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July 30, 1999
Proposed draft the Companies (BUY-BACK OF SHARES) Rules, 1999.
S.R.O. 889 (I)/99.- The
following draft of the Companies (Buy-back of Shares) Rules, 1999, which are proposed to
be made in exercise of the powers conferred by sections 95A and 506 of the Companies
Ordinance, 1984 (XLVII of 1984), read with section 43 of the Securities and Exchange
Commission of Pakistan Act, 1997 (XLII of 1997) is hereby published as required by
sub-section (2) of section 506 of the Companies Ordinance, 1984 (XLVII of 1984) for the
information of all persons likely to be affected thereby and notice is hereby given that
the draft will be taken into consideration after fourteen days of its publication in the
official Gazette.
Any objection or suggestion which may be received from any person in respect of the said
draft before the expiry of the said period will be considered by the Securities and
Exchange Policy Board.
THE COMPANIES (BUY-BACK OF SHARES) RULES, 1999
S.R.O. 890 (I)/99.- In exercise of the powers conferred by section 95A, read with section 506, of the Companies Ordinance, 1984 (XLVII of 1984), and clause (b) of section 43 of the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997), the Securities and Exchange Policy Board hereby makes the following rules, the same having been published previously as required under the said section 506, namely:-
THE COMPANIES (BUY-BACK OF SHARES) RULES, 1999
1. Short title and
commencement.-
(1) These rules may be called the Companies (Buy-back of Shares) Rules, 1999.
(2) They shall come into force at once.
(3) They shall apply to listed companies.
2. Definitions.-
(1) In these rules, unless there is anything repugnant in the subject or context,-
(a) "Commission" means the Securities and Exchange Commission of Pakistan;
(b) "Ordinance" means the Companies Ordinance, 1984 (XLVII of 1984); and
(c) "purchase" means purchase by the companies of their own shares.
(2) All other terms and
expressions used but not defined in these rules shall have the same meaning as assigned to
them in the Ordinance.
3. Financial ratios.- (1) Subject to and in addition to other restrictions and
conditions provided in section 95A of the Ordinance, the company intending to purchase,
shall have debt-equity and current ratios as under:
(i) Debt-equity ratio 60:40
(ii) Current ratio 1:1
(2) The financial ratios as per sub-rule (1) shall be certified by the auditors of the
company on a date not earlier than thirty days immediately preceding the date of passing
the special resolution for the purchase.
(3) Debt-equity and current ratios as certified by the auditors shall be indicated in the
explanatory statement to be circulated to the members alongwith the notice of the meeting
in which the proposed purchase is to be considered.
4. Availability of sufficient cash and distributable profits.- (1) The company
shall obtain a certificate from the auditors that it has sufficient cash available with it
for the proposed purchase.
(2) The certificate as per sub-rule (1) shall be made on a date not earlier than thirty
days immediately preceding the date of passing the special resolution for purchase and the
availability of cash as certified by the auditors shall be indicated in the explanatory
statement to be circulated alongwith the notice of the meeting.
5. Purchase procedure.- (1) The directors shall take a decision in a meeting for
the purchase of a specified number of shares at a determined price and shall fix a date
for the company's meeting so as to seek the approval of shareholders.
(2) The decision of the directors for the purchase shall be communicated to the Commission
and the respective stock exchange on the day of the decision.
(3) Subject to the approval of the shareholders made in a meeting through special
resolution, the tender notice for the purchase may contain -
(i) the maximum number of shares to be purchased by the company;
(ii) the manner in which the offer is to be communicated;
(iii) the last date by which the offer to sell the shares is to be made; and
(iv) the name and the address of the designated branches of the authorized bank.
(4) A shareholder interested to sell his shares to the company in response to the tender
notice, shall make the offer in writing through the designated branches of an authorized
bank, providing the following information in the offer:
(i) Name of the shareholder;
(ii) father's name and in the case of female shareholder, husband's name;
(iii) National Identity Card No.;
(iv) address of the shareholder registered with the company;
(v) number of shares offered for repurchase by the company;
(vi) distinctive numbers of share certificates (if not in Central Depository);
(vii) folio No. (if not in Central Depository);
(viii) sub-account No. with Central Depository, if any;
(5) The company shall take a decision on the offers received, within ten days of the
closing date of the receipt of offers.
(6) In case, offers received in response to tender notice exceed the requisite purchase,
the acceptance thereof shall be on pro-rata basis in lots of 500 shares.
(7) The acceptance of the offer shall be communicated within seven days of the decision.
(8) The shareholder whose offer has been accepted, shall submit the share certificates
alongwith the transfer deed duly signed, verified and witnessed to the company through
designated branches of the bank within seven days of the receipt of acceptance from the
company.
(9) In case, the shares are on the Central Depository System, a confirmation from the
Central Depository about the availability of the shares alongwith authorization to
transfer, shall be sent to the designated branches of the bank within seven days of the
receipt of acceptance of the offer.
(10) The acceptance of the offer shaode and purchase price shall be provided in the
explanatory notes of the accounts.
7. Filing of return.- The company shall submit to the Commission and the registrar
concerned, a return as per 'Appendix' to these rules, within thirty days of the
purchase.8. Relaxation of rules.- Where the Commission is satisfied that it is not
practicable to comply with the maintenance of debt-equity and current ratios in a
particular case or class of cases, the Commission may, for reasons to be recorded and
subject to ode and purchase price shall be provided in the explanatory notes of the
accounts.
7. Filing of return.- The company shall submit to the Commission and the registrar
concerned, a return as per 'Appendix' to these rules, within thirty days of the purchase.
8. Relaxation of rules.- Where the Commission is satisfied that it is not practicable
to comply with the maintenance of debt-equity and current ratios in a particular case or
class of cases, the Commission may, for reasons to be recorded and subject to special
conditions as it may deem fit, relax both or any one of the financial ratios specified in
rule 3 in the case of a particular company.
9. Penalty;- Whoever fails or refuses to comply with or contravenes any provision
of these rules, or knowingly and willfully authorizes or permits such failure, refusal or
contravention shall, in addition to any other liability under the Ordinance, be also
punishable with fine not exceeding two thousand rupees, and, in case of continuing
failure, refusal or contravention, to a further fine not exceeding one hundred rupees for
every day after the first during which such contravention continues.
No. 95A/Com.(CL)/99
( MUHAMMAD SIDDIQUE )
Joint Registrar of Companies (HQ)
APPENDIX
THE COMPANIES ORDINANCE, 1984
[Section 95A(13)]
RETURN ABOUT THE PURCHASE BY THE COMPANY OF ITS OWN SHARESName of Company ..................................... .................................
Company Registration No..............................................................
Date of listing and name of stock exchange ...........................................
.......................................................................................................
Presented by ................................................................ (state the name and designation of the officer signing the document).
Fee paid Rs................ in...................................................(name and address of the bank) vide receipt No. ............. dated .......................... or bank draft/pay order No.............................dated................................
(To be attached in original).To
The Securities and Exchange
Commission of Pakistan/
The Registrar of Companies
........................................
........................................PARTICULARS RELATING TO PURCHASE OF THE COMPANY'S OWN SHARES
(1) Total number of shares purchased.
(2) Total amount of cash paid for purchase of shares.
(3) Date of purchase
(4) Cash available with the company before making the payment on .................(date)
(5) Distributable profits on the date of purchase.
(6) Mode of purchase (indicate whether through stock exchange or otherwise).
(7) Date of the meeting in which special resolution for the purchase of shares was passed.
(8) Date of despatch of notice of the meeting (Attach the notice alongwith the explanatory statement and
other enclosures).
(9) Date of declaration of solvency by directors (Attach a copy of the 'declaration' verified by an affidavit as per Annexure).Date ............................
Place ...........................Signatures:................................
(Names in block letters of majority of the
directors including the chief executive).ANNEXURE
DECLARATION OF SOLVENCY
[Pursuant to section 95A(8)]Name of the company .............................................................Ltd.
Presented by ................................................................................Declaration of solvency
We, (i) ........................................, (ii) ............................................,
(iii) ........................................, and (iv) .............................................
being majority of the directors of .......................................................
do solemnly affirm and declare that we have made a full enquiry into the affairs of the company, and that after having done so, we have formed the opinion that the company shall continue to operate as a going concern and that it is capable of meeting its liabilities on time during the period upto the end of the immediately succeeding financial year. And we make this solemn declaration believing the same to be true.Signatures: (i).....................(chief executive)
(ii)........................(director
(iii).......................(director)
(iv).......................(director)Solemnly affirm and declare at ......................... the ...................
day of .................(year), before me.COMMISSIONER FOR OATHS OR
NOTARY PUBLIC OF JUSTICE OF THE PEACE
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