Foreign Exchange Manual, 2000

For business information, annual reports, laws, ordinances, regulations and articles.

1. Definition :-
Section 2 of the Act defines "security" as shares, stocks, bonds, debentures, debenture stock and Government securities as defined in the Securities Act, 1920, deposit receipts in respect of deposit of securities and units or sub-units of unit trusts but does not include bills of exchange or promissory notes other than Government promissory notes. A "foreign security" is defined as a security issued elsewhere than in Pakistan and any security the principal of or interest on which is payable in any foreign currency or elsewhere than in Pakistan. For the purpose of Section 13 of the Act, the term "security" also includes coupons or warrants representing dividends or interest and life or endowment insurance policies.

For the purposes of Section 13 of the Act, the term "a person resident outside Pakistan" covers a foreign national including a foreign national of Indo-Pakistan origin as also a Pakistani holding dual nationality for the time being resident in Pakistan and a company registered in Pakistan which is controlled directly or indirectly by a person resident outside Pakistan. In this connection a reference is also invited to para 2 of Chapter-XIX.

2. Import of Securities :-
There are no restrictions under the Act on import into Pakistan of any securities whether Pakistani or foreign.

3. Export of Foreign Securities :-
In terms of clause(a) of sub-section 1 of Section 13 of the Act, the taking or sending of any securities to any place outside Pakistan except with the general or special permission of the State Bank, is prohibited. Persons in Pakistan who are holders of foreign securities and who wish to send such securities to banks, brokers or agents abroad for purpose of sale, transfer, etc., should apply to the State Bank through an Authorised Dealer for necessary export licence.

Permission for export of such securities will be granted provided the securities are sent through an Authorised Dealer who should give an under taking that the securities will be received back in Pakistan within a specified period or in the case of sale, the sale proceeds in foreign currency will be repatriated to Pakistan. State Bank may also consider applications for exchange of foreign shares and/or securities held by residents of Pakistan with Pakistan shares and/or securities held by residents abroad. Applications for this purpose should be made to the State Bank through an Authorised Dealer or stock and share broker.

4. Export of Pakistani Securities :-
Pakistan nationals as also "persons resident outside Pakistan" holding Pakistani securities desirous of sending or taking out the Pakistani securities not covered under the succeeding para 7 are required to obtain prior permission of the State Bank. Application for the purpose should be made to the State Bank through an Authorised Dealer.

5. Transfer of Securities to Non-Residents :-
In terms of clause (b) of sub-section 1 of Section 13 of the Act, transfer of any security or creation or transfer of any interest in a security to, or in favour of "a person resident outside Pakistan" is prohibited except with the general or special permission of the State Bank. The above prohibition applies to transfer of (i) all Pakistani securities (i.e. securities expressed to be payable in Pakistan currency or registered in Pakistan) whether held by persons resident in or outside Pakistan and (ii) all foreign securities held by Pakistan nationals. Pledging or hypothecation of securities to or in favour of non-residents e.g., as collateral or security for credit facilities abroad,(see Chapter XIX) or utilising them for forming trusts or settlements of which a non-resident is the beneficiary is also prohibited under Section 13 of the Act. In the case of securities registered in Pakistan, the companies concerned must obtain permission of the State Bank before registering its transfer in the name of "persons resident outside Pakistan". In terms of Section 13 of the Act Authorised Dealers are required to obtain permission of the State Bank before purchasing shares or securities registered in Pakistan on behalf of "persons resident outside Pakistan".

6. General Exemptions :-
The State Bank has granted the following exemptions from the provisions of Section 13(1) of the Act in connection with the issue, transfer and export of securities registered or to be registered in Pakistan:-

(a) Issue/Transfer of Pakistani Securities to Persons Resident outside Pakistan on Repatriation Basis :-
I. Issue of shares/Modaraba Certificates/Trust & fund Units out of new public offers including right issues, on repatriable basis and transfer of shares quoted on the stock exchange on repatriable basis, to the following, provided the issue price or purchase price, as certified by a stock exchange broker, is paid in foreign exchange either by a remittance from abroad through normal banking channels or out of a foreign currency account maintained by the subscriber/buyer in Pakistan:

(i) a Pakistan national resident outside Pakistan;
(ii) a person who holds two nationalities including Pakistani nationality;
(iii) a person who is not a citizen of Pakistan;
(iv) a firm (including Partnership & Trust) registered outside Pakistan and a company or other body corporate (‘Company’) incorporated outside Pakistan (excluding branches in Pakistan of such firms and companies and a firm/company owned or controlled by a foreign government);

In case where the price of the quoted shares has been negotiated privately, it should not be less than the price quoted on the stock exchange on the date of finalization of the deal.

This exemption also applies to a private placement of new shares including right shares with foreign investors by a manufacturing concern which is either a Public Limited or a Private Limited company provided payment is made by the investors in foreign exchange or through the supply of plant and machinery.

II. Transfer of shares in favour of non-residents as mentioned under sub-para (I) above on repatriable basis by a manufacturing concern which is either a Private Limited Company or an unlisted Public Limited Company provided the purchase price is paid in foreign exchange and is not less than the break-up value of shares as certified by a practising Chartered Accountant.

III. Issue and Export of Bonus Shares to Persons Resident outside Pakistan on Repatriable Basis :-
The companies covered under Para-6(a)I & II above i.e. companies listed on Stock Exchanges in Pakistan and manufacturing concerns which are either un-listed Public Limited or Private Limited Companies have general permission to issue and export bonus shares to their non-resident shareholders. However, before issuing bonus shares to non-residents, the company concerned must ensure:-

(a) (i) that the shares against which bonus shares are to be issued are held by the non-residents under the specific and/or general per-mission of the State Bank and registered at their foreign address.

(ii) that in case the shares are held under the general permission, the requirements as contained in Para-7(a), (b) & (c) below have been fully complied with.

(iii) that the company fulfils statutory requirement of free reserves for issue of bonus shares or necessary waiver from Corporate Law Authority has been obtained in this respect.

(iv) that the application on the prescribed form (Appendix V-96A) is duly certified by the company's Auditors as well as their designated bankers.

(b) Within 30 days from the date of export of bonus shares issued in terms of Para-6(a)III above, the companies concerned will submit the following documents to their designated banker:-

(i) Application in duplicate in the prescribed form (Appendix V-96A) duly certified by the company's Auditors, which will also be counter-signed by the designated banker. There will be one consolidated application in respect of all the non-resident shareholders.

(ii) Two certified copies of the audited annual Profit & Loss Account and Balance Sheet of the company for the year to which the bombs issue pertains.

(iii) Two certified true copies of the shareholders/Director's resolution declaring the bonus.

(iv) Two certified true copies of Auditor's Certificate regarding free reserves in terms of SRO.710(I)/80 dated the 26th June, 1980.

(b) Transfer of Securities from a Person Resident outside Pakistan on Repatriation Basis to another Person Resident outside Pakistan :-
Transfer of Pakistani securities held by "a person resident out side Pakistan" on repatriable basis to other "persons resident outside Pakistan" on the same basis, against payment outside Pakistan, provided a certificate to this effect is given by the transferee to the company concerned.

(c) Exemption from Restrictions of Section 18(1) of FER Act :-
Companies issuing shares to non-residents/registering transfer of shares in favour of non-residents, in accordance with the exemptions provided in sub-paragraphs (a) and (b) and the buyers and sellers of the shares transferred to a non-resident, are exempted from the operation of restrictions contained in Section 18(1) of the Foreign Exchange Regulation Act.

(d) Issue of Securities and NIT Units to Persons Resident outside Pakistan on Non-Repatriation Basis :-
Issue of Pakistani securities of all types including NIT Units but excluding shares of companies not quoted on stock exchange, in favour of persons resident outside Pakistan, on non-repatriable basis, if payment is made in Pakistan rupees provided the securities are registered at the Pakistan address of the purchaser and a clear undertaking is furnished by him that no repatriation of capital and profits/dividends accruing thereon will be claimed at any stage.

(e) Sale of Securities held by a Person Resident outside Pakistan on Non Repatriation Basis to a Person Resident In or outside Pakistan :-
Sale of Pakistani securities held by "persons resident outside Pakistan" on the basis of non-repatriation of capital and profit/dividend to a person, whether resident in or outside Pakistan, on the same basis, provided the securities are registered at the Pakistan address of the purchaser and a clear undertaking is given by him that no repatriation of capital and profit/dividend accruing thereon will be claimed at any stage.

(f) Issue of Government Securities to Foreign Nationals Resident in or outside Pakistan on Repatriation Basis:-
(i) Issue of government securities to foreign nationals resident in Pakistan or resident outside Pakistan, on the basis of repatriation of capital and profits subject to the condition that the price is paid in foreign exchange either as a remittance through banking channels or out of a foreign currency account maintained by the purchaser in Pakistan. Remittance of profits and dis-investment proceeds will be allowed by the State Bank on submission of evidence of inward remittance or of payment from a Foreign Currency Account.

(ii) Issue of NIT Units to Overseas Pakistanis and to Foreign Nationals on Repatriation Basis :-
Issue of NIT Units to Pakistan nationals resident outside Pakistan and foreign nationals resident in or outside Pakistan on the basis of repatriation of capital and profits, subject to the condition that payment is made to the National Investment Trust Limited in foreign exchange, either as a remittance through banking channels or out of a Foreign Currency Account maintained in Pakistan. Remittance of profits and disinvestment proceeds of the Units may be made by the National Investment Trust Limited through an Authorised Dealer designated for the purpose in terms of paragraph l3(b), Chapter XIV of the Foreign Exchange Manual.
Ref. F.E. Cir. No. 34 of 1998.

(g) Issue/Transfer of Registered, Corporate Debt Instruments to persons Resident outside Pakistan on Repatriation Shares:-
Issue/transfer of rupee denominated registered Corporate Debt Instruments (viz. PTCs, TFCs etc); and Registered WAPDA Bonds which non-residents are eligible to purchase under the WAPDA Bonds Regulations for the respective issue as notified by the Government, in favour of non-residents (including overseas Pakistanis) on the basis of repatriation of capital & profits/interest subject to the condition that the issue/purchase price is paid in foreign exchange either as a remittance through banking channels or out of foreign currency/Special Convertible Rupee Account maintained with a bank in Pakistan. Remittance of profit/interest and sale/maturity proceeds will be allowed by the State Bank on submission of evidence of inward remittance or of payment out of Foreign Currency Account.

6A. Issue of shares by companies incorporated in Services/Infrastructure, Social and Agriculture Sectors, to ‘persons resident outside Pakistan’ on repatriable basis against payment in foreign exchange, provided the conditions prescribed in the Government’s current Investment Policy have been fulfilled and an ‘Entitlement Certificate’ issued by the State Bank.

7. Procedure for Issue of Shares :-
(a) Companies issuing shares on repatriable basis, as permitted in sub-paragraph (a) of paragraph 6, may open foreign currency collection accounts with banks abroad for receiving the subscription in foreign currency. They may also allow refunds to unsuccessful applicants. The amounts subscribed by the successful applicants should be repatriated to Pakistan and foreign currency accounts closed within a week of the allotment of shares and a Proceeds Realization Certificate obtained from the concerned Authorised Dealer in Pakistan. The Proceeds Realization Certificate should be submitted to their banker which is designated by them for the purpose of remittance of dividend and dis-investment proceeds as per procedure outlined in para 13(b) Chapter XIV. A list (Appendix V-96) in duplicate of all the persons (non-resident Pakistanis and foreigners)to whom the shares have been allotted, should also be submitted. The designated Authorised Dealer will retain a copy of the list for its records and pass on another copy alongwith the Proceeds Realization Certificate to the Foreign Exchange Department (Investment Division), State Bank of Pakistan, Central Directorate, Karachi.

(b) In case shares are to be issued to non-residents against the value of plant and machinery supplied by them, an application should be submitted to the Area Foreign Exchange Office for issue of "Exchange Entitlement Certificate" alongwith the Invoices, Bills of Lading, Bills of Entry and Import Permit. Once the Exchange Entitlement Certificate has been issued, the company concerned may issue shares to the non-resident investors and surrender the "Exchange Entitlement Certificate" in place of bank's Encashment certificate.
Ref. F.E. Cir. No. 34 of 1998.

(c) Procedure for issue of shares.
I. After registering transfer of shares in favour of a non-resident as permitted vide sub-paragraphs (a) and (b) of paragraph 6, the company concerned shall send within 30 days of such registration, an intimation by letter (in duplicate) to the designated banker showing the name, nationality and address of the non-resident shareholder and the number of shares registered in his name alongwith its face value. The letter should be accompanied by proceeds realization certificate, showing the amount of sale price received in Pakistan, certificate of the transferee, as applicable and practising Chartered Accountant’s Certificate of break-up value of shares in case of Private Limited or unlisted Public Limited Companies. The designated bank will retain a copy of the letter for its record and keep the second copy alongwith the proceeds realization certificate, certificate given by the transferee and practising Chartered Accountant’s certificate of break-up value, if applicable for onward submission to the Foreign Exchange Department (Investment Division), State Bank of Pakistan, Central Directorate, Karachi in the consolidated form before remittance of dividend with a copy of Appendix V-59 and/or alongwith application for issue and export of bonus/right shares as above, as the case may be. The designated Authorised Dealer, before passing on the documents to the State Bank, will ensure that the following particulars of the inward remittance have been further certified by the concerned Authorised Dealer (issuing bank) under his signature and seal on the back of each proceeds realization certificate:-
i). Amount of Foreign Currency.
ii). Rate of Receipt.
iii) Rate of exchange applied.
iv). Rupee equivalent.
v). Page no. Item No. reference of schedule and period of monthly exchange returns under which the transaction has been reported to the State bank.

II. Special Instructions regarding shares transferred under Central Depository System (CDS) of Central Depository Companies.:-

(i) General:
a) Separate account or sub-account will be opened & maintained at CDC for each non-resident investor eligible for investment in registered shares/securities quoted at Stock Exchange in Pakistan.

b) It must be ensured that all transactions at CDS i.e., deposit into or withdrawal from the account/sub-account of a non-resident is supported by other words, there should not be any netting/adjustment and payment/receipt in respect of each purchase/sale should be settled independent of other transactions of the non-resident. In case the investment by the non-resident is made/routed through his Special Convertible Rupee Account (SCRA) maintained with an Authorised Dealer in Pakistan, the SCRA should never show an overdrawn position.

(ii) Initial transfer in the name of CDC:
While approving the initial/first-time transfer of shares/securities purchased/held by non-residents, in the name of CDC for deposit into CDS, the company concerned will ensure that the shares are already registered in its record on repatriable basis in the name of the non-resident concerned. If the shares are not already so registered, the company will obtain requisite documents, i.e., broker's memo, proceeds realization certificates (PRCs) for cost of shares purchased and transfer stamp duty, or where the shares have been purchased from another non-resident shareholder against payment out side Pakistan, transferee certificate along with PRC for transfer stamp money.

iii) Subsequent transaction i.e., deposit/withdrawal at CDS.
c) Where investments are made through SCRA, the Authorised Dealer concerned will continue to ensure that complete/proper record of all transactions is kept at their end and the annual statements of SCRAs is furnished to the State Bank as usual. As at present, documents involving such investment would not be required to be submitted to the company at any stage.

b) In case of investments not involving SCRA, the original documents as listed at (ii) above will be submitted as usual to the respective company by the 'Participant' concerned alongwith a certificate that the shares are in the name of CDC and have since been deposited into/withdrawn from the respective non-resident's account at CDS. The company after making necessary entry in its record to update CDC's non-resident holding will furnish the same to its designated Authorised Dealer. The Authorised Dealer will keep these documents in its record for onward submission to the State Bank in the prescribed manner alongwith returns pertaining to dividend/ bonus or right issue and will as usual make the remittance of disinvestment proceeds of such shares subject to the prescribed drill/rules.

iv) Dividend Payment/allotment of bonus or right shares:
CDC will issue to the respective company a list of beneficial non-resident shareholders certifying their individual holding as on Ex-date of dividend/bonus/right as per attachment of this Circular. Before issue of dividend warrant or allotment of bonus/right shares the company will verify the holding of non-residents not involving SCR/s from its record including interalia as mentioned in sub-para (iii)(b) above and for the non-residents investing through SCRAs, it will obtain an undertaking-cum-certificate from the Authorised Dealer concerned on the Attachment II of this Circular, and on the basis of this undertaking-cum-certificate it will certify Appendix V-59 & V-96 and V-96A for such shares. The aforesaid list provided by CDC with invariably be attached by the company to the aforesaid returns.
Ref. F.E Cir. No. 61 Dated 15th - 8 - 1994.

(d) Export of Shares & Remittance of Dividend/Disinvestment Proceeds :-
Subject to observance of the procedure outlined in sub-pare (a), (b) & (c) above, the companies issuing/registering transfer of shares in favour of non-residents may export the share certificates to the non-resident owners and the designated Authorised Dealers may allow remittance in respect of the following:-

(i) Dividend net of applicable tax.

(ii) Disinvestment proceeds, provided the amount to be remitted is not in excess of the sale price as certified by a Stock Exchange Broker or in the case of a Private Limited Company or an unlisted Public Limited Company, the break-up value as certified by a practicing Chartered Account-ant and tax, if applicable, has been paid.
Ref. F.E. Cir. No. 34 of 1998.

(e) The Designated Authorised Dealer while reporting remittance of disinvestment proceeds in favour of non-residents as permitted under sub-para(d) above, in their monthly exchange returns should invariably attach the following in format information/documents:-

(i) Name and address of the non-resident shareholders.

(ii) Name and address of the company whose shares were sold by the non-resident beneficiary indicating whether it is a listed Public Limited Company or unlisted Public Limited/Private Limited Company engaged in manufacturing.

(iii) Name, address and residential status of the buyer of above shares. if the shares are not quoted on stock Exchange added.

(iv) Copy of Broker's Memo(s) showing, interalia, the details shares sold by non-resident, date of sale, sale price of the shares etc.; and practising Chartered Accountant's Certificate of break-up value where applicable.

(v) In case the unquoted shares were sold to another non-resident on repatriable basis, a copy of letter with which necessary Proceeds Realization Certificates and Annexure "A" were furnished to the State Bank.

(v) A copy of the "Designation Letter".

8. (a) Trading of Quoted Shares by Non Residents :-
(i) Non-residents are allowed to trade freely in the shares quoted on the Stock Exchanges in Pakistan. For this purpose the non-residents will be required to open a 'Special Convertible Rupee Account' with any Authorised Dealer in Pakistan. Such accounts can be fed by remittances from abroad or by transfer from a foreign currency account maintained in Pakistan. The balance available therein can be used for purchase of any share quoted on the Stock Exchange. Payment for such purchases may be debited to the account on production of stock broker's memo showing sale of shares to the account holder and sale proceeds of shares may be credited provided evidence of the sale price in the shape of stock broker's memo is produced. The fund available in such special accounts can be transferred outside Pakistan or credited to a foreign currency account maintained in Pakistan at any time without prior approval of the State Bank. These accounts can also be credited with dividend income. Transfers from one such account to another may also be made in case of transfer of shares between the two account-holders.

(ii) The commission earned by the international brokers from their overseas clients and credited net of taxes to the broker’s S.C.R.A. account may be remitted by the Authorized Dealer provided the funds so credited have emanated from inward remittances or paid out of S.C.R.A. of the investors.

(iii) The Authorised Dealers will be required to submit to the Senior Deputy Director, Foreign Exchange Department, (Investment Division), State Bank of Pakistan, Central Directorate, Karachi a statement showing the balance as on 30th June each year in each such individual account, the total amount of inward remittances in the account, the total outward remittances during the year from the account and the market value of stocks held by the account holder as on 30th June.
Ref. F.E. Cir. No. 17 Dated 16th July 1998.

Ref. F.E. Cir. No. 34 of 1998.

(b) Trading of Federal Investment Bonds & Treasury Bills in the Secondary Market :-
Non-residents are allowed to trade freely in Federal Investment Bonds (FIBs) and Treasury Bills (TBs) in the secondary market through Special Convertible Rupee Accounts subject to the instructions applicable to these accounts as contained in Sub-Para-(a) above.

9. Issue and Encashment of Foreign Exchange Bearer Certificates/U.S. Dollar Bearer Certificates/Five Years Foreign Currency Bearer Certificates :-
In terms of Federal Government Notifications No.575(I)/85 dated the 6th June, 1985, No.140(I)/91 dated the 25th February, 1991 and No.167(I)/92 dated the 7th March, 1992 the schemes of Foreign Exchange Bearer Certificates, U.S. Dollar Bearer Certificates and Five -Year Foreign Currency Bearer Certificates respectively have been floated. Agencies authorised by the Federal Government as offices of issue can sell and encash these certificates. The procedure for sale and Encashment of the same has been prescribed by the Securities Department of the State Bank of Pakistan.
Ref F.E Cir. No. 11 dated 15th March, 1995.

10. Issue of Foreign Exchange against Encashment of Foreign Exchange Bearer Certificates/U.S. Dollar Bearer Certificates/Five Years Foreign Currency Bearer Certificates :-
In case Encashment is made in Pakistan and the bearer desires to receive the amount in foreign exchange, Authorised Dealers may issue Foreign Currency Notes/Demand Drafts/T.Ts /M.Ts/Travellers Cheques in the name of the beneficiary indicated by the bearer.

11. Expert and Transfer of Foreign Exchange Bearer Certificates/ U.S. Dollar Bearer Certificates/Five Years Foreign Currency Bearer Certificates :-
State Bank of Pakistan vice its Notification No.F.E.2/85-SB dated the 1st August, 1985 (App. III-13) has granted general permission for doing various acts referred to in Section 13 of the Foreign Exchange Regulation Act, 1947 in relation to Foreign Exchange Bearer Certificates issued under Foreign Exchange Bearer Certificates Rules 1985, U.S. Dollar Bearer Certificates Rules 1991 and Five years Foreign Currency Bearer Certificates issued under Five years Foreign Currency Bearer Certificates Rules 1992. In other words, persons irrespective of their nationality and/or residential status can freely take or send out of Pakistan the Foreign Exchange Bearer Certificates/U.S. Dollar Bearer Certificates and Five years Foreign Currency Bearer Certificates and transfer them to non-residents.

12. Transfers between Registers :-
Clauses (c) and (d) of sub-section (1) of Section 13 of the Act prohibit, respectively, transfers of securities from registers in Pakistan to registers out side Pakistan and the issuing, whether in Pakistan or elsewhere, of securities which are registered or to be registered in Pakistan, to "persons resident outside Pakistan" except with the general or special permission of the State Bank.

13. Holding and Disposal of Foreign Securities :-
(a) Pakistan national resident in Pakistan who is or becomes owner of foreign securities is permitted to hold or retain such securities provided he has acquired them in a manner not involving a breach or violation of the Foreign Exchange regulations. Holders of foreign securities who wish to sell, transfer or otherwise dispose of or deal in securities, can do so only with the prior permission of the State Bank.

Investment Abroad by Resident Pakistanis :-
(b) Residents of Pakistan including firms and companies incorporated in Pakistan can make investment in companies incorporated abroad on repatriable basis through Foreign Exchange Bearer Certificates subject to the following conditions:-

(i) The investor should make a return to the Investment Division, Foreign Exchange Department, State Bank of Pakistan, Central Directorate, Karachi within one month of acquiring the securities giving particulars in respect of the said securities, in the specimen given in Appendix V-97 of the Foreign Exchange Manual.

(ii) The Dividend/Sale Proceeds of the shares (including Capital gains) shall be repatriated to Pakistan through normal banking channels. Such amount will not be credited to the Foreign Currency Account or for purchase Foreign Exchange Bearer Certificates /other Pakistani securities on repatriable basis.

14. Registration of Foreign Securities :-
Under Section 19(I) of the Act, the Federal Government have issued a Notification No. I(1)-2-FE/56 dated the 1st August, 1956, requiring all persons resident in Pakistan who are or become the owners of any security in respect of which the principal, interest or dividends is or are payable in the currency of any foreign country or in respect of which the owner has the option to acquire the payment of principal, interest or dividends in such currencies to make a return to the State Bank within one month of their acquiring the securities giving particulars in respect of the said securities. The specimen of the form in which these particulars are required to be furnished in duplicate is given in Appendix V-97. Foreign nationals residing in Pakistan are not required to submit the above returns.

15. Under-writing of Shares, Term Certificates and Modaraba Certificates by Foreign Banks :-
Underwriting of shares, participation term certificates etc., by foreign banks eventually involves holding of those shares/securities which are not taken up by the general public, and as such attracts the provisions of Section 13(1) of the Foreign Exchange Regulation Act, 1947. State Bank has given general permission under which foreign banks can under-write the issue of shares to the extent of 30% of the public offering or 30% of its own paid-up capital and reserves whichever is less. They are also permitted to under-write public issues of participation term certificates, term finance certificates and Modaraba certificates provided that where the terms and conditions of issue of such securities grant an option to the holders to convert the securities into ordinary shares, the restrictions of 30% as mentioned above would apply.

16. Foreign Controlled Investment Banks incorporated in Pakistan.
Branches of foreign banks in Pakistan and foreign controlled investment banks incorporated in Pakistan are permitted to invest in Pak. Rupee denominated registered listed corporate debt instruments issued in Pakistan, provided such investment is made through initial public offering and secondary market purchases, and further provided that investment in those debt instruments which are convertible into shares does not exceed 30% of the paid-up share capital of the issuing company or 30% of the paid-up capital and reserves of the investing institution, which ever is less. The profit/interest accruing on such investment will be treated as their income for the purpose of profit/dividend remittance.

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