall be deemed to have madedefault in complying with the requirements of this section.

29.-(1) No insurer shall grant loans or temporary advances either on hypothecation ofproperty or on personal security or otherwise, except loans on life policies issued by himwithin their surrender value, to any director, manager, actuary, auditor or officer of theinsurer if a company, or where the insurer is a firm, to any partner therein, or to any othercompany or firm in which any such director, manager, actuary,officer or partner holdsthe position of a direct manager, actuary, officer or partner;

Provided that nothing herein contained shall apply to loans made by an insurer to abanking company ;

Provided further that where any event occurs giving rise to circumstances, the existenceof which at the time of the grant of any subsisting loan would have made such grant acontravention of this section, such loan shall, notwithstanding any contract to thecontrary, be repaid within three months from the occurrence of such event and in case ofdefault, the director, manager, auditor, actuary, officer or partner concerned shall, without


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prejudice to any other penalty which he may incur, cease to hold office with the insurergranting the loan on the expiry of the said three months:

Provided further that nothing in this section shall prohibit a company from granting suchloans or advances to a subsidiary company or to any other company of which the

company granting the loan or advance is a subsidiary company.

(2) The provisions of section 86D of the Companies Act, 1913, shall not apply to a loangranted to a director of an insurer being a company, if the loan is one granted on thesecurity of a policy on which the insurer bears the risk and the policy was issued to thedirector on his own life, and the loan is within the surrender value of the policy.

(3) Subject to the provisions of sub-section (1), no insurer shall grant to any employee,insurance agent or employer of agents any loans or temporary advances, either onhypothecation of property or on personal security or otherwise except-----

(a) loans on life policies issued by him to an employee, agent or employer of agentswithin their surrender value ; and

(b) temporary advances to an employee, insurance agent or employer of agents notexceeding,-

(i) in the case of an employee, two months' salary ;

(ii) in the case of an insurance agent the renewal commission earned by him during twoyears immediately preceding the date of application for the advance, or a sum notexceeding two hundred and fifty rupees if he has not earned any renewal commission orhas earned a renewal commission of less than two hundred and fifty rupees ; and

(iii) in the case of an employer of agents the renewal commission and the over-ridingrenewal commission earned by him during the year immediately preceding the date ofapplication for the advance, or a sum not exceeding one thousand rupees if he has notearned any renewal commission and over-riding renewal commission or has earned arenewal and over-riding renewal commission of less than one thousand rupees;

Provided that in respect of the life insurance business of an insurer, the total temporaryadvances referred to in this clause shall not exceed at any time ten thousand rupees in thecase of insurers having a life insurance fund of less than ten lakhs of rupees and in anyother case one per cent. of the life insurance fund subject to a maximum of one hundredthousand rupees.

(4) Every insurer shall before the 30th day of June, 1958, and thereafter before the 1stday of February of every subsequent year, furnish to the Controller of Insurance in theprescribed form a statement showing the particulars of the various advances paid by himand outstanding against an employee, insurance agent or an employer of agents as on the31st day of December, 1957, and on the 31st day of December of every subsequent year.


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(5) Every loan or advance existing as at the 31st day of December, 1957, which iscontrary to the provisions of subsection (3), or is in excess of the limits specified thereinshall, notwithstanding any contract to the contrary, be repaid within one year of the dateof commencement of the Insurance (Amendment) Ordinance, 1958, or within such

further period as may be allowed by the Controller of Insurance.

(6) Where any event occurs giving rise to circumstances, the existence of which at thetime of the grant of any subsisting loan or advance would have made such grant acontravention this section, such loan or advance shall, notwithstanding any contract to thecontrary, be repaid within three months from the occurrence of such event, or within suchfurther period as may be allowed by the Controller of Insurance.

30. If by reason of a contravention of any of the provisions of section 27 or section 29,any loss is sustained by the insurer or by the policy-holders, every director, manager,officer or partner who is knowingly a party to such contravention shall, without prejudice

to any other penalty to which he may be liable under this Act, be jointly, and severallyliable to make good the amount of such loss.

31.-(1) None of the assets in Pakistan of any insurer shall, except in the case of depositsmade with the State Bank of Pakistan under section 7 or section 98 or in so far as assetsare required to be deposited for safe custody with a scheduled bank under sub-section (4)of section 27, be kept otherwise than S[in the name of a public officer approved by theCentral Government, or in tie corporate name of the undertaking, if a company, or in thename of the partners, if a firm, or in the name of the proprietor, if an individual.

(2) No insurer incorporated or domiciled in Pakistan shall hold any of his assets kept inan Acceding State or a non-Acceding State otherwise than in the name of an authorityapproved by the Government of the State, or in the corporate name of the undertaking, ifa company, or in the name of the partners, if a firm, or in the name of the proprietor, if anindividual, except in the case of deposits made under any law of the State relating toinsurance or in so far as assets are required by the law of the State to be vested in trustees.

32. No insurer shall appoint a managing agent for the conduct of his business.

INVESTIGATION

33.-(1) The Controller may, at any time, investigate the affairs of an insurer and,

wherever necessary, employ an auditor or actuary or both for assisting him in any suchinvestigation.

(2) It shall be the duty of every manager, managing director or other officer of the insurerto produce before the Controller, auditor or actuary all such books of account, registersand other documents in his custody or power and to furnish him with any such statementor information relating to the affairs of the insurer within such time as the Controller,auditor or actuary may require.


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(3) When an investigation is made under this section, the Controller may, after giving anopportunity to the insurer to make a representation in writing or be heard in person, byorder in writing,------

(a) require the insurer to take such action in respect of any matter arising out of theinvestigation as he may think fit to secure compliance with the provisions of this Act, or

(b) cancel the registration of the insurer under clause (f ) of sub-section (4) of section 3,or

Companies Rules Volume I

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Transcript of Companies Rules Volume I