Companies Rules Volume IV

8/13/2019 Companies Rules Volume IV

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Securities and Exchange

Commission of Pakistan

Companies Rules

Volume IV

Regulations

(Updated up to 5 December 2013)


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Companies Rules

Volume IV

Regulations

(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Insurance Act, 1938 (Repealed)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Companies (Appointment of Trustees) Act, 1972 (Repealed)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Foreign Private Investment (Promotion & Protection) Act, 1976 (Repealed)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Investment Companies and Investment Advisors Rules, 1971 (Repealed)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Economic Reforms (Acquisition and Compensation) Rules, 1973 (Repealed)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Corporate Law Authority Rules, 1984 (Repealed)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Asset Management Companies Rules, 1995 (Repealed)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Venture Capital Companies and Fund Managers Rules, 1995 (Repealed)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 Gazette of Pakistan

ISLAMABAD, TUESDAY, DECEMBER 12, 2000

Part IIStatutory Notifications (S.R.O.)

Government of PakistanSecurities and Exchange Commission of Pakistan

NotificationIslamabad, the 7th December, 2000

S.R.O. 884(I)/2000.--In exercise of the powers conferred by section 40 of the

Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997), theSecurities and Exchange Policy Board, on the recommendation of the Securities and

Exchange Commission of Pakistan and in consultation with the Federal Government,hereby makes the following regulations, the same having been published previously

as required by the said section, namely:--

THE SECURITIES AND EXCHANGE POLICY BOARD (CONDUCT OF BUSINESS)

REGULATIONS, 2000

1. Short title and commencement.--(1) These regulations may be called theSecurities and Exchange Policy Board (Conduct of Business) Regulations, 2000.

(2) They shall come into force at once.

2. Definitions.--In these regulations, unless there is anything repugnant in the

subject or context,--

(a) "Act" means the Securities and Exchange Commission of Pakistan Act, 1997 (XLII

of 1997);

(b) "Board" means the Securities and Exchange Policy Board;

(c) "Chairman" means the Chairman of the Board;

(d) "Commission" means the Securities and Exchange Commission of Pakistan;

(e) "Member" means a member of the Board; and

(f) "Section" means a section of the Act.

3. Procedure and conduct of business of the Board.--(1) The Board may meetat such times and places, for conduct of its business, as it may think fit;

Provided that in the absence of a decision of the Board to the contrary, the Chairmanshall decide the time and place for the meetings of the Board.

(2) The Chairman shall, on the requisition of not less than three Members, proceed

to call a meeting of the Board within seven days of the receipt of the requisition.

(3) The requisition shall, stating the objects of the meeting, be signed by therequisitions and shall be deposited at the head office of the Commission.


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travel by air in executive class and reimbursement of actual expenses including

travelling, boarding and lodging expenses and the Members other than ex-officio

Members shall also be entitled to compensation for performing extra services, asdetermined by the Board from time to time.

4. Committees of the Board.--(1) The Board may constitute committees

consisting of its Members and may co-opt other persons on the committee whereconsidered necessary.

(2) The Board may, subject to the provisions of the Act, delegate any of its powersto a committee as it thinks fit and any committee so formed shall, in exercise of the

powers so delegated, conform to the terms of reference that may be given to it bythe Board.

(3) The Board may appoint a Member as convener of the committee who will chair its

meetings.

(4) The committee may meet and adjourn as it thinks proper.

(5) Questions arising at any meeting of the committee shall be determined by amajority of votes of its members present, and in case of an equality of votes, theconvener of the Committee shall have a second or casting vote.

(6) Subject to the provisions of sub-section (4) of section 15 of the Act, members

and any other persons invited to attend a meeting of a committee shall be entitled to

travel by air in executive class and reimbursement of actual expenses includingtravelling, boarding and lodging expenses, and the Members other than ex-officio

Members shall be entitled to compensation for performing extra services as theBoard may, from time to time, determine.

5. Authentication of the decisions of the Board.--(1) All orders and decisions of

the Board shall be authenticated by the signatures of the Chairman or any otherMember authorised in this behalf by the Chairman and bear the official seal of theBoard.

(2) All orders and decisions of the Board shall be communicated under the signatures

of a person authorized by the Board in this behalf.

(3) Such of the orders and decisions of the Board and guidelines given by it, as are

deemed fit for publication in any authoritative report or the official Gazette, may bereleased for such publication on such terms and conditions as the Chairman may

specify.

6. Submission of references, letters, etc.--All references, letters, replies,

documents or papers required to be submitted to the Board shall be written, typed,or printed neatly and legibly on one side of the paper, in double space, annexingthereto true copies of the documents in support of the material contained therein.

7. Power of the Board to require submission of addition information.--TheBoard may call for such additional information as it considers necessary in

connection with any matter relating to its functions and power under the Act.

8. Assistance to the Board.--The Board may, in consultation with the


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Commission, at any time avail the assistance of other institutions, consultants,

experts, accountants, surveyors or such other technical and professional persons as

it may consider necessary and ask them to submit report to it. The institutions andother persons so engaged, shall be entitled to compensation for providing assistance,

as the Board may, from time to time, determine.

[No. ED/SECP-14/2000.]

MOHAMMAD HAYAT JASRA,

Executive Director (Law)


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The Gazette of Pakistan

ISLAMABAD, THURSDAY, FEBRUARY 15, 2001

PART IIStatutory Notifications (S.R.O.)

GOVERNMENT OF PAKISTANSECURITIES AND EXCHANGE COMMISSION OF PAKISTAN

NOTIFICATIONIslamabad, the 15th February, 2001

S.R.O. 101(I)/2001.--In exercise of the powers conferred by sub-section (5) of

section 34 of the Securities and Exchange Ordinance, 1969, the Securities andExchange Commission of Pakistan (the Commission) hereby makes the following

regulations for the Karachi Stock Exchange (Guarantee) Ltd., (the Exchange)namely:-

1) There shall be seven outside directors to be appointed by the Commission in

consultation with the Exchange from amongst non-member securities market

experts, lawyers, chartered accountants, investment bankers, etc.

2) The Chairman shall be elected by the Board of Directors, from amongst theelected directors.

3) The position of Vice Chairman shall be abolished.

4) The directors shall not delegate their authority relating to operational matters to

any directors except the managing director.

5) The managing director shall be appointed, removed and terminated with the prior

approval of the Commission.

Consequent upon the effect of aforesaid regulations, revised article clauses of the

Exchange shall stand amended as under, namely:-

Article 1(b)(iii)"The Chairman" means "Chairman of the Board of the Exchange."

Article 12(i)

Where a member resigns from his individual membership in favour of and fornominating a Corporate Body of which he simultaneously becomes a nominee to

represent such Corporate Body as a member of the Exchange, his resignation and his

consequent nomination by the Corporate Body shall not affect his office of theChairman and/or Director which he may be holding at the time of his resignation in

favour of such Corporate Body. Additionally, the tenure of such individualsmembership will be taken into account for determining the security of such

Corporate Member for the purpose of election or co-option to the office of theChairman and/or the Board under Article 33 hereinbelow.

Article 14(b)A Corporate Body which becomes a Member of the Exchange may nominate one of

its Directors as a Nominee Director to represent its Membership on the Exchange andsuch nominee shall become eligible for being elected as the Chairman and/or a

member of the Governing Board of Directors under Article22(b) hereinbelow.


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Article 22(a)(i)

Ten(10) directors to be elected from amongst the members by the General Body;

Article 22(a)(ii)

Deleted.

Article 2(a)(iii)Seven outside directors to be appointed by the Commission in consultation with the

Exchange from among non-member securities market experts, lawyers, chartered

accountants, investment bankers, etc.

Article 22(a)(iv)Deleted.

Article 22(b)

The Chairman shall be elected by the Board of Directors from amongst the electedmember directors after the Board has been fully constituted including the nomination

of non-member directors.

Article 22(d)All the elected, nominated, appointed and co-opted Directors including the Chairmanshall retire on 31st December every year.

Article 22(e)

A Member who has been elected for a consecutive period of two years as Director

shall not be eligible to contest elections for a third consecutive term to the sameoffice. However he shall be eligible to contest election for another office for a period

of one year.

Article 28The Exchange from 1951 onward, shall in the month of December every year in the

manner hereinafter provided elect by ballot 10 (ten) directors of the GoverningBoard.

Article 29Twenty-one days (21) previous notice of the ballot for election of the Directors shall

be given by the Board.

Article 32

At least fourteen (14) days previous notice of the intention to propose any personeligible for election to the board must be given to the Secretary in writing signed by

2 members of the Exchange.

Article 34(a)

No member shall be elected or co-opted to the Office of the Chairman and the Boardwho has not been an individual Member or a Nominee Director of a CorporateMember of the Exchange for one year or more immediately preceding the date of his

election or co-option.

Article 34(b)

Deleted.

Article 34(c)


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Deleted.

Article 35No member shall be entitled to give more than one vote to any particular candidate,

nor shall be entitled to give more than ten (10) votes for the election for theDirectors. A member shall, however, be entitled to give a smaller number of votes

than the prescribed maximum. In case of an equality of votes, the election shall bedecided by drawing lots.

Article 42The Chairman shall preside at all meetings of the Board. If the Chairman is not

present within fifteen minutes of the time appointed for holding a meeting or if hedecline to preside, the Directors present shall elect any one of themselves to be

Chairman of such meeting.

Article 50A previous shall be added at the end to the following effect, namely:-

Provided that the Board shall not delegate its authority relating to operational

matters to any director except the Managing Director.

Article 54(a)

The Board shall appoint a qualified and experienced person as a whole time paidManaging Director who shall function as the Chief Executive of the Exchange. The

appointment of Managing Director shall be made for such period, not exceeding

three years at a time, and on such terms and conditions as the Board maydetermine. The person so appointed shall not engage himself in any business,

profession or vocation directly or indirectly including trading or dealing in shares andsecurities during the period he holds office. The Managing Director shall be liable to

dismissal or removal from his office with three fourth of the total number of Directorsor by special resolution passed in a General Meeting:

Provided that the appointment, removal and termination of the Managing Directorshall be made with the prior approval of the Securities and Exchange Commission of

Pakistan and for this purpose the term "removal and/or termination" shall includenon-renewal of his contract.

Article 55(b)

The General Manager under the general control and direction of the Managing

Director shall perform such functions and duties as may be entrusted or delegated tohim by the Managing Director. He shall maintain and have charge over the books,

records and papers of the Exchange and conduct all correspondence on behalf of theExchange and the Board and shall countersign all cheques or the payments of

money. The General Manager and Secretary shall report to the Managing Director on

all day to day matters concerning the management of the affairs of the Exchange.

Article 68

The Chairman shall be entitled to take the chair at every Annual or Extraordinary

General Meeting. If at any meeting the Chairman is not present within fifteenminutes of the time appointed for such meeting of if present, he declines to act as

Chairman, the members present shall choose a member of the Board as Chairman adif no member of the said Board be present or if all the members of the said Board

present decline to take the chair, the members present shall choose one of the


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members to preside over the meeting.

Article 77Every Chairman, Managing Director, Director, General Manager, Member of

Committee, Arbitrator, Secretary, Auditor and other Executive and staff of theExchange shall, if so required by the Directors, before entering upon duties, sign a

declaration pledging himself to observe a strict secrecy respecting all transactions ofthe Exchange and in all matters relating thereto, and such declaration shall pledge

himself not to reveal any of the matters except when required so to do by the

Directors or by a Court of Law and except so far as may be necessary in order tocomply with any of the provisions in these presents contained.

Article 80

Every Chairman, Managing Director, Director, General Manager, Member ofCommittee, Arbitrator, Secretary, Auditor and other Executives and staff of the

Exchange shall be indemnified by the Exchange against and it shall be the duty ofthe Directors, out of the funds of the Exchange, to pay all costs, losses, penalties

and expenses which any such officer or servant may incur or become liable to by

reason of any contract entered into or act or deed done by, or omitted by him as

such officer or servant or in any way in the discharge of his duties and no directorsor other officers of the Exchange shall be liable for the acts, receipts, neglects ordefaults of any other Director or officer for joining in any receipt or other act for

conformity or for any loss or expenses happening to the Exchange through theinsufficiency or deficiency of title to any property acquired by order of the Directors

for or on behalf of the Exchange or for the insufficiency or deficiency or depreciation

of any security in or upon which any of the moneys of the Exchange shall be investedor for any loss or damage arising form the Bankruptcy or insolvency or tortuous act

of any person with whom any moneys, securities or effects of the Exchange shall bedeposited or for any loss occasioned by any error of judgment, omission, default or

oversight on his part or for any loss, damage or misfortune whatever which shallhappen in relation to the execution of the duties of his office or in relation thereto

unless the same happens through his own dishonesty.

The decision of the Commission regarding the above mentioned regulations was

communicated to the Exchange through a directive bearing No.2(46)CF/SE/97/04dated 16th January, 2001 as per annexure.


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ANNEXURE

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN NIC BUILDING,

JINNAH AVENUE

No.2(46)CF/SE/97

Islamabad, the 16th January, 2001

Mr. Muhammad Yacoob Memon,Acting Managing Director,

Karachi Stock Exchange (Guarantee) Ltd.

Stock Exchange Building, Karachi.

Subject:

DIRECTIVE UNDER SECTION 34(4) OF THE SECURITIES AND EXCHANGE

ORDINANCE, 1969

Dear Sir,

Please refer to this Commissions letter No.2(46)CF/SE/97 dated 7.12.2000 followedby the letter No.2(46)CF/SE/97 dated 18.12.2000, whereby the Commission had, inexercise of its powers conferred by sub-section (4) of section 34 of the Securities

and Exchange Ordinance, 1969, issued the following directions in the interest ofcapital market and had directed that the Articles of Association of the Karachi Stock

Exchange may be amended to them in conformity with the directions:-

(i) That there shall be seven outside directors to be appointed by the Commission inconsultation with the Exchange from amongst non-member securities market

experts, lawyers, chartered accountants, investment bankers, etc.

(ii) That the Chairman shall be elected by the Board of Directors, from amongst the

elected directors.

(iii) That the position of Vice Chairman shall be abolished.

(iv) That the directors shall not delegate their authority relating to operationalmatters to any director except the managing director.

(v) That the managing director shall be appointed, removed and terminated with the

prior approval of the Commission.

2. The above directives which were issued by the Commission after providing an

opportunity of hearing in the Exchange on December 15, 2000, were made effectivew.e.f. December 31, 2000.

3. It has been noticed with concern that the Exchange has neglected to comply with

the above mentioned directions within the specified period and has violated thespecified provisions of the Securities and Exchange Ordinance, 1969. Therefore, the

Commission, in exercise of the powers conferred by sub-section (5) of the said

section 34 and in the interest of capital market and investors, has decided that theabove mentioned five directives as specified in the previous references of the

Commission shall be the regulations deemed to have been made by the KarachiStock Exchange and Articles of the Exchange shall be deemed to have been amended


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accordingly. Any provisions in the Articles which may be repugnant to the above

mentioned directives, would be void and ineffective after 31st December, 2000.

Yours faithfully,

Sd/-

(SHAHID GHAFFAR)Executive Director (SM)

No. 2(46)/CF/SE/97/04

Sd

(MOHAMMAD HAYAT JASRA)

Executive Director (Law)


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Code of Corporate Governance

March 28, 2002

BOARD OF DIRECTORS

(i) All listed companies shall encourage effective representation ofindependent non-executive directors, including those representingminority interests, on their Boards of Directors so that the Board as agroup includes core competencies considered relevant in the context ofeach listed company. For the purpose, listed companies may takenecessary steps such that:

(a) minority shareholders as a class are facilitated to contest election ofdirectors by proxy solicitation, for which purpose the listedcompanies may:

annex to the notice of general meeting at which directors are tobe elected, a statement by a candidate(s) from among theminority shareholders who seeks to contest election to theBoard of Directors, which statement may include a profile of thecandidate(s);

provide information regarding shareholding structure and copiesof register of members to the candidate(s) representingminority shareholders; and

on a request by the candidate(s) representing minorityshareholders and at the cost of the company, annex to thenotice of general meeting at which directors are to be electedan additional copy of proxy form duly filled in by such

candidate(s) and transmit the same to all shareholders in termsof section 178 (4) of the Companies Ordinance, 1984;

(b) the Board of Directors of each listed company includesat least oneindependent director representing institutional equity interest of abanking company, Development Financial Institution, Non-BankingFinancial Institution (including a modaraba, leasing company orinvestment bank), mutual fund or insurance company; and

E x p l a n a t i o n : For the purpose of this clause, the expression"independent director" means a director who is not connected withthe listed company or its promoters or directors on the basis of

family relationship and who does not have any other relationship,whether pecuniary or otherwise, with the listed company, itsassociated companies, directors, executives or related parties. Thetest of independence principally emanates from the fact whether suchperson can be reasonably perceived as being able to exerciseindependent business judgment without being subservient to anyapparent form of interference.


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Any person nominated as a director under sections 182 and 183 ofthe Companies Ordinance, 1984 shall not be taken to be an"independent director" for the above-said purposes.

The independent director representing an institutional investor shallbe selected by such investor through a resolution of its Board ofDirectors and the policy with regard to selection of such person for

election on the Board of Directors of the investee company shall bedisclosed in the Directors' Report of the investor company.

(c) executive directors, i.e. working or whole time directors, are notmore than 75% of the elected directors including the Chief Executive:

Provided that in special circumstances, this condition may be relaxedby the Securities and Exchange Commission of Pakistan.

Provided further that nothing contained in this clause shall apply tobanking companies, which are required by Prudential Regulation No.9for Banks to have not more than 25% of the directors as paid

executives of the banks.

(ii) The directors of listed companies shall, at the time of filing their consentto act as such, give a declaration in such consent that they are aware oftheir duties and powers under the relevant law(s) and the listedcompanies Memorandum and Articles of Association and the listingregulations of stock exchangesin Pakistan.

QUALIFICATION AND ELIGIBILITY TO ACT AS A DIRECTOR

(iii) No listed company shall haveas a director,a person who is serving as adirector of ten other listed companies.

(iv) No person shall be elected or nominated as a director of a listed companyif:

(a) his name is not borne on the register of National Tax Payers exceptwhere such person is a non-resident; and

(b) he has been convicted by a court of competent jurisdiction as adefaulter in payment of any loan to a banking company, aDevelopment Financial Institution or a Non-Banking FinancialInstitution or he, being a member of a stock exchange, has beendeclared as a defaulter by such the stock exchange; and

(v) A listed company shall endeavour that no person is elected or nominated asa director if he or his spouse is engaged in the business of stock brokerage(unless specifically exempted by the Securities and Exchange Commission ofPakistan).


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recommendations of any technical or executive sub-committee of theBoard that may be set up for the purpose;

(c) the Board of Directors establish a system of sound internal control,which is effectively implemented at all levels within the listedcompany;

(d) the following powers are exercised by the Board of Directors onbehalf of the listed company and decisions on material transactionsor significant matters are documented by a resolution passed at ameeting of the Board:

investment and disinvestment of funds where the maturityperiod of such investments is six months or more, except in thecase of banking companies, Non-Banking Financial Institutions,trusts and insurance companies;

determination of the nature of loans and advances made by thelisted company and fixing a monetary limit thereof;

write-off of bad debts, advances and receivables anddetermination of a reasonable provision for doubtful debts;

write-off of inventories and other assets; and determination of the terms of and the circumstances in which a

law suit may be compromised and a claim/ right in favour of thelisted company may be waived, released, extinguished orrelinquished;

(e) appointment, remuneration and terms and conditions of employmentof the Chief Executive Officer (CEO) and other executive directors ofthe listed company are determined and approved by the Board ofDirectors; and

(f) in the case ofa modaraba or a Non-Banking Financial Institution,whose main business is investment in listed securities, the Board ofDirectors approve and adopt an investment policy, which is stated ineach annual report of the modaraba/ Non-Banking FinancialInstitution.

E x p l a n a t i o n : The investment policy shall inter alia state:

that the modaraba/ Non-Banking Financial Institution shall notinvest in a connected person, as defined in the AssetManagement Companies Rules, 1995, and shall provide a list ofall such connected persons;

that the modaraba/ Non-Banking Financial Institution shall notinvest in shares of unlisted companies; and

the criteria for investment in listed securities.The Net Asset Value of each modaraba/ Non-Banking FinancialInstitution shall be provided for publicationon a monthly basis to thestock exchange on which its shares/ certificates are listed.

(ix) The Chairman of a listed company shall preferably be elected from amongthe non-executive directors of the listed company. The Board of Directors


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shall clearly define the respective roles and responsibilities of theChairman and Chief Executive, whether or not these offices are held byseparate individuals or the same individual.

MEETINGS OF THE BOARD

(x) The Chairman of a listed company, if present, shall preside over meetingsof the Board of Directors.

(xi) The Board of Directors of a listed company shall meet at least once inevery quarter of the financial year. Written notices (including agenda) ofmeetings shall be circulated not less than seven days before themeetings, except in the case of emergency meetings, where the noticeperiod may be reduced or waived.

(xii) The Chairman of a listed company shall ensure that minutes of meetingsof the Board of Directors are appropriately recorded. The minutes ofmeetings shall be circulated to directors and officers entitled to attendBoard meetings not later than 30 days thereof, unless a shorter period is

provided in the listed companys Articles of Association.

In the event that a director of a listed company is of the view that hisdissenting note has not been satisfactorily recorded in the minutes of ameeting of the Board of Directors, he may refer the matter to theCompany Secretary. The director may require the note to be appended tothe minutes, failing which he may file an objection with the Securities andExchange Commission of Pakistan in the form of a statement to thateffect.

SIGNIFICANT ISSUES TO BE PLACED FOR DECISION BY THE BOARD OFDIRECTORS

(xiii) In order to strengthen and formalize corporate decision-making process,significant issues shall be placed for the information, consideration anddecision of the Boards of Directors of listed companies.

Significant issues for this purpose may include:

annual business plans, cash flow projections, forecasts and long termplans;

budgets including capital, manpower and overhead budgets, alongwith variance analyses;

quarterly operating results of the listed company as a whole and interms of its operating divisions or business segments;

internal audit reports, including cases of fraud or irregularities of amaterial nature;

management letter issued by the external auditors; details of joint venture or collaboration agreements or agreements

with distributors, agents, etc; promulgation or amendment of a law, rule or regulation, enforcement

of an accounting standard and such other matters as may affect thelisted company;


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status and implications of any law suit or proceedings of materialnature, filed by or against the listed company;

any show cause, demand or prosecution notice received fromrevenue or regulatory authorities, which may be material;

default in payment of principal and/or interest, including penalties onlate payments and other dues, to a creditor, bank or financialinstitution or default in payment of public deposit;

failure to recover material amounts of loans, advances, and depositsmade by the listed company, including trade debts and inter-corporate finances;

any significant accidents, dangerous occurrences and instances ofpollution and environmental problems involving the listed company;

significant public or product liability claims likely to be made againstthe lis ted company, including any adverse judgment or order madeon the conduct of the listed company or of another company thatmay bear negatively on the listed company;

disputes with labour and their proposed solutions, any agreementwith the labour union or Collective Bargaining Agent and any charterof demands on the listed company; and

payment for goodwill, brand equity or intellectual property.ORIENTATION COURSES

(xiv) All listed companies shall make appropriate arrangements to carry outorientation courses for their directors to acquaint them with their dutiesand responsibilities and enable them to manage the affairs of the listedcompanies on behalf of shareholders.

CHIEF FINANCIAL OFFICER (CFO) AND COMPANY SECRETARY

APPOINTMENT AND APPROVAL

(xv) The appointment, remuneration and terms and conditions of employmentof the Chief Financial Officer (CFO), the Company Secretary and the headof internal audit of listed companies shall be determined by the CEO withthe approval of the Board of Directors.

The CFO or the Company Secretary of listed companies shall not beremoved except by the CEO with the approval of the Board of Directors.

QUALIFICATION OF CFO AND COMPANY SECRETARY

(xvi) No person shall be appointed as the CFO of a listed company unless:(a) he is a member of a recognized body of professional accountants; or(b) he is a graduate from a recognized university or equivalent, having

at least five years experience in handling financial or corporate affairsof a listed public company or a bank or a financial institution.

(xvii) No person shall be appointed as the Company Secretary of a listedcompany unless he is:


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(a) a member of a recognized body of professional accountants; or(b) a member of a recognized body of corporate/ chartered secretaries;

or

(c) 1a person holding masters degree in Business Administration orCommerce or being a Law Graduate from a University recognized by

Higher Education Commission and having at least five years relevantexperience.

Provided that a person already engaged by a company as Secretarybefore the 26

thOctober, 2002 may continue in that capacity if he has

an experience of not less than five years in that position.

REQUIREMENT TO ATTEND BOARD MEETINGS

(xviii) The CFO and the Company Secretary of a listed company shall attendmeetings of the Board of Directors.

Provided that unless elected as a director, the CFO or the CompanySecretary shall not be deemed to be a director or entitled to cast a voteat meetings of the Board of Directors for the purpose of this clause.Provided further that the CFO and/ or the Company Secretary shall notattend such part of a meeting of the Board of Directors, which involvesconsideration of an agenda item relating to the CFO, Company Secretary,CEO or any director.

CORPORATE AND FINANCIAL REPORTING FRAMEWORK

THE DIRECTORS REPORT TO SHAREHOLDERS

(xix) The directors of listed companies shall include statements to the followingeffect in the Directors Report, prepared under section 236 of theCompanies Ordinance, 1984:

(a) The financial statements, prepared by the management of the listedcompany, present fairly its state of affairs, the result of itsoperations, cash flows and changes in equity.

(b) Proper books of account of the listed company have beenmaintained.

(c) Appropriate accounting policies have been consistently applied inpreparation of financial statements and accounting estimates arebased on reasonable and prudent judgment.

1 Previous clause (xvii) (c) a lawyer; or and clause (xvii) (d) a graduate from a

recognized university or equivalent, having at least five years experience in handling

corporate affairs of a listed public company or corporation amended vide directive dated

October 6, 2005.


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(d) International Accounting Standards, as applicable in Pakistan, havebeen followed in preparation of financial statements and anydeparture therefrom has been adequately disclosed.

(e) The system of internal control is sound in design and has beeneffectively implemented and monitored.

(f) There are no significant doubts upon the listed companys ability tocontinue as a going concern.

(g) There has been no material departure from the best practices ofcorporate governance, as detailed in the listing regulations.

The Directors Reports of listed companies shall also include the following,where necessary:

(a) If the listed company is not considered to be a going concern, thefact along with reasons shall be disclosed.

(b) Significant deviations from last year in operating results of the listedcompany shall be highlighted and reasons thereof shall be explained.

(c) Key operating and financial data of last six years shall besummarized.

(d) If the listed company has not declared dividend or issued bonusshares for any year, the reasons thereof shall be given.

(e) Where any statutory payment on account of taxes, duties, levies andcharges is outstanding, the amount together with a brief descriptionand reasons for the same shall be disclosed.

(f) Significant plans and decisions, such as corporate restructuring,business expansion and discontinuance of operations, shall beoutlined along with future prospects, risks and uncertaintiessurrounding the listed company.

(g) A statement as to the value of investments of provident, gratuity andpension funds, based on their respective audited accounts, shall beincluded.

(h) The number of Board meetings held during the year and attendanceby each director shall be disclosed.

(i) The pattern of shareholding shall be reported to disclose theaggregate number of shares (along with name wise details wherestated below) held by:

associated companies, undertakings and related parties (namewise details);

NIT and ICP (name wise details); directors, CEO and their spouse and minor children (name wise

details);


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executives; public sector companies and corporations; banks, Development Finance Institutions, Non-Banking Finance

Institutions, insurance companies, modarabas and mutualfunds; and

shareholders holding ten percent or more voting interest in thelisted company (name wise details).

E x p l a n a t i o n : For the purpose of this clause, clause (b) of direction(i) and direction (xxiii), the expression executive means anemployee of a listed company other than the CEO and directorswhose basic salary exceeds five hundred thousand rupees in afinancial year.

(j) All trades in the shares of the listed company, carried out by itsdirectors, CEO, CFO, Company Secretary and their spouses andminor children shall also be disclosed.

FREQUENCY OF FINANCIAL REPORTING

(xx) The quarterly unaudited financial statements of listed companies shall bepublished and circulated along with directors review on the affairs of thelisted company for the quarter.

(xxi) All listed companies shall ensure that half-yearly financial statements aresubjected to a limited scope review by the statutory auditors in suchmanner and according to such terms and conditions as may bedetermined by the Institute of Chartered Accountants of Pakistan andapproved by the Securities and Exchange Commission of Pakistan.

(xxii) All listed companies shall ensure that the annual audited financialstatements are circulated not later than four months from the close of thefinancial year.

(xxiii) Every listed company shall immediately disseminate to the Securities andExchange Commission of Pakistan and the stock exchange on which itsshares are listed all material information relating to the business andother affairs of the listed company that will affect the market price of itsshares. Mode of dissemination of information shall be prescribed by thestock exchange on which shares of the company are listed.

This information may include but shall not be restricted to informationregarding a joint venture, merger or acquisition or loss of any material

contract; purchase or sale of significant assets; any unforeseen orundisclosed impairment of assets due to technological obsolescence, etc.;delay/ loss of production due to strike, fire, natural calamities, majorbreakdown, etc.; issue or redemption of any securities; a major changein borrowings including any default in repayment or rescheduling ofloans; and change in directors, Chairman or CEO of the listed company.


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RESPONSIBILITY FOR FINANCIAL REPORTING AND CORPORATECOMPLIANCE

(xxiv) No listed company shall circulate its financial statements unless the CEOand the CFO present the financial statements, duly endorsed under theirrespective signatures, for consideration and approval of the Board ofDirectors and the Board, after consideration and approval, authorize the

signing of financial statements for issuance and circulation.

(xxv) The Company Secretary of a listed company shall furnish a SecretarialCompliance Certificate, in the prescribed form, as part of the annualreturn filed with the Registrar of Companies to certify that the secretarialand corporate requirements of the Companies Ordinance, 1984 havebeen duly complied with.

DISCLOSURE OF INTEREST BY A DIRECTOR HOLDING COMPANYS SHARES

(xxvi) Where any director, CEO or executive of a listed company or theirspouses sell, buy or take any position, whether directly or indirectly, in

shares of the listed company of which he is a director, CEO or executive,as the case may be, he shall immediately notify in writing the CompanySecretary of his intentions. Such director, CEO or executive, as the casemay be, shall also deliver a written record of the price, number of shares,form of share certificates (i.e. whether physical or electronic within theCentral Depository System) and nature of transaction to the CompanySecretary within four days of effecting the transaction. The notice of thedirector, CEO or executive, as the case may be, shall be presented by theCompany Secretary at the meeting of the Board of Directors immediatelysubsequent to such transaction. In the event of default by a director, CEOor executive to give a written notice or deliver a written record, theCompany Secretary shall place the matter before the Board of Directors

in its immediate next meeting:

Provided that each listed company shall determine a closed period priorto the announcement of interim/ final results and any business decision,which may materially affect the market price of its shares. No director,CEO or executive shall, directly or indirectly, deal in the shares of thelisted company in any manner during the closed period.

AUDITORS NOT TO HOLD SHARES

(xxvii) All listed companies shall ensure that the firm of external auditors or anypartner in the firm of external auditors and his spouse and minor children

do not at any time hold, purchase, sell or take any position in shares ofthe listed company or any of its associated companies or undertakings:

Provided that where a firm or a partner or his spouse or minor child ownsshares in a listed company, being the audit client, prior to theappointment as auditors, such listed company shall take measures toensure that the auditors disclose the interest to the listed company within14 days of appointment and divest themselves of such interest not laterthan 90 days thereof.


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CORPORATE OWNERSHIP STRUCTURE

(xxviii)2Every company which is proposed to be listed shall, at the time of public

offering, comply with the requirements of offer of shares to the generalpublic as contained in the related Listing Regulations, unless the limit isrelaxed by the stock exchange with the approval of Securities andExchange Commission of Pakistan.

DIVESTITURE OF SHARES BY SPONSORS/CONTROLLING INTEREST

(xxix) In the event of divestiture of not less than 75% of the total shareholdingof a listed company, other than a divestiture by non-residentshareholder(s) in favour of other non-resident shareholder(s) or adisinvestment through the process of privatization by the Federal orProvincial Government, at a price higher than the market value ruling atthe time of divestiture, it shall be desirable and expected of the directorsof the listed company to allow the transfer of shares after it has beenascertained that an offer in writing has been made to the minorityshareholders for acquisition of their shares at the same price at which the

divestiture of majority shares was contemplated. Where the offer price tominority shareholders is lower than the price offered for acquisition ofcontro lling interest, such offer price shall be subject to the approval ofthe Securities and Exchange Commission of Pakistan.

AUDIT COMMITTEE

COMPOSITION

(xxx) The Board of Directors of every listed company shall establish an AuditCommittee, which shall comprise not less than three members, includingthe chairman. Majority of the members of theCommitteeshall be from

among the non-executive directors of the listed company and thechairman of the Audit Committee shall preferably be a non-executivedirector. The names of members of the Audit Committee shall bedisclosed in each annual report of the listed company.

FREQUENCY OF MEETINGS

(xxxi) The Audit Committee of a listed company shall meet at least once everyquarter of the financial year. These meetings shall be held prior to theapproval of interim results of the listed company by its Board of Directorsand before and after completion of external audit. A meeting of the AuditCommittee shall also be held, if requested by the external auditors or the

head of internal audit.

2Previous clause (xxviii)Every company which is proposed to be listed shall, at the time of

public offering, offer not less than Rs. 100 million or 20% of the share capital of the

company, whichever is higher, to the general public unless the limit is relaxed by the stockexchange with the approval of the Securities and Exchange Commission of Pakistan.

amended vide directive dated October 6, 2005

.


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(e) review of management letter issued by external auditors andmanagements response thereto;

(f) ensuring coordination between the internal and external auditors ofthe listed company;

(g) review of the scope and extent of internal audit and ensuring that theinternal audit function has adequate resources and is appropriatelyplaced within the listed company;

(h) consideration of major findings of internal investigations andmanagement's response thereto;

(i) ascertaining that the internal control system including financial andoperational controls, accounting system and reporting structure areadequate and effective;

(j) review of the listed companys statement on internal control systemsprior to endorsement by the Board of Directors;

(k) instituting special projects, value for money studies or otherinvestigations on any matter specified by the Board of Directors, inconsultation with the Chief Executive and to consider remittance ofany matter to the external auditors or to any other external body;

(l) determination of compliance with relevant statutory requirements;(m)monitoring compliance with the best practices of corporate

governance and identification of significant violations thereof; and

(n) consideration of any other issue or matter as may be assigned by theBoard of Directors.

REPORTING PROCEDURE

(xxxiv) The Audit Committee of a listed company shall appoint a secretary of theCommittee. The secretary shall circulate minutes of meetings of the AuditCommittee to all members, directors and the CFO within a fortnight.

INTERNAL AUDIT

(xxxv) There shall be an internal audit function in every listed company. Thehead of internal audit shall have access to the chair of the Audit

Committee.

(xxxvi) All listed companies shall ensure that internal audit reports are providedfor the review of external auditors. The auditors shall discuss any majorfindings in relation to the reports with the Audit Committee, which shallreport matters of significance to the Board of Directors.


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EXTERNAL AUDITORS

(xxxvii) No listed company shall appoint as external auditors a firm of auditorswhich has not been given a satisfactory rating under the Quality ControlReview programme of the Institute of Chartered Accountants of Pakistan.

(xxxviii) No listed company shall appoint as external auditors a firm of auditors

which firm or a partner of which firm is non-compliant with theInternational Federation of Accountants' (IFAC) Guidelines on Code ofEthics, as adopted by the Institute of Chartered Accountants of Pakistan.

(xxxix) The Board of Directors of a listed company shall recommend appointmentof external auditors for a year, as suggested by the Audit Committee. Therecommendations of the Audit Committee for appointment of retiringauditors or otherwise shall be included in the Directors Report. In case ofa recommendation for change of external auditors before the elapse ofthree consecutive financial years, the reasons for the same shall beincluded in the Directors Report.

(xl) No listed company shall appoint its auditors to provide services inaddition to audit except in accordance with the regulations and shallrequire the auditors to observe applicable IFAC guidelines in this regardand shall ensure that the auditors do not perform management functionsor make management decisions, responsibility for which remains with theBoard of Directors and management of the listed company.

(xli) 3 (a) All listed companies in the financial sector shall change theirexternal auditors every five years. Financial sector, for this purpose,means Banks, Non-Banking Finance Companies (NBFCs), Modarabas andInsurance Companies; and

(b) All listed companies other than those in the financial sector shall, at aminimum, rotate the engagement partner after every five years.

(xlii) No listed company shall appoint a person as the CEO, the CFO, aninternal auditor or a director of the listed company who was a partner ofthe firm of its external auditors (or an employee involved in the audit ofthe listed company) at any time during the two years preceding suchappointment or is a close relative, i.e. spouse, parents, dependents andnon-dependent children, of such partner (or employee).

(xliii) Every listed company shall require external auditors to furnish aManagement Letter to its Board of Directors not later than 30 days from

the date of audit report.

3Previous clause (xli)All listed companies are required to change their external auditors

every five years. If for any reason this is impractical, a listed company may at a minimum,

rotate the partner in charge of its audit engagement after obtaining the consent of the

Securities and Exchange Commission of Pakistan. amended vide directive dated March 16,

2005


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(xliv) Every listed company shall require a partner of the firm of its externalauditors to attend the Annual General Meeting at which audited accountsare placed for consideration and approval of shareholders.

COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

(xlv) All listed companies shall publish and circulate a statement along with

their annual reports to set out the status of their compliance with thebest practices of corporate governance set out above.

(xlvi) All listed companies shall ensure that the statement of compliance withthe best practices of corporate governance is reviewed and certified bystatutory auditors, where such compliance can be objectively verified,before publication by listed companies.

(xlvii) Where the Securities and Exchange Commission of Pakistan is satisfiedthat it is not practicable to comply with any of the best practices ofcorporate governance in a particular case, the Commission may, forreasons to be recorded, relax the same subject to such conditions as it

may deem fit.


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Appendix

lause Reference Brief DescriptionManner of

EnforcementEffective Date

i)

Representation ofindependent non-executivedirectors, including thoserepresenting minorityinterests, on the Board ofDirectors of listedcompanies

Voluntary When next election is due

ii)Filing of consent bydirectors

Mandatory When next election is due

iii) and (iv)Qualification and eligibilityto act as a director

Mandatory When next election is due

v)Election/ nomination of abroker on the Board ofDirectors

Voluntary When next election is due

vi) Tenure of office of directors Mandatory Immediate

vii), (viii) and (ix)Responsibilities, powers andfunctions of the Board ofDirectors

Mandatory July 1, 2002

x), (xi) and (xii)

Meetings of the Board of

Directors Mandatory Immediate

xiii)Significant issues to beplaced for decision by theBoard of Directors


xiv) Orientation courses Mandatory July 1, 2002

xv)Appointment and removalof CFO and CompanySecretary


xvi) and (xvii)Qualification of CFO andCompany Secretary

MandatoryImmediately for newappointments

xviii)Requirement for CFO andCompany Secretary toattend Board meetings

Mandatory Immediate


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xix)The directors' report toshareholders

MandatoryFor accounting periodsending on or after June 30,2002

xx), (xxi), (xxii)nd (xxiii)

Frequency of financialreporting

MandatoryFor accounting periodsending on or after June 30,

2002

xxiv) and (xxv)Responsibility for financialreporting and corporatecompliance


xxvi)Disclosure of interest by adirector holding company'sshares

Mandatory Immediate

xxvii) Auditors not to hold shares Mandatory Immediate

xxviii) Corporate ownershipstructure


xxix)Divestiture of shares bysponsors/ controllinginterest


xxx), (xxxi),xxxii), (xxxiii) andxxxiv)

Audit Committee Mandatory July 1, 2002

xxxv) and (xxxvi) Internal Audit Mandatory July 1, 2002

xxxvii), (xxxviii),xxxix) and (xl)

Appointment of externalauditors

MandatoryWhen next appointment ofauditors is due

xli)Rotation of externalauditors

MandatoryWhen next appointment ofauditors is due

xlii)

Appointment of a partner oremployee of the externalauditors in a key positionwithin the listed company

MandatoryImmediately for newappointments

xliii)Management letter issuedby external auditors



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Companies (Registration Offices)

Regulations, 2003

S.R.O. 891(1)/2003, Islamabad, the 5

th

September, 2003.- Inexercise of the powers conferred by sub-section (2) of section 466 of the

Companies Ordinance, 1984 (XLVII of 1984), read with clause (c) of section

43 of the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of

1997), and in supersession of the Notification No. S.R.O. 1139 1)/86, dated the

30th December, 1986, the Securities and Exchange Commission of Pakistan is

pleased to make the following regulations, namely:-

1. Short title and commencement.- (1) These regulations may be

called the Companies(Registration Offices) Regulations, 2003.

(2) They shall come into force at once.

2. Definitions.- (1) In these Regulations, unless there is anythingrepugnant in the subject or' context,-

(a) "Annex" means an annexure to these regulations;

(b) "Company Registration Office" means an office established by theCommission under sub-section (1) of section 466;

l[(ba) "CUIN" means. a corporate universal identification number which is a

sequential computer generated number assigned to every "company;](c) "electronic database" means the system for maintaining a database2[electronically in respect of all the record of companies]and includes the

Corporate Registration System, Corporate Compliance and Facilitation System,and Diary System;,

l[(ca) "eServices" means any service or means provided by the Commission

for the submission, filing, processing, recording or\ registration of documents

electronically;](d) "Ordinance" means the Companies Ordinance, 1984 (XLVII of 1984);

(e) "registrar concerned" means additional registrar, joint registrar, deputyregistrar or assistant registrar who is incharge of a Company Registration Office

in which a company is registered or in whose territorial jurisdiction its

registered office is situated;

*Superseding "Companies (Registration Offices) Regulations, 1986".

1Clauses "(ba) & (ca) inserted by SRO 599 1)/2011 dated June 13,

2011.

2Substituted for "relating to company information" by SRO 599 1)/2011 dated June 13, 2011.


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3.1[ ]

(g) "Schedule" means a Schedule to the Ordinance; and(h) "section" means a section of the Ordinance.

(2) The words and expressions used but not defined herein shall havethe same meaning as are assigned to them in the Ordinance.

3. Establishment of Company Registration Offices.- (1)

For registration of companies and performing other duties under the

Ordinance, the Commission shall establish Company Registration Offices

at the places specified in column (2) of the Table below, with jurisdiction

extending to companies, not being companies to which section 5 applies,

having registered offices in the territories specified in column (3) of the

said table.

TABLE

S. No. Place. Territory.

(1) (2) (3)

1. Faisalabad. The Civil Divisions of Faisalabad and Sargodhaexcept district of Bhakkar in the Province ofPunjab.

2. Islamabad. The Civil Division of Rawalpindi in the Provinceof Punjab 'and the Islamabad Capital Territory.

3. Karachi. The Civil Divisions of Karachi, Hyderabad andMir Pur Khas in the Province of Sindh

4. Lahore. The Civil Divisions of Lahore and Gujranwala,districts of Sahiwal and Pakpatan except tehsil ofChichawatni in the Province of Punjab.

5. Multan. The Civil Divisions of Multan, Bahawalpur and

Dera Ghazi Khan, district of Bhakkar and tehsil

of Chichawatni in the Province of Punjab.

6. Peshawar. The Province of the 2[Khyber Pakhtunkhawa],

the Federally Administered Tribal Areas and the

Provincially Administered Tribal Areas to which

the executive' authority of the Province of the

2[Khyber Pakhtunkhawa] extends.

7. Quetta. The Province of Baluchistan and theProvincially

Administered Tribal Areas to which the executive

authority of the Province of Baluchistan extends.

8. Sukkur. The Civil Divisions of Sukkur and Larkana in the

Province of Sindh.

lClause (f) omitted by SRO 599 1)/2011 dated June 13; 201l.2Substituted for "North-West Frontier" by SRO 599 1)/2011 dated June 13, 2011.

Cl. (f) omission.- Before omission it read as follows:-

"(f)"Registrar of Companies" means the Registrar posted at headquarters of

the Commission and includes an additional registrar;"


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l[(1A) Notwithstanding the provisions of Regulation 3(1), Company

Registration Offices may function beyond their territorial jurisdiction to the

extent and manner as may be specified by the Commission from time to

time.]2[(2) The Company Registration Offices shall observe such working

hours as may, from time to time, be approved by the Commission, and shall,

with the exception of public holidays, be open for transaction of businesswith the public, for Monday to Thursday, from 09:00 A.M. to 1:00 P.M. and

2:00 P.M. to 3:00 P.M.; and for Friday, from 09:00 A.M. to 1:00 P.M. and

from 2:30 P.M. to 3:30 P.M.]

(3) Every Company Registration Office shall have a seal for

authentication of documents required for or in connection with registration

of companies:

Provided that the design of the seal shall require approval of theRegistrar of Companies.

4. Suggestions and complaint box.- In every Company

Registration Office, there shall be placed a "suggestions and complaintbox" at a conspicuous place to receive feedback from the public regarding

the working of Company Registration Office or for any other difficulty or

complaint and the box shall be opened by the person authorized by the

Registrar of Companies.

5. Incorporation of companies.- (1) The certificate of

incorporation, issued in pursuance of section 32, shall be in the form as

set out in Annex A.

3[(2) Every company which is incorporated shall be assigned a CUIN

and the company registration number assigned previously to a company

shall be replaced with a CUIN.]

lSub-regulation (lA) inserted by SRO 599 1)/2011 dated June 13, 2011.

2Sub-regulation 3(2) substituted by SRO 599 1)/2011 dated June 13, 2011.

3Sub-regulation 5(2) substituted SRO 599 1)/2011 dated June 13, 2011.

Sub-regulation 3(2), Substitution.- Before substitution it read as

follows:-

"(2) The Company Registration Offices shall observe such working hours asmay, from time to time, be approved by the Commission for those offices, andshall, with the exception of public holidays, be open, between the hours of 10:00

A.M. and 2:00 P.M. from Monday to Friday, for transaction of business with thepublic."

Sub-regulation 5(2), Substitution.- Before substitution it read as

follows:-

"(2) Every company which is incorporated shall be assigned a companyregistration number which shall be a consecutive number generated by electronicdatabase to be used as an identification number for that company and shall be statedon the certificate of incorporation and all relevant documents or papers relating tothe company."


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l[ ]

(4) Every company formed or incorporated outside Pakistan which has2[established] a place of business in Pakistan and

3[delivers] documents pursuant to

the provisions contained in4

[section 451] of the Ordinance shall5

[ ]be assigned a6[CUIN and be issued a certificate of registration of documents in the form as set

out in Annexure AA].7[(5) The registrar. concerned shall before issuing any certificate under this

regulation, register the documents required to be registered under the Ordinance

and upload the copy of the certificate duly signed by him in the electronic database

through eServices.].8[ ]

9[5A. Transfer of documents.- In case a company changes its place of

registered office from the territorial jurisdiction of a Company

Registration Office to another, the registrar of such Company Registration Officeshall, send within seven days, all the physical record relating to that company to theregistrar in whose territorial jurisdiction the registered office of the company isshifted.]lSub-regulation 5(3) omitted by SR0599 I)/2011 dated June 13, 2011.

2Word inserted by SRO 599 1)/2011 dated June 13, 2011.

3Substituted for "files" by SRO 599 1)/2611 dated June 13, 2011.

4Substituted for "Part XIV' by SRO 599 1)/2011 dated June 13, 2011.

5Word "also" omitted by SRO 599 1)/2011 dated June 13, 2011.

6Substituted for "company registration number in the same manner as provided in clause (2)" by SRO

599 1)/2011 dated June 13, 2011.7Sub-regulation 5(5) substituted by SRO 599 1)/2011 dated June 13, 2011.

8Sub-regulation 5(6) omitted by SRO 599 1)/2011 dated June 13, 2011.

9Regulation 5A-inserted by SRO 599 1)/2011 dated June 13, 2011.

Sub-regulation 5(3), Omission.- Before omission it read as follows:-

"(3) Where a company transfers its registered office from the territorial jurisdiction of oneCompany Registration Office to another, the company identification number of such companyshall be changed by the Company Registration Office in whose territorial jurisdiction itsregistered office is transferred, to the extent It is necessary to reflect thechange of the Company Registration Office."

Sub-regulation 5(5), Substitution.- Before substitution it read as follows:-

"(5) The registrar concerned shall cause the fact of certificate of incorporation havingbeen granted, the dateof incorporation and the company registration number to be entered onthe stamped memorandum and articles of association under' the datedsignature of the registrar

concerned issuing the certificate of incorporation and also cause a copy of the certificate ofincorporation to be attached to the memorandum and articles of association of the company."

Sub-regulation 5(6) Omission.- Before omission it read as follows:-

"(6) The company registration number and the name and designation of the registrarconcerned with his dated signature shall be 'affixed on all certificates and other documents andpapers issued by the Company Registration Office with which the company is for the timebeing registered."


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6. Issuance of certificates.- 1[(1)] The registrar concerned shall cause theissue of following certificates, namely:-

(a) The certificate of incorporation for effecting the change of name of acompany for the purpose of section 40 in the form as set out in Annexure

B;(b) the certificate for conversion of a public company into a private company

for the purpose of sub-section (2) of section 41 in the form as set out inAnnexure C;

(c) the certificate for conversion of a private company into a public companyfor the purpose of sub-section (3) of section 41 in the form as set out inAnnexure D;

(d) certificate of registration of mortgage or charge, etc., for the purposes ofsection 127 in the form as set out in Annex E; and

(e) certificate for commencement of business for the purposes of sub-section

(2) of section 146 in the form as set out in Annex F.2[(2)The registrar concerned shall before issuing any certificate under this

regulation, register the documents required to be registered under the Ordinance andupload a copy of the certificate duly singed by him in eServices.]

3[7. Uploading physical documents into eServices.- The registrar

concerned shall upload or cause to be uploaded the scanned images of all documentsfiled in physical form in relation to every company and enter or cause to be enteredall the relevant information in the electronic database through eServices.].

3[8.Maintenance of information in the electronic database.- It shall be

the responsibility of the registrar concerned to maintain correct information in the

electronic database and in case of any discrepancy he shall immediately report thesame to the Registrar of Companies for rectification thereof who shall ensure itsimmediate correction and communicate to the registrar concerned accordingly.]1Rule 6 renumbered as 6(1) by SRO 5991)/2011 dated June 13, 201l.

2Sub.regulation 6(2) inserted by SRO 5991)/2011 dated June 13, 2011.

3Regulations 7 & 8 substituted by SRO 5991)/2011 dated June 13, 2011:

Regulations 7 8 Substitution.- Before substitution it read as follows:-

"7. Data entry.- The registrar concerned shall cause all incoming documents filed by, oron behalf, of companies registered with a Company Registration Office to be entered in theelectronic database on the day it is received."

"8. Document Management System.-. The documents identified by the Commission for

storage of image in the Document Management System shall, before being entered in thecomputer system, be scanned and image stored in the Document Management System on theday on which such

Companies Rules Volume IV

Documents

Transcript of Companies Rules Volume IV