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January 14, 1999
(IV) in rule 6, in sub-rule (2), for the
full stop, at the end, a colon shall be substituted and thereafter the following proviso
shall be added, namely:-
"Provided that an investment company may invest in the unlisted securities up
to ten per cent and in the government securities and rated fixed income securities having
minimum investment grade rating up to twenty per cent of its total investment portfolio
subject to such conditions as the Authority may notify in the official Gazette.";
(V) in rule 7, in sub-rule (1), in clause (a), after the word "made", the
commas and words ",or has arranged to make," shall be inserted;
(VI) in rule 17,-
(i) in sub-rule (1),-
(a) in clause (a), for the word "fourteen", the word
"twenty-one" shall be substituted; and
(b) in clause (b), for the words "two months", the words "sixty
days" shall be substituted;
(ii) in sub-rule (2), for the words, commas and figure "provisions of the
Securities and Exchange Rules, 1971," the words "requirements set out in the
Second Schedule to these rules" shall be substituted.
(VII) in rule 19,-
(i) for clause (a) the following shall be substituted, namely:-
"(a) that such person is registered as a company under the Companies
Ordinance, 1984 (XLVII of 1984), and has capital of not less than twenty million rupees:
Provided that an existing investment adviser shall raise its capital to a minimum
level of twenty million rupees within a period of three years.";
(ii) in clause (d) for the full stop, at the end, semicolon and the word ";
and" shall be substituted; and
(iii) after clause (d), amended as aforesaid, the following new clause shall be
added, namely:-
"(e) that such a person furnishes an undertaking, within ninety days of the
grant of a certificate of registration, that the investment adviser shall furnish evidence
to the satisfaction of the Authority that the personnel employed by it for executive,
research or other related functions possess sufficient educational qualifications and
professional experience to manage funds for the investment companies and rendering
advisory services.";
(VIII) in rule 20, for sub-rule (2) the following shall be substituted, namely:-
"(2) An application under sub-rule (1) shall, besides other documents referred
to in Form III, be accompanied by;-
(a) an undertaking that the company will at all times maintain a net capital
balance in the capital account of an amount which is not less than one and a half per cent
of the paid-up capital; and
(b) receipt evidencing a fee of twenty-five thousand rupees as application process
fee."
(IX) for the words "THE SCHEDULE" the words "THE FIRST
SCHEDULE" shall be substituted; and
(X) after the first Schedule the following shall be added, namely:-
"THE SECOND SCHEDULE
[See rule 17(2)]
DISCLOSURE REQUIREMENTS FOR INVESTMENT COMPANIES
1. General
(l) Annual report must contain all the information required in this Schedule.
Interim reports must at least contain the statement of assets and liabilities and the
investment portfolio. Where the investment company has paid or proposes to pay an interim
dividend, the amount of dividend should be disclosed.
(2) All reports must contain comparative figures for the previous period except for
the investment portfolio.
(3) The items listed under the statement of assets and liabilities, income
statement, distribution statement, statement of movements in reserves and the notes to the
accounts, where applicable, must be disclosed. It is, however, not mandatory to adopt the
format as shown or to disclose the items in the same order.
2. Statement of assets and liabilities.
The following must be separately disclosed, namely:-
(i) total value of investments;
(ii) bank balances;
(iii) preliminary and floatation costs;
(iv) dividends and other receivable;
(v) bank loan and overdrafts or other forms of borrowings;
(vi) dividend payable;
(vii) total value of all assets;
(viii) total value of all liabilities; and
(ix) net asset value.
3. Income statement.
(l) Total investment income net of withholding tax, broken down by category.
(2) Total other income, broken down by category.
(3) Element of income and capital gains.
(4) An itemized list of various costs which have been debited to the scheme
including,--
(a) fees paid to the investment adviser;
(b) remuneration of the custodian;
(c) amortization of formation costs; director's fee and remuneration;
(d) safe custody and bank charges; auditor's remuneration;
(e) borrowing expenses; legal and other professional fees; and
(f) any other expense borne by the company.
(5) Taxes.
(6) Amounts transferred to and from reserves.
(7) Net income to be carried forward for distribution.
4. Distribution statement.
(l) Amount brought forward at the beginning of the period.
(2) Net income for the period.
(3) Interim dividend and date of distribution.
(4) Final dividend per share.
(5) Undistributed income carried forward.
5. Statement of movements in reserves.
(l) Net asset value per share as at the beginning of the period.
(2) Net asset value per share as at the end of the period.
(3) Any item resulting in an increase or decrease in net asset value of the share
including, -
(i) surplus or loss on sale of investments;
(ii) exchange gain or loss;
(iii) unrealized appreciation or diminution in value of investments; and
(iv) net income for the period less distribution.
(4) Amounts transferred to and from the revenue account.
6. Notes to the accounts.
The following matters shall be set out in the notes to the accounts.
(1) Principal accounting policies:
(a) The basis of valuation of the assets of the company including the basis of
valuation of unquoted and unlisted securities;
(b) the revenue recognition policy regarding dividend income and other income;
(c) foreign currency translation, if any;
(d) the basis of amortization of formation costs;
(e) taxation; and
(f) any other accounting policy adopted to deal with items which are judged
material or critical in determining the transactions and in stating the disposition of the
investment company.
Note.- Any changes to the above accounting policies and their financial effects
upon the accounts should also be disclosed.
(2) Transactions with connected persons:
The following transactions should be disclosed, namely:-
(l) Details of all transactions entered into during the period between the company
and the investment adviser, or any entity in which these parties or their connected
persons have a material interest; and
(2) name of any director of the investment adviser or any connected person if such
a person becomes entitled to profits from transactions in shares or from management of the
company and the amount of profits to which such person becomes entitled.
(3) Borrowings:
(l) State whether the borrowings are secured or unsecured and the duration of the
borrowings.
(2) Contingent liabilities and commitments of the company.
(3) If the free negotiability of any asset is restricted by statutory or
contractual requirements, this must be stated.
7. Contents of the auditors' report.
The report of the auditor should state --
(l) whether in the auditor's opinion, the accounts prepared for that period have
been properly prepared in accordance with the relevant provisions of the rules;
(2) without prejudice to the foregoing, whether in the auditor's opinion, a true
and fair view is given of the disposition of the company at the end of the period and of
the transactions of the scheme of the period then ended;
(3) if the auditor is of the opinion that proper books and records have not been
kept by the company or the accounts prepared are not in agreement with the company's books
and records, that fact; and
(4) if the auditor has failed to obtain all the information and explanations which,
to the best of his knowledge and belief, are necessary for the purpose of the audit, that
fact.
8. Investment portfolio.
(l) Number or quantity of each holding together with the description and market
value.
(2) The total investment stated at cost.
(3) The value of each holding as a percentage of the total investments.
(4) Statement of movements in portfolio holdings since the end of the preceding
accounting period.
9. Performance table.
(l) A comparative table covering the last three financial years and including,
for each financial year, at the end of the financial year.--
(a) total net asset value; and
(b) net asset value per share.
(2) A performance record over the last ten financial years; or if the company has
not been in existence during the whole of that period in which it has been in existence,
showing the earnings per share and dividend distribution during each of those years.
(Syed Samsamul Haq)
Joint Secretary
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