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 Listing Regulations

                        

I. PRELIMINARY

1.         Short title and extent of applicability: 

(1)        These Regulations may be called "Listing Regulations of the Islamabad Stock Exchange (Guarantee) Limited"

(2)        The Regulations shall apply to all companies, and securities applying for listing and those listed on the Exchange.

2.         (1)        In the Regulations, unless there is anything repugnant in the subject or
                         context;                          

i)          "Commission" means the Securities and Exchange Commission of Pakistan:

ii)         "Board" means the Board of Directors of the Exchange;

ii-a)      �CDC� means the Central Depository Company of Pakistan Limited;

ii-b)      �CDS� means the Central Depository System established and operated by the Central Depository Company of Pakistan Limited;

 ii-c)      �Eligible Security� means a security which CDC has declared to be eligible for deposit with the CDC;

 iii)         "Exchange" means the Islamabad Stock Exchange (Guarantee) Limited;

 iv)         "Listed Company" means a company or a body corporate or other body which has been listed in accordance with the Regulations and whose securities are listed and include a provisionally listed company under these Regulations for trading in provisionally listed companies of the Exchange:

v)         "Listed Security" shall include any share, scrip, debentures, participation term certificate, modaraba certificate, mushariqa certificate, term finance certificate, bond, pre‑organization certificate or such other instruments as the Federal Government may, by notification in the Official Gazette, specify for the purpose and which is accepted for listing on the Stock Exchange in accordance with the Regulations;

 vi)        "Ordinance" means the Companies Ordinance, 1984 (XLVII of 1984);

vii)        "Prescribed" means prescribed by these Regulations or under authority
             hereof;

viii)       "Regulations" means these Listing Regulations of the Exchange for the time
             being in force;

ix)        "Secretary" means the Secretary of the Exchange;

x)         "Securities & Exchange Ordinance" means the Securities & Exchange
             Ordinance, 1969 (XVII of 1969).

xi)        �Bidding Period�, means the period during which bids for subscription of shares will be made by Institutional Investors and HNWI.

Xii)       �Book Building�, means a mechanism of price determination through which indication of interest for investment in the shares offered by an issuer/offeror is collected from Institutional Investors and HNWI and a book is built which gives a picture of demand for the shares at different price levels. The strike price is determined based on the price at which demand for the share at the end of book building period is sufficient to raise the minimum capital required;

xiii)       �Book Runner�, means a Corporate Brokerage House, appointed as Book Runner by the Issuer/Offeror;

xiv)       �Bid Collection Centre�, means pre-determined places where applications for bidding of shares are collected by the Book Runner on behalf of the Issuer/Offeror;

xv)       �Strike Price or the Issue Price�, means the price of share determined/discovered on the basis of book building process and is the price at which the shares are issued to institutional investors and HNWI;

xvi)       �Final Prospectus/Offer for Sale Document�, means the prospectus/offer for sale document containing all the information & disclosures as required under the Companies Ordinance, 1984 together with disclosure of the strike price and results of the Book Building process;

xvii)      �Floor Price�, means the minimum price set by the Issuer/Offerer for offer of shares;

xviii)     �General public�, means all individual and institutional investors including both Pakistani (residents & non-residents) and foreign investors;

xviv)     �High Networth Individual Investor(HNWI)�, means an individual  investor who applies or bids for shares of the value of more than Rs. 1,000,000/- in the Book Building process;

xx)       �Institutional Investor�, includes both local and foreign institutional investors;

xxi)      �Book Building Offer�, means the offer made under the Book Building process;

�Investment Finance Company�, means an investment finance company as defined in the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003.

xxii)      �Issuer�, means a public limited Company or a body corporate which intends to issue shares to the public through prospectus under section 57 of the Companies Ordinance, 1984;

xxiii)    Lead Manager�, means a Corporate Brokerage House, or a Schedule Bank or a Developmental Financial Institution or an Investment Finance Company appointed as Lead Manager by the Issuer/Offeror;

xxiv)     �Limit Price�, means the maximum price a prospective Institutional Investors or HNWI is willing to pay for a share under the Book Building process;

xxv)      �Offeror�, means a person who directly or indirectly holds more than 10% of any shares of a public limited company or a body corporate and offer for sale such shares, in full or in part, to the general public;

xxvi)     �Offer Price�, means the price per share at which shares are offered for sale to the general public. This may either be the strike price or a price at a certain discount to the strike price;

xxvii)    �Preliminary Prospectus/Offer for Sale Document�, means the preliminary offering document containing all the information & disclosures as required under the Companies Ordinance, 1984, approved by the Commission under Section 57 or Section 62 of the Companies Ordinance, 1984 as the case may be and issued to the Institutional Investors and HNWIs for the Book Building process;

xxviii)   �Public Issue/Offer�, means issue/offer of shares by an Issuer/Offeror to the general public;

xxviv)   �Strike order�, means a bid for a specified number of shares at the strike price to be determined under the Book Building process;

xxx)      �Step bid�, means a series of limit bids at increasing prices

 

(2)        Words or expressions defined in the Ordinance and the Securities & Exchange Ordinance shall, except those defined herein or where the subject or the context forbids, bear the same meanings as in those Ordinances or either of them and in the case of word or expression bears different meanings under both the Ordinances, that meaning which is carried or included in the Companies Ordinance, 1984 shall prevail and have preferred application.

II.   LISTING OF COMPANIES & SECURITIES

 3.                     (1)        No dealings in securities of a company shall be allowed on the Exchange, either on the Ready Quotation Board or Cleared List, unless the company or the securities have been listed and permission for such dealing has been granted in accordance with the Regulations.

(2)        The permission under Sub‑Regulation (I) may be granted upon an application being made by the company or in respect of the securities in the manner prescribed. The Exchange, in granting such permission will consider among other things, sufficiency of public interest in the company or the securities.

(3)        The Exchange shall decide the question of granting permission within a maximum period of three months from the date of receipt of listing application. In case the permission is refused, the reasons thereof will be communicated to the applicant and the Commission within two weeks of the decision.

(4)        The Board will be the sole authority to grant, defer or refuse such permission and may for that purpose, relax any of these Regulations subject only to two‑third majority of the directors present at such meeting of the Board and so resolving.

4. (1)    The application for listing shall be made by the applicant company or on behalf of the security in the prescribed form and will be accompanied by the fees, specified in the Regulations.

(2)        The Board may require additional evidence, declarations, affirmations and information as also other forms to be filled up and all such requisitions shall be deemed to be prescribed requisitions for the purpose of a proper application for consideration by the Board for listing.

(3)        If an application together with the additional information referred to in Sub‑Regulation (2) is not submitted, the Board may defer consideration or decline to consider it in which case such application will stand disposed off as refused. However, the applicant may move a fresh application after six months from the date of refusal unless the Board other‑wise decides.

(4)        An applicant company or security applying for listing shall furnish full and authentic information in respect thereof and such other particulars as the Board of the Exchange may require from time to time. All routine particulars may be called for by the Secretary.

 III.   UNDERTAKING

5. (1)    No listing of a company, securities shall be permitted unless the company or the authorized representative on behalf of the securities has provided an undertaking under a common seal and authorized signature to abide by these Regulations.

(2)        The Company and/or the authorized representative in respect of securities, as the
 case may be, shall further undertake:‑

             i)     that the securities shall be quoted on the Ready Quotation Board and/or the
                    Cleared List at the discretion of the Exchange;

            ii)     that the Exchange shall not be bound by the request of the company to remove
                    its securities from the Ready Quotation Board and/or the Cleared List;

           iii)     that the Exchange shall be authorized and have the right, at any time and
                   without serving notice if it be deemed proper, to suspend or to remove any
                   shares or securities from the Ready Quotation Board and/or the Cleared List for
                   any reason, which the Exchange considers sufficient in public interest subject,
                   however, to the procedure laid down in Section 9 of the Securities and Exchange
                   Ordinance;

          iv)     that such provisions in the Articles of Association of a company or in any
                  declaration or basis relating to any other security as are or otherwise not deemed
                  by the Exchange to be in conformity with the Regulations shall, upon being called
                  upon by the Board, be amended forthwith and until such time as these
                  amendments are made, the provisions of these Regulations shall be deemed to
                  supersede the Articles of Association of the Company or the nominee relating to
                  the other securities to the extent indicated by the Board for purposes of
                  amendment.

          v)     that the company or the security may be de‑listed by the Board in the event of
                  non‑compliance and breach of undertaking given hereunder.

 6.         The following documents and particulars duly certified by the company or the company presenting the security shall be submitted to the Exchange at the time of application for listing or any time on demand by the Exchange:

             i)          Application for listing as per Form I ;

            ii)         Memorandum & Articles of Association;

            iii)         Copy of the Certificate of Incorporation;

            iv)        Copy of the Certificate of Commencement of Business;

            v)         Copy of the Feasibility‑ Report, in case of new project;

            vi)        Copy of the Permission for setting up the Industrial Unit;

            vii)        Copies of the title deeds of the land;

viii)       Copies of all material contracts and agreements entered into or exchanged
            with foreign participants, machinery, suppliers and any other financial
            institutions;

ix)        Copies of Letter(s) of Credit established in favour of Machinery Suppliers, if
            linked with the public issue;

x)         Copy of authorization for floatation of Modaraba by the Registrar of Modaraba
            Companies;

xi)        Names of Directors alongwith directorship of other companies listed on the
            Exchange;

xii)        Draft Prospectus/Offer for Sale;

xiii)       Auditor's Certificate for the amount subscribed by the
            Promoters/Directors/Associates;

xiv)       Copies of the Agreements relating to issue of securities for consideration
             other than cash, if any;

xv)       Copies of underwriting agreement (s) (if any ) and No Objection Certificates
            from the underwriters to publish the prospectus ;

xvi)       Statement of audited accounts for the last Five (05) years or for a shorter
             number of years if the company is in operation only for such period;

           xvii)      Statement showing the cost of project and means of finance;

           xviii)     Copies of the approved application under Sec 41(1)(f) & (106) of the Income
                       Tax Ordinance 1979;

           xix)       Copies of the consent letters from Bankers to the Issues;

xx)       Application for submission of undertaking and payment of fees as per Form II;

xxi)       Copy of approval of prospectus/offer for sale from the Commission;
            and

xxii)      Any other document(s)/material contract(s) and such other particular(s) as may
            be required by the Exchange.

  III‑A .  OFFER OF CAPITAL BY COMPANIES / MODARABAS TO THE PUBLIC

 6 A. (1)        The offer of shares to the general public shall not be less than Rs. 100 million or 20% of the share capital of the company, which ever is higher, unless the limit is relaxed by the Exchange with the approval of the Securities & Exchange Commission of Pakistan.

(2)         Allocation of share capital to overseas Pakistanis shall not exceed twenty percent of the public offer.

         (3)           Allocation of share capital to employees of the company shall not exceed five percent of the public offer.

         (4)        In the case of a Modaraba applying for listing on the Exchange, 30 % of the total paid‑up capital shall be subscribed by the sponsors or their associates or friends, relatives and associated undertakings and the balance 70% shall be offered to the General Public.

(5)                 The Stock Exchange, if it is satisfied that it is not practicable to comply with the requirements of any of the above Regulations in a particular case or class of cases, the Exchange may, for the reasons to be recorded, relax the Regulations subject to approval of the Commission. 

          (6)        In case where the shares of the company are issued / offered through book building, it shall comply with the requirements as set out in Appendix 1 of these Regulations�

 

 

 

 

IV.   PROSPECTUS, ALLOTMENT, ISSUE & TRANSFER OF SHARES

7.      (1)        No Company will apply for listing or be listed unless it is registered under the Ordinance as a public limited company or has been setup under a statute and its minimum paid-up capital is Rs. 20 million.

         (2)        Companies registered in Northern areas and Azad Jammu & Kashmir will be eligible for listing and will be treated at par with companies registered in Pakistan.

         (3)        Despite receiving the application for listing and any preliminary actions thereon, no company shall be listed unless it has made a public issue which is subscribed by not less than 250 applications.

         (4)        The requirements of Sub section (1) or (3) shall not apply to listing of securities other than shares of companies unless any law so requires or the Federal Government, in  exercise of its power under the Securities & Exchange Ordinance so directs.

         (5)        The Company may make a public offer of securities to be eligible securities in the CDS.

8. (1)            The Prospectus or the offer for sale shall be submitted to and cleared by the Exchange before an application for its approval is made to the Commission. The Exchange may require additional information, data, certification or requirement to be included in the prospectus or the offer for sale. If any applicant fails to comply with such requirements, the Exchange may refuse to issue clearance under these Regulations.

 (2)               The Prospectus or the offer for sale shall conform to and in accordance with the requirements and provisions of the Ordinance and/or the Securities and Exchange Ordinance and any other law or legal requirements for the time being applicable. The application made to the Commission shall, amongst other things, be accompanied by the clearance given by the Exchange under Sub-regulation (1).

 (3)               Without prejudice to the foregoing, the prospectus or the offer for sale shall fulfill all requirements of the law and instructions of the Commission as well as the criteria for listing and the guidelines laid down by the Exchange from time to time, not being inconsistent with law or instructions of the Commission.

               (a)        The share certificates shall be issued in such marketable lots or in any other manner as may be determined or approved by the Exchange.

               (b)        The application money shall be refunded, within such time as is prescribed in Regulation 9(4), if the company is not listed on the Exchange for any reason whatsoever or the listing is refused.

 (4)               The prospectus or offer for sale with the proforma application form shall be published by the company in one Newspaper each at Karachi, Lahore and Rawalpindi/Islamabad, or as the Exchange may in addition require, at least 7(seven) days in advance but not more than 30(thirty) days before the due date of the opening of the subscription list.

 (5)               The issue shall be made available to the Exchange and to the bankers to the issue for distribution of printed copies of prospectus or offer for sale and application forms in the quantity to be determined by the Exchange and the Bankers. The company shall also accept application on identical forms.

 (6)               Applications for shares shall be accepted only through bankers to the issue, whose names shall be included in the prospectus or the offer for sale.

 (7)               The directors or the offerers, as the case may be, shall not participate in subscription of shares offered to the general public.

9.                (1)              The company shall inform the Exchange of the subscription received, which information shall be communicated in writing under the hand of an authorized person with certificate(s) from Bankers to the issue, within three working days of the closing of subscription.

                   (2)               The company shall take a decision within 10 days of the closure of subscription list as to what applications have been accepted and are successful.

                   (3)               The company shall refund the application money in case of un-accepted or unsuccessful applications within 10 days of the date of such decision.

                   (4)               In case the application for listing is refused by the Exchange, for any or whatsoever reasons, the company shall forthwith pay without surcharge all money received from applicants in pursuance of the prospectus or the offer for sale, and if any such money is not repaid within 10 days after the company becomes liable to repay it, the directors of the company shall be, jointly & severally, liable to repay that money with surcharge at the rate of one and half percent for every month or part thereof from the expiration of the fifteenth day.

                   (5)               In case of over‑subscription, the company, or the offerers, as the case may be, shall immediately submit to the Exchange, copies of the ballot register of successful applications.

                   (6)               The company shall dispatch all shares certificates, in marketable lots, within 30 days of the closing of subscription list to all the successful applicants under intimation to the Exchange.

                      Provided that where the security has been declared to be an eligible security, Share Certificates shall be issued by the company or deposited directly into the CDS in such manner as may be prescribed by the CDC.

                   (7)               Any company which makes a default in complying with the requirements of these Regulations, or any of its sub‑regulation, shall pay to the Exchange a penalty of Rs. 500 (Rupees five hundred only) for every day during which the default continues. The Exchange may also notify the fact of such default and the name of defaulting company by the notice and also by publication in the Ready Board Quotations of the Exchange.

                   (8)               Any action under these Regulations shall be without prejudice to the action or steps taken by any other person or authority.

10.        The company or the offerers shall, within 30 days of closing of subscription list, pay brokerage to the members of the Exchange at the minimum rate of one percent of the value of the shares actually sold through them.

 11.                   (1)        The Company shall split allotment letters and letters of right into marketable lots within seven days of receipt of such application.

                         (2)        The company shall consolidate or split, as may be required by a holder in writing, share certificates into marketable lots within 45 days of receipt of such application. The company may charge an amount, which shall not exceed Rs.10/‑(ten) for each share certificate, except in the case of those issued or to be issued in market lots.

                         Provided that requirement of sub-regulations (1) & (2) shall not apply where the security has been declared an eligible security and held in the name of CDC. In such cases, the procedure as prescribed by the CDC shall be complied with.

 12.                    (1)        The company shall verify the signature of shareholders within 48 hours of such request.

                         (2)        The company shall complete shares transfer and have ready for delivery the share certificates lodged for registration of transfer within 45 days of the application for such transfer and its registration.

                 

Provided that this regulation shall not apply in case of eligible securities deposited into the CDS. In such cases, the procedure as prescribed by the CDC shall be complied with.

 13.                   (1)        The company shall give a minimum of 21 days notice to the Exchange prior to closure of Share Transfer Books for any purpose.

                         Provided that companies quoted on Cleared List shall give two months notice for closure of Share Transfer Register subject to prior approval of dates by the Exchange.

                         (2)        The company shall treat the date of posting as the date of lodgment of shares for the purpose for which shares transfer register is closed, provided that the posted documents are received by the company before relevant action has been taken by the company.

                          (3)        The company shall issue transfer receipts immediately on receiving the shares for transfer.

                          (4)        The company shall not charge any transfer fee for transfer of shares.

                          (5)        The company shall provide a minimum period of 07 days but not exceeding 15 days at a time for closure of Shares Transfer Register, for any purpose, not exceeding 45 days in a year in the whole.

14.        No listed company shall exercise any lien whatsoever on fully paid shares and nor shall there be any restriction on transfer of fully paid shares. The same shall apply to all listed securities.

V.   DIVIDENDS AND ENTITLEMENTS

15.                    (1)        Every listed company shall advise and keep advised by appropriate writings the Exchange of all dividends and entitlement in respect of its listed securities immediately upon recommendations by its directors through a letter to be delivered under a sealed cover during trading hours of the Exchange.

                        (2)        Listed companies, holding their board meetings outside Islamabad, shall advise the Exchange and convey full particulars as in sub‑regulation (I) including the place, address and time, during its time, during its trading hours by fax followed by a letter of confirmation.

                        (3)        Intimation of dividend and of all other entitlements shall be sent to the Exchange not later than 15 days prior to commencement of the book closure.

16.        Every listed company shall send to the Exchange its financial results, both in the case of half yearly and annual accounts, in such form as may be prescribed by the Exchange as soon as these are approved by the directors of the company.

17.                    (1)        The Company shall send to the Exchange 100 copies each of statutory reports, annual reports and audited accounts not later than 21 days before a meeting of the shareholders is held to consider the same.

                         (2)        The company shall send to the Exchange copies of all notices as well as resolutions prior to their publications and dispatch to the shareholders and also file with the Exchange certified copies of all such resolutions as soon as these have been adopted and become effective.

                         (3)        The company shall send to the Exchange such number of copies of its quarterly accounts as prescribed by the Exchange from time to time and within the time stipulated under Ordinance.

                          (4)      All listed companies are required to transmit the quarterly/ annual accounts on the website of the Exchange (www.ise.com.pk) and it would be sent in Portable Document Format (PDF) with digital signatures at the following e-mail address: [email protected] and [email protected]

 

 18.                  (1)        Every listed company shall;

                                  i)          dispatch the interim divided warrants to the shareholders concerned within 45 days from the date of commencement of closing of share transfer register for purpose of determination of entitlement of dividend;

                                   ii)         dispatch the final dividend warrants to the shareholders concerned within 45 days from the date of General Meeting in which the same has been approved;

                                   iii)         intimate the Exchange immediately as soon as all the dividend warrants are posted to the shareholders;

                                   iv)        dispatch interim and final dividend warrants to the shareholders by registered post unless those entitled to receive the dividend require otherwise in writing.

                         (2)        All dividend warrants, in addition to the place of the Registered Office of the issuing companies, shall be encashable at Karachi, Hyderabad, Sukkur, Quetta, Multan, Lahore, Faisalabad, Islamabad/Rawalpindi and Peshawar for a period of three months from the date of issue.

                         (3)        A listed company, which makes a default in complying with the requirements of these Regulations, shall pay to the Exchange penalty of Rs. 500/‑ (Rupees five hundred only) for every day during which the default continues. The Exchange may also notify the fact of such default and the name of defaulting company by publication in the official quotation list of the Exchange.

                         (4)        The Board may suspend or if so decides, delist any company which makes a default in complying with the requirements of this Regulation.

                         (5)        Any action under these Regulations shall be without prejudice to the action or steps taken by any other person or authority.

 

 

 VI.   ANNUAL GENERAL MEETINGS, ETC.

 19.                   (1)        A listed company shall hold its Annual General meeting and lay before the said meetings Balance Sheet and Profit & Loss Account within four months following the closure of its financial year.

       i)       Each Modarba shall hold an annual review meeting of its certificate holders and lay before the said meeting its financial statements within four months following the close of its financial year

                         (2)        A company may apply to the Exchange for extension in time for holding Annual General Meeting mentioned under sub regulation (1) above for a maximum period of 30 days and shall pay the extension fees up to a maximum of Rs 25,000 for 30 days or part thereof with such application.

                                    Provided that the above extension shall be allowed subject to production of a letter of approval from the Securities and Exchange Commission allowing a similar extension.

                         (3)        Upon receipt of the application, with the fee corresponding to the extension applied for, the, Board may, in its sole discretion, grant or refuse the extension. In the event of refusal the fee paid with the application shall be refunded.

                         (4)        Failure to obtain extension from the Exchange or if the Annual General Meeting is not held within time of the extension, it shall make the company liable to penalty at double the rate of extension fees provided above.

                         (5)        No further extension beyond maximum period under sub‑regulation (2) shall be granted. In the event of default continuing after the final extension provided herein above, the company shall be liable to an additional penalty at the rate of Rs. 500/‑ (five hundred) per day for every day of the default and to action of suspension or delisting as may be decided by the Exchange. The Exchange may also notify the fact of such default and the name of the defaulting company by notice and also by publication of the same in the official quotation list of the Exchange.

                         (6)        The Board may suspend/delist any company which makes a default in complying with the requirements of this Regulation and/or fails to pay the penalty payable hereunder or imposed by the Exchange.

                           (7)     Every Listed Company or issuer of Listed Security shall submit in such form and manner as may be prescribed by the Exchange from time to time the number and break-up of their free-float shares on quarterly basis i.e. as on March 31, June 30, September 30 and December 31 each year. Such information shall be submitted to the Exchange within 15 days of close of each quarter.

 

Explanation:

 

The term �free-float� for the purposes of this Sub-Regulation shall mean proportion of total shares issued by a company, that are readily available for trading at the Stock Exchange. It generally excludes the shares held by controlling directors / sponsors / promoters, government and other locked-in shares not available for trading in the normal course.

20.                    (1)        The company shall furnish copies of minutes of its Annual General Meeting and of every Extra‑Ordinary General Meeting to the Exchange within 30 days of such meeting.

                         (2)        The company shall furnish a complete list of all its shareholders as at the 31st of December in each calendar year, duly affirmed to be correct as and upto that date, within 30 days thereof. Failure to comply in the said behalf shall be deemed to be violation of these Regulations and, in addition, such company shall be liable to pay a sum of Rs. 500 (five hundred) per day for each day of default until it continues.

 VII.   INCREASE OF CAPITAL & ALLIED ISSUES

21.        Every listed company shall immediately advise the Exchange of all decisions taken by its board of directors regarding any change in authorized, issued or paid‑up capital, by issue of bonus shares, right shares or refund of capital.

22.                    (1)        A listed company shall issue entitlement letters or right offers to all the shareholders within a period of 45 days from the date of re‑opening of share transfer register of the company closed for this purpose.

                                    � Provided that this regulation shall not apply in case of eligible securities deposited into CDS. In such cases, the procedure as prescribed by the CDC shall be complied with.�

                        (2)        The company shall pay the following fees for extension granted by the Exchange with regard to issuance of entitlement letters, etc.

                        i)          For the first 15 days .............. Rs. 100 per day

                        ii)         For the next 15 days .............. Rs. 200 per day.

                                    Failure to seek extension from the Exchange shall make the company liable to a penalty at double the rate of extension fee provided above.

                        (3)        No extension shall be granted beyond the period in sub‑regulation (2). In the event of the default continuing after the final extension, the company shall be liable to an additional penalty at the rate of Rs. 500 (five hundred) per day for each day of default and also to action of suspension or otherwise delisting by the Exchange.

                        (4)        No company which has been suspended or de‑listed, as the case may be, shall be restored and its shares re‑quoted on Exchange until it has paid the full amount of penalty for the days of the default and receives the assent of the Board for the restoration.

23.                    (1)        A listed company shall issue bonus shares certificates within a period of forty five days from the date of re‑opening of the share transfer register closed for this purpose according to the following time table:‑

                                  i)          The bonus shares certificates shall be dispatched to the shareholders concerned by registered post unless those entitled to receive the bonus share certificates require otherwise in writing;

                                  ii)         The Exchange shall be immediately intimated as soon as the bonus share certificates are posted to the shareholders;

                                   iii)         The company shall pay the extension fee for extension granted by the Exchange with regard to issuance of bonus shares;

                                   iv)        No extension beyond that provided in the preceding clause shall be granted;

                                   v)         In the event of the default continuing after the final extension the company shall be liable to a penalty at the rate of Rs. 500/‑ (five hundred) per day if the default continues and also to action of suspension or de‑listing by the Exchange;

                                     � Provided that this regulation shall not apply in case of eligible securities deposited into the CDS. In such cases, the procedure as prescribed by the CDC shall be complied with.�

                        (2)        No listed company, which has been suspended or de‑listed, shall be restored and its shares re‑quoted on the Exchange until it pays penalty for the days of the default and receives the assent of the Board for restoration.

VIII.   LISTING OF SUBSIDIARY COMPANY & OTHER MATTERS

24.                    (1)        A listed company distributing shares of its unlisted subsidiary company in the form of special dividend, right shares or any similar distribution shall get such subsidiary company listed on the Exchange within a period of 120 days from the date of approval of such distribution by the shareholders at a meeting of such company.

                        (2)        In case of failure of such subsidiary company to apply for listing or refusal by the Exchange for such listing on account of insufficient public interest, or for any other reason whatsoever, the company distributing special dividend shall encash the shares of the subsidiary company at the option of the recipients at a price not less than the current break‑up value or face value, whichever is higher, within 30 days from the expiry of 120 days or from the date of refusal of listing, whichever is earlier, failure in which behalf shall be default in which event the trading in the shares of the listed company shall be suspended by the Board or the company de‑listed.

25.        Every listed company shall notify the Exchange immediately regarding changes in its Board of Directors by addition or removal by death, resignation, or disqualification, etc.

26.        A listed company shall obtain prior clearance of the Exchange for any amendment proposed to be made in its memorandum and articles of association before the same are placed for the approval of the shareholders.

27.        A listed company shall immediately notify the Exchange in respect of any material change in the nature of its business including sale or purchase of major operating assets, franchise, brand name, goodwill, royalty, financial plan, etc and all relevant information such as consideration, terms of payments, period of use of such facilities and projected gains to accrue to the company.

28.        Every listed company shall advise the Exchange of:-

                        (a)        The decision to issue Participation Term Certificates and the purpose thereof not withstanding that application is to be made to the authorities later;

                        (b)        Submit copy of the application made to authorities with relevant details and certified copy of the consent order;

                        (c)        All materials particulars of the Participation Term Certificates including conditions governing the issue, details of guarantee/securities, trustees and name of the subscribing institution(s).

29.        All listed companies shall obtain prior approval of the Exchange in respect of the date & time of holding of its Annual General Meetings.

30.        All listed companies shall notify the Exchange in advance the date & time of its board meeting specially called for consideration of its accounts and for declaration of any entitlements for the shareholders.

Quality of Audit

30-A     All listed companies shall facilitate the Quality Control Review (QCR) of the audit working papers of practicing chartered accountants, carried out by the Institute of Chartered Accountants of Pakistan (ICAP) and, therefore, shall authorize their auditors to make available all the relevant information including the audit working papers to the QCR Committee of ICAP.

 

 

30-B (i)

No listed company shall appoint or continue to retain any person as an auditor, who has been found guilty of professional misconduct, by the Commission or by a Court of Law, for a period of three years unless a lesser period is determined by the Commission. In case a firm has been appointed as an auditor, and if any of its partners has been held guilty of professional misconduct, the firm shall only be eligible for appointment as an auditor provided a written confirmation is given by the firm to all the stock exchanges of the country and the Commission with a copy to ICAP to the effect that such a partner shall not be engaged in the audit of any listed company for the specified period.

 

(ii) A person appointed as an auditor shall be guilty of �professional misconduct� if he:

 

a.         fails to report a material misstatement or fact known to him and non-disclosure of which may render the financial statements misleading or disclosure of which is necessary in his professional capacity;

 

b.         fails to obtain sufficient information to warrant the expression of an opinion or his exceptions are sufficiently material to negate the expression of an opinion;

 

c.          makes a statement which is misleading, or deceptive;

 

d.         incites any one to commit a criminal offence, or helps or encourages anyone in planning or execution of a criminal offence which is committed;

 

e.         agrees with anyone to prevent or obstruct the course of justice by concealing, destroying or fabricating evidence by a misleading statement which he knows to be untrue;

f.          deceives any person, either by making a statement, which he knows to be false, or by suppressing matters relevant to a proper appreciation of its significance;

 

g.         expresses his opinion on financial statements of any business or enterprise in which he, his firm or a partner in his firm has substantial interest.

 

h.         is penalized under any of the provisions of the Companies Ordinance, 1984 in relation to his function as an auditor of a listed company; and

 

i.          is guilty of any other act which is determined as professional misconduct by the Commission in relation to his function as an auditor of a listed company.

 

30-C

(i)        No listed company shall appoint or continue to retain any person as an auditor who is engaged by the company to provide any service that are prohibited.

 

(ii)        A listed company shall also not appoint or continue to retain any person as an auditor, if a person associated with the auditor is, or has been, at any time during the preceding three months engaged to provide any services that are prohibited.

 

Explanation:

For the purposes of this regulation, the expression �associated with� shall mean any person associated with the auditor, if the person: -

 

a. is a partner in a firm, or is a director in a company, or holds or controls shares carrying more than twenty percent of the voting power in a company, and the auditor is also partner of that firm, or is a director in that company or so holds or controls shares in such company; or

 

b. is a company or body corporate in which the auditor is a director or holds or controls shares carrying more than twenty percent of the voting power in that company or has

other interest to that extent. Explanation: For the purpose of this regulation the services that are prohibited shall mean the following:

 

  1. Preparing financial statements, accounting records and accounting services;
  2. Financial information technology system design and implementation, significant to overall financial statements;
  3. Appraisal or valuation services for material items of financial statements;
  4. Acting as an Appointing Actuary within the meaning of the term defined by the Insurance Ordinance, 2000;
  5. Actuarial advice and reviews in respect of provisioning and loss assessments for an Insurance entity;
  6. Internal Audit services related to internal accounting controls, financial systems or financial statements;
  7. Human resource services relating to:-

i)                             Executive recruitment;

ii)                           Work performed (including secondments) where management decision will be made on behalf of a listed audit client;

  1. Legal services;
  2. Management functions or decisions
  3. Corporate finance services, advice or assistance which may involve independent threats such as promoting, dealing in or underwritten of shares of audit clients.
  4. Any exercise or assignment for estimation of financial effect of a transaction or event where an auditor provides litigation support services as identified in paragraph 9.187 of Code of Ethics for Chartered Accountants.
  5. Share Registration Services (Transfer Agents) and;

 

  1. Any other service (s), which the Council with the prior approval of the Securities and Exchange Commission of Pakistan, may determine to be a �prohibited service�.

The Commission may, in its sole discretion and to the extent deemed fit and proper exempt one or more services from the restriction aforesaid. ICAP also may, with the prior written approval of the Commission, and to the extent deemed fit and proper, exempt one or more services from this restriction.

IX.   DE‑LISTING, SUSPENSION AND DEFAULTERS' COUNTER

31.                    (1)        A listed company may be de-listed, suspended or placed on the Defaulters� Counter for any of the following reasons:-

(a)        if its securities are quoted below 50% of face value for a continuous period of three years.

Provided that if the shares of the company quoted at 50% or above of their face value then such a rate is maintained for a continuous period of thirty working days;

(b)        if it has failed to declare dividend or bonus:-

i)          for five years from the date of declaration of last dividend or bonus; or

ii)         in the case of manufacturing companies, for 5 years from the date of commencement  of production; and

 iii)         for five years from the date of commencement of business in all other cases.

(c)        if it has failed to hold its Annual General Meeting for a continuous period of 3 years;

(d)        if it has gone into liquidation either voluntarily or under court order;

(e)        if it has failed to pay the annual listing fees as prescribed in these regulations payable to the Exchange for a period of 2 years or penalty imposed under these regulations or any other dues payable to the Exchange;

(f)         if it has failed to comply with the requirements of any of these regulations;

(ff)        if the company for any reason whatsoever refuses to join CDS after its securities have been declared eligible securities by the CDC;

(g)        no company which has been de‑listed or suspended shall be restored and its shares re-quoted until it removes the causes of de‑listing/suspension and receives the assent of the Board for the restoration.

                         (2)        No company will be de-listed or placed on Defaulters� Counter, under these Listing Regulations, unless such company has been given an opportunity of being heard.

Provided, however, placement of a company on the Defaulters� Counter for reasons mentioned above in sub-regulation (1) above, shall not impair the power of the Exchange to de-list such company subsequently, if causes mentioned in paras (a) & (b) of sub-regulation (1) are not removed within a reasonable time, or if in the opinion of the Board, such causes will not be removed by the company within a reasonable time, and/or de-listing of such company becomes necessary in the public interest.

 31-A   Voluntary de-listing: -

 

i)                   Any company intending to seek voluntary de-listing from the Exchange shall intimate to the Exchange, immediately, of the intention of the majority security holders/sponsors to purchase all securities, without exception, from all the security holders with the purpose to de-list the security along with the reasons thereof. Such intimation shall also include minimum price at which the securities are proposed to be purchased.

 

Provided that the minimum purchase price are proposed by the sponsors will be the highest of the benchmark price based on any of the following:

 

a)                  Current Market Price

b)                  Average Market Price (Annualized)

c)                   Break-up Value based on revaluation of assets.

d)                  Earnings Multiplier approach (for profitable companies)

e)                  The maximum price at which the Sponsors had purchased these shares from the open market in the preceding one year.

 

Explanation:

 

a)                 Current Market Price:

 

Current Market Price shall be the closing price on the date the application for de-listing of the company is received by the Exchange.

 

 

 

 

b)                 Average Market Price (Annualized):

 

Average Market Price shall be the daily closing price of shares of the company for the period of three years immediately preceding the date of application for de-listing is received by the Exchange.

 

            c)         Break-up Value based on revaluation of assets:

 

The adjusted Break-up Value which shall be determined by the auditors of the company in accordance with the International Accounting Standards on the basis of the latest audited accounts of the company which must be made to a date not less than 6 months from the date the application is received by the Exchange, on the basis of revalued assets, and such revaluation of the assets must have been undertaken not more than one year prior to the date of the application by category �A� Professional Valuer approved by the Pakistan Banks Association.  

            d)         Earning Multiplier approach (for profitable companies)

 

                        Profitable Companies:

Profitable companies shall be the companies that have earned after tax profit in their last audited accounts or their weighted average EPS of last three years is positive.

                        Fair value = Estimated Earnings * P/E ratio.
 

This approach is based on the identity that a stock�s current price is the product of its actual earning per share and the P/E ratio. The P/E ratio is calculated by dividing the current price by the actual earning per share. To determine the value of stock, both the earnings and the P/E ratio will have to be estimated.

 

Price may be determined as a multiple of the P/E ratio of the related sector as on the date of application for the voluntary buy-back of shares is received by the Exchange. Earning per share may be based on the higher of the latest audited accounts of the companies in that sector or a weighted average earning per share of last 3 years of 50%, 33% and 17% for the latest, second latest and third accounting period respectively of those companies.

 

            i)         The final minimum purchase price of the securities to be de-listed shall be fixed with the approval of the Exchange.

 

At the same time the Exchange shall determine the minimum percentage of securities to be purchased by sponsors to qualify for de-listing and the same will be communicated to the company.

 

ii)                 In case of disagreement of sponsors on minimum percentage to be purchased as determined by the Exchange, the sponsors will file an appeal with the commission within 10 days of receipt of communication of such determination under intimation to the Exchange. The decision taken by the Commission will be final and binding.

 

iii)               The sponsors/majority shareholders shall submit an undertaking that they will abide by these Regulations which pertain to buy-back of shares/voluntary de-listing of securities.

 

iv)               Until the decision on the sponsors� offer for buy-back of shares is taken by the Exchange or the commission, as the case may be, the sponsors will not be allowed to withdraw their such offer.

 

 

31-B    Voluntary de-listing of a security shall be subject to the following: -

 

i)                    Approval of the proposal in general meeting of the company by not less than � of the security holders present in person or by the proxy at such general meeting.

 

ii)                   Compliance by the company with the prescribed procedure, guidelines/criteria and other terms and conditions may be laid down by the Exchange.

 

The Exchange may for any reason whatsoever refuse to accept the proposal of the company, the purchase price and/or the request to de-list the securities.

 

31-C    Procedure for voluntary de-listing: -

 

i)                    A formal application shall be made by the company for de-listing supported by reasons thereof and the proposed purchase price along with non- refundable application fee of Rs. 100,000/- (Rupees One Hundred Thousand only) to be paid by the sponsors.

 

ii)                   On approval by the Exchange of the application, the company shall call a general meeting of its security holders and pass a special resolution approved by not less than � of their number present at such meeting resolving that the securities be de-listed on the terms stipulated by the Exchange. The sponsors will not vote against buy-back/de-listing resolution in the general meeting.

 

iii)                 A copy of special resolution referred to above shall be sent to the Exchange immediately along with a complete list of holders of the security held by the majority security holders and others, their names/category, the number of securities and addresses.

 

iv)                 Together with the application for de-listing, the company must submit an undertaking from a Purchase Agent (who may be a commercial bank, or an investment bank or a member of the Exchange) on behalf of the majority security holders which will constitute an irrevocable open offer to purchase at the relevant purchase price the securities from the other security holders. The said offer to remain valid at least for a period of 60 days or as may be fixed by the Exchange from the date of commencement of purchase. The purchasing agent will provide a bank guarantee in an amount and such format as is demanded by the Exchange to secure this obligation and the said bank guarantee will remain valid till at least 15 days from the expiry date of the said open offer or when all outstanding securities have been purchased by the majority security holders whichever is earlier.

 

Provided that where a member of the Exchange is appointed as Purchase Agent and the total buy-back amount does not exceed Rs. 2.5 million, the requirement of bank guarantee can be replaced with the undertaking of such member of the Exchange on the prescribed format.

 

Provided further that in case of appointment of purchase agent other than a member of the Exchange, all trade shall be routed through a member of the Exchange.

 

Provided further that all the trades during the initial period of 60 days will be conducted on ISE Computerized Trading System only irrespective of marketable lot. The purchase agent will be required to maintain a live bid in the system at the minimum purchase price approved by the Exchange. The purchase price shall be based on market forces, subject to minimum purchase price determined by the Exchange.

 

v)                  The application for de-listing shall be supported by a written consent of the purchase agent to act as agent for purchase of the securities to be de-listed on behalf of the majority security holders as contemplated by these Regulations.

 

vi)                 The company shall convey to all the holders securities other than majority holders on their addresses available in the records of the company through registered post the decision taken in their General Meeting to purchase the securities together with a copy of the special resolution and also publish a notice in this behalf duly approved by the Exchange through two widely circulated newspapers including one of Islamabad.

 

vii)               The company shall also submit the following information on completion of the period of purchase of securities to be de-listed:-

 

a)                  Total number of issued securities (with percentage)

 

b)                  Securities owned by majority security holders before the offer (with percentage)

 

c)                   Securities bought under the offer (with percentage)

 

d)                  Total securities currently owned by majority security holders (with percentage)

 

e)                  Securities still outstanding with majority holders (with percentage)

 

f)                    Amount of Bank Guarantee required @ Rs. ________ calculated as higher of minimum purchase price or the price on the day of closing of the initial offer of the sponsors per outstanding security.

 

viii) a) With regard to the outstanding securities identified in para (e) above, the sponsors shall continue to remain obliged to purchase the same at the higher of minimum purchase price or the price on the day of closing of the initial offer of the sponsors for a  period of 12 months from the day following the expiry of initial buy-back period of 60 days and the sponsors shall submit a bank guarantee in an amount and format acceptable to the Exchange to secure such obligation. 

 

           Provided that the requirement of submission of bank guarantee will not be applicable where a member of the Exchange act as purchase agent on behalf of the sponsors. In such a situation, the purchase agent will be required to submit an undertaking in the format prescribed by the Exchange.

 

b)      The company once allowed de-listing under these Regulations will not be allowed re-listing of any of it�s securities which have been de-listed at least for a period of five years from the date of delisting. However, the Exchange may allow, on case to case basis, listing of such securities on Over-the Counter (OTC) market. 

 

31-D    Time Frame for Completion for Requirements

 

i)                    The company shall immediately convey the decision of its Board of Directors to de-list the securities, provided that intimation of such decision to the Exchange shall be supported with a copy of the relevant resolution passed by the Board of Directors in this regard.

 

ii)                   Within one week of the aforementioned intimation, the company will furnish its sponsors� undertaking to purchase the securities owned by persons other than the sponsors at a purchase price. On receipt of such undertaking, the Exchange shall be empowered by the company within 15 days of the date of such request by the Exchange.

 

iii)              The Board on its own or on the basis of recommendations of the Special Committee, will determine/approve the purchase price. The decision of the Board will be communicated to the sponsors/company and shall also be notified and announced immediately.

 

Provided that any member of the Board and/or Special Committee holding 2% or more shares of the company applying for voluntary de-listing will not participate in the deliberations while the case of the company is considered by the Board/Committee.

 

iv)            The sponsors will be required to convey their acceptance/refusal to the purchase price approved by the Board within 7 days of conveying of the relevant decision to them. 

 

If the company wishes to appeal this decision to the Commission it must do so within 10 days of the decision in which case no further steps will betaken on the de-listing application until the Commission determines the purchase price.

 

v)         Once the purchase price has been finalised either by determination by the Commission in appeal or by the sponsors accepting the price stipulated by the Exchange, the company will be required to comply with the following procedure: -  
 

a)      To obtain approval of the proposal of voluntary de-listing in the general meeting of the holders of the securities within 30 days of the acceptance of sponsors.

b)      After approval of the general meeting, the requirements under Voluntary Delisting Regulations shall be completed within 7 days of the general meeting, to commence the purchase of shares.

c)       The sponsors will purchase the securities for a period of 60 days.

d)      Upon expiry of the said purchase period, the company will submit the relevant documents/information to the Exchange within a period of 21 days.

e)      After receipt of the required documents/information and compliance of the relevant requirements as stipulated by the Exchange, the securities shall stand delisted after a period of 30 days. 

v)                  In case of non-acceptance of the price determined by the Exchange as the purchase price, the company shall file an appeal with the Commission within 10 days of the date of refusal for determining the price under intimation to the Exchange. On finalizing the price by the Commission, the procedure as laid-down above will be followed.

          31-E    Relaxation of Rules:

          Where the Exchange is satisfied that it is not practicable to comply with any requirement of these Regulations in a particular case or class of cases, the Exchange may, for any reason to be recorded, relax such requirement subject to such conditions as it may deem fit.

         31-F    Penalty:

          Whoever fails or refuses to comply with, or contravenes any provision of these Regulations, or knowingly and willfully authorizes or permits such failure, refusal or contravention shall, in addition to any other liability under the Regulations, be also liable to fine not exceeding two hundred thousand rupees for each default, and, in case of continuous failure, refusal or contravention, to a further fine not exceeding five thousand rupees for every day after the first during which such contravention continues.                

X.   LISTING AND ANNUAL FEES

33                     (1)        A company applying for listing on the Exchange, shall pay an initial listing fee equivalent to 0.1% of the PAID‑UP‑CAPITAL subject to a respective minimum and maximum limit of rupees one hundred thousand or rupees one million as the case may be.

Provided that in case of debt instruments or mutual funds, the initial listing fee shall be charged at the rate of 1/25th of 1% of the total value of such instrument/fund subject to a maximum of Rs. 200,000/-

                        (2)        Whenever a listed company increases the paid‑up‑capital of any class or class of its shares, or securities listed on the Exchange, it shall pay to the Exchange a fee equivalent to 0.1% of such increase.

                        (3)        Every listed company shall pay, in respect of each financial year of the Exchange, commencing from 1st July and ending on the 30th June next, an annual listing fee, which shall be payable by or before 30th September in each calendar year, as per following Schedule:‑

 

 Companies having Paid-up Capital                                              Rate of Fee

 

 Upto Rs. 50 million                                                                            Rs. 10,000 per annum

 

 Above Rs. 50 million & upto Rs. 200 million                                      Rs. 15,000 per annum

 

 Above Rs. 200 million                                                                       Rs. 25,000 per annum

 

 

Provided that the issuers of debt instruments would be required to pay a flat amount of Rs. 10,000/- irrespective of the size of the total issue

Provided that the Board may revise the above fees or any of the slabs or add new slabs with the approval of the Authority.

Provided further that every company applying for listing shall pay annual listing fee for the entire financial year of the Exchange along with the listing application irrespective of the date of its listing during that financial year.

                        (4)        The above listing fee or any other sum fixed by the Board shall be payable by 30th September in advance for every financial year.

                        (5)        Failure to pay the annual fee by 30th September shall make the company liable to pay a surcharge at the rate of 1.5% (one and a half percent) per month or part thereof, until payment. However, if reasonable grounds are adduced for non or delayed payment of annual fee, the Exchange may, reduce or, waive the surcharge liability.

                        (6)        A company, applying for enlistment on the Exchange shall, in addition to other fees, pay a sum of Rs. 10,000/‑ as service charges.

34.                    (1)        All Exchange dues shall be paid by, cheques, pay orders or bank drafts payable to the Exchange at any bank branch located in Islamabad.

                        (2)        Without prejudice to the action with the Exchange may take under these Regulations in the event of default in payment of its dues, nothing shall prevent the Exchange from recovering such dues through posting defaulters names on the notice board of the Exchange or by invoking the process of law and obtaining order of a competent court.

35.                    (1)        Without prejudice to various specific or other penalties provided or available under these Regulations the Exchange shall have powers to suspend, or de-list a company or place it on the �Defaulters� Counter� which in the opinion of the Exchange, such company has defaulted or contravened any Listing Regulations;

                        (2)        The suspension of delisting under the preceding sub‑regulation shall be communicated to the company and simultaneously notified to the trade, inter alia, by posting it on the notice board of the Exchange and publishing it, if deemed necessary, in the official Quotation List or a Circular or intimation issued by the Exchange

(3)                 Trading in the shares and securities of the suspended or delisted company shall forthwith cease and shall not be recommenced until the suspension is withdrawn or the listing restored by order of the Board.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 XI. CODE OF CORPORATE GOVERNANCE

 BOARD OF DIRECTORS

 

36.         All listed companies shall encourage effective representation of independent non-executive directors, including those representing minority interests, on their Boards of Directors so that the Board as a group includes core competencies considered relevant in the context of each listed company. For the purpose, listed companies may take necessary steps such that:

a.      Minority shareholders as a class are facilitated to contest election of directors by proxy solicitation, for which purpose the listed companies may:

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

          provide information regarding shareholding structure and copies of register of members to the candidate(s) representing minority shareholders; and

          ? on a request by the candidate(s) representing minority shareholders and at the cost of the company, annex to the notice of general meeting at which directors are to be elected an additional copy of proxy form duly filled in by such candidate(s) and transmit the same to all shareholders in terms of section 178 (4) of the Companies Ordinance, 1984; 

 

(b)  the Board of Directors of each listed company includes at least one independent director representing institutional equity interest of a banking company, Development Financial Institution, Non-Banking Financial Institution (including a modaraba, leasing company or investment bank), mutual fund or insurance company; and

[Explanation: For the purpose of this clause, the expression "independent director" means a director who is not connected with the 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, its associated companies, directors, executives or related parties. The test of independence principally emanates from the fact whether such person can be reasonably perceived as being able to exercise independent business judgment without being subservient to any apparent form of interference.

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

The independent director representing an institutional investor shall be selected by such investor through a resolution of its Board of Directors and the policy with regard to selection of such person for election on the Board of Directors of the investee company shall be disclosed in the Directors' Report of the investor company.]

(c) executive directors, i.e. working or whole time directors, are not more than 75% of the elected directors including the Chief Executive:

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

Provided further that nothing contained in this clause shall apply to banking companies, which are required by Prudential Regulation No.9 for 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 consent to act as such, give a declaration in such consent that they are aware of their duties and powers under the relevant law(s) and the listed companies� Memorandum and Articles of Association and the listing regulations of stock exchanges in Pakistan.

QUALIFICATION AND ELIGIBILITY TO ACT AS A DIRECTOR

iii.      No listed company shall have as a director, a person who is serving as a director of ten other listed companies.

iv.     No person shall be elected or nominated as a director of a listed company if:

a.      his name is not borne on the register of National Tax Payers except where such person is a non-resident; and

b.      he has been convicted by a court of competent jurisdiction as a defaulter in payment of any loan to a banking company, a Development Financial Institution or a Non-Banking Financial Institution or he, being a member of a stock exchange, has been declared as a defaulter by such the stock exchange; and

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

TENURE OF OFFICE OF DIRECTORS

vi.     The tenure of office of Directors shall be three years. Any casual vacancy in the Board of Directors of a listed company shall be filled up by the directors within 30 days thereof.

RESPONSIBILITIES, POWERS AND FUNCTIONS OF BOARD OF DIRECTORS

vii.    The directors of listed companies shall exercise their powers and carry out their fiduciary duties with a sense of objective judgement and independence in the best interests of the listed company.

viii.  Every listed company shall ensure that:

a.      a �Statement of Ethics and Business Practices� is prepared and circulated annually by its Board of Directors to establish a standard of conduct for directors and employees, which Statement shall be signed by each director and employee in acknowledgement of his understanding and acceptance of the standard of conduct;

b.      the Board of Directors adopt a vision/ mission statement and overall corporate strategy for the listed company and also formulate significant policies, having regard to the level of materiality, as may be determined it;

Explanation:

Significant policies for this purpose may include:

          risk management;

          human resource management including preparation of a succession plan;

          procurement of goods and services;

          marketing;

          determination of terms of credit and discount to customers;

          write-off of bad/ doubtful debts, advances and receivables;

          acquisition/ disposal of fixed assets;

          investments;

          borrowing of moneys and the amount in excess of which borrowings shall be sanctioned/ ratified by a general meeting of shareholders;

          donations, charities, contributions and other payments of a similar nature;

          determination and delegation of financial powers;

          transactions or contracts with associated companies and related parties; and    health, safety and environment

 

A complete record of particulars of the above-mentioned policies along with the dates on which they were approved or amended by the Board of Directors shall be maintained.

The Board of Directors shall define the level of materiality, keeping in view the specific circumstances of the company and the recommendations of any technical or executive sub-committee of the Board 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 company;

(d) the following powers are exercised by the Board of Directors on behalf of the company and decisions on material transactions or significant matters are documented by a resolution passed at a meeting of the Board:

          investment and disinvestment of funds where the maturity period of such investments is six months or more, except in the case of banking companies, trusts, mutual funds and insurance companies;

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

          write-off of bad debts, advances and receivables and determination 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 the company may be waived, released, extinguished or relinquished;

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

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

Explanation:

The investment policy shall inter alia state:

          that the modaraba/ Non-Banking Financial Institution shall not invest in a connected person, as defined in the Asset Management Companies Rules, 1995, and shall provide a list of all such connected persons;

          that the modaraba/ Non-Banking Financial Institution shall not invest in shares of unlisted companies; and

          the criteria for investment in listed securities.

The Net Asset Value of each modaraba/ Non-Banking Financial Institution shall be provided for publication on a monthly basis to the stock exchange on which its shares/ certificates are listed.

ix.     The Chairman of a listed company shall preferably be elected from among the non-executive directors of the listed company. The Board of Directors shall clearly define the respective roles and responsibilities of the Chairman and Chief Executive, whether or not these offices are held by separate individuals or the same individual.

MEETINGS OF THE BOARD

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

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

xii.    (xii) The Chairman of a listed company shall ensure that minutes of meetings of the Board of Directors are appropriately recorded. The minutes of meetings shall be circulated to directors and officers entitled to attend Board meetings not later than 30 days thereof, unless a shorter period is provided in the listed company�s Articles of Association.

In the event that a director of a listed company is of the view that his dissenting note has not been satisfactorily recorded in the minutes of a meeting of the Board of Directors, he may refer the matter to the Company Secretary. The director may require the note to be appended to the minutes, failing which he may file an objection with the Securities and Exchange Commission of Pakistan in the form of a statement to that effect.

KEY INFORMATION TO BE PLACED FOR DECISION BY BOARD OF DIRECTORS

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

Significant issues for this purpose may include:

n        annual business plans, cash flow projections, forecasts and long term plans;

n        budgets including capital, manpower and overhead budgets, along with variance analyses;

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

n        internal audit reports, including cases of fraud or irregularities of a material nature;

n        management letter issued by the external auditors;

n        details of joint venture or collaboration agreements or agreements with distributors, agents, etc;

n        promulgation or amendment of a law, rule or regulation, enforcement of an accounting standard and such other matters as may affect the listed company;

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

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

n        default in payment of principal and/or interest, including penalties on late payments and other dues, to a creditor, bank or financial institution or default in payment of public deposit;

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

n        any significant accidents, dangerous occurrences and instances of pollution and environmental problems involving the listed company;

n        significant public or product liability claims likely to be made against the listed company, including any adverse judgement or order made on the conduct of the listed company or of another company that may bear negatively on the listed company;

n        disputes with labour and their proposed solutions, any agreement with the labour union or Collective Bargaining Agent and any charter of demands on the listed company; and

n         payment for goodwill, brand equity or intellectual property.

 

 

ORIENTATION COURSES

xiv.  All listed companies shall make appropriate arrangements to carry out orientation courses for their directors to acquaint them with their duties and responsibilities and enable them to manage the affairs of the listed companies on behalf of shareholders.

CHIEF FINANCIAL OFFICER (CFO) AND COMPANY SECRETARY

APPOINTMENT AND APPROVAL

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

The CFO or the Company Secretary of listed companies shall not be removed 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 affairs of a listed public company or a bank or a financial institution.

xvii.                        No person shall be appointed as the Company Secretary of a listed company unless he is:

a.      a member of a recognized body of professional accountants; or

b.      a member of a recognized body of corporate/ chartered secretaries; or

c.       a lawyer; or

d.      a graduate from a recognized university or equivalent, having at least five years experience of handling corporate affairs of a listed public company or corporation.

 

REQUIREMENT TO ATTEND BOARD MEETINGS

xviii.                       The CFO and the Company Secretary of a listed company shall attend meetings of the Board of Directors.

Provided that unless elected as a director, the CFO or the Company Secretary shall not be deemed to be a director or entitled to cast a vote at meetings of the Board of Directors for the purpose of this clause. Provided further that the CFO and/ or the Company Secretary shall not attend such part of a meeting of the Board of Directors, which involves consideration 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 following effect in the Directors� Report, prepared under section 236 of the Companies Ordinance, 1984:

a.      The financial statements, prepared by the management of the listed company, present fairly its state of affairs, the result of its operations, cash flows and changes in equity.

b.      Proper books of account of the listed company have been maintained.

c.       Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment.

d.      International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and any departure therefrom has been adequately disclosed.

e.      The system of internal control is sound in design and has been effectively implemented and monitored.

f.        There are no significant doubts upon the listed company�s ability to continue as a going concern.

g.      There has been no material departure from the best practices of corporate 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, the fact along with reasons shall be disclosed.

b.      Significant deviations from last year in operating results of the listed company shall be highlighted and reasons thereof shall be explained.

c.       Key operating and financial data of last six years shall be summarised.

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

e.      Where any statutory payment on account of taxes, duties, levies and charges is outstanding, the amount together with a brief description and reasons for the same shall be disclosed.

f.        Significant plans and decisions, such as corporate restructuring, business expansion and discontinuance of operations, shall be outlined along with future prospects, risks and uncertainties surrounding the listed company.

g.      A statement as to the value of investments of provident, gratuity and pension funds, based on their respective audited accounts, shall be included.

h.      The number of Board meetings held during the year and attendance by each director shall be disclosed.

i.         The pattern of shareholding shall be reported to disclose the aggregate number of shares (along with name wise details where stated below) held by:

          associated companies, undertakings and related parties (name wise details);

          NIT and ICP (name wise details);

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

          executives;

          public sector companies and corporations;

          banks, Development Finance Institutions, Non-Banking Finance Institutions, insurance companies, modarabas and mutual funds; and

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

Explanation: For the purpose of this clause, clause (b) of direction (i) and direction (xxiii), the expression �executive� means an employee of a listed company other than the CEO and directors whose basic salary exceeds five hundred thousand rupees in a financial year.

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

FREQUENCY OF FINANCIAL REPORTING

xx.   The quarterly unaudited financial statements of listed companies shall be published and circulated along with directors� review on the affairs of the listed company for the quarter.

xxi.  All listed companies shall ensure that second quarterly financial statements are subjected to a limited scope review by the statutory auditors in such manner and according to such terms and conditions as may be determined by the Institute of Chartered Accountants of Pakistan and approved by the Securities and Exchange Commission of Pakistan.

xxii.                        All listed companies shall in the form and manner specified by the Commission ensure that the annual audited financial statements are sent to every member of the company at least twenty-one (21) days before the Annual General Meeting is held to consider the same.

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

This information may include but shall not be restricted to information regarding a joint venture, merger or acquisition or loss of any material contract; purchase or sale of significant assets; any unforeseen or undisclosed impairment of assets due to technological obsolescence, etc.; delay/ loss of production due to strike, fire, natural calamities, major breakdown, etc.; issue or redemption of any securities; a major change in borrowings including any default in repayment or rescheduling of loans; and change in directors, Chairman or CEO of the listed company.

RESPONSIBILITY FOR FINANCIAL REPORTING AND CORPORATE COMPLIANCE

xxiv.               No listed company shall circulate its financial statements unless the CEO and the CFO present the financial statements, duly endorsed under their respective signatures, for consideration and approval of the Board of Directors and the Board, after consideration and approval, authorize the signing of financial statements for issuance and circulation.

 

It shall be mandatory for the CEO and CFO to have the second quarter and annual accounts (both separate and consolidated where applicable) initialed by the external auditors before presenting it to the audit committee and the Board of Directors for approval.

 

xxv.                        The Company Secretary of a listed company shall furnish a Secretarial Compliance Certificate, in the prescribed form, as part of the annual return filed with the Reg-istrar of Companies to certify that the secretarial and corporate requirements of the Companies Ordinance, 1984 have been duly complied with.

DISCLOSURE OF INTEREST BY A DIRECTOR HOLDING COMPANY�S SHARES

xxvi.                      Where any director, CEO or executive of a listed company or their spouses 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 Company Secretary of his intentions. Such director, CEO or executive, as the case may be, shall also deliver a written record of the price, number of shares, form of share certificates (i.e. whether physical or electronic within the Central Depository System) and nature of transaction to the Company Secretary within four days of effecting the transaction. The notice of the director, CEO or executive, as the case may be, shall be presented by the Company Secretary at the meeting of the Board of Directors immediately subsequent to such transaction. In the event of default by a director, CEO or executive to give a written notice or deliver a written record, the Company 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 prior to 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 the listed 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 any partner 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 of the listed company or any of its associated companies or undertakings:

Provided that where a firm or a partner or his spouse or minor child owns shares in a listed company, being the audit client, prior to the appointment as auditors, such listed company shall take measures to ensure that the auditors disclose the interest to the listed company within 14 days of appointment and divest themselves of such interest not later than 90 days thereof.

 

 

 

CORPORATE OWNERSHIP STRUCTURE

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 stock exchange with the approval of the Securities and Exchange Commission of Pakistan.

DIVESTURE OF SHARES BY SPONSORS/CONTROLLING INTEREST

xxix.                      In the event of divestiture of not less than 75% of the total shareholding of a listed company, other than a divestiture by non-resident shareholder(s) in favour of other non-resident shareholder(s) or a disinvestment through the process of privatization by the Federal or Provincial Government, at a price higher than the market value ruling at the time of divestiture, it shall be desirable and expected of the directors of the listed company to allow the transfer of shares after it has been ascertained that an offer in writing has been made to the minority shareholders for acquisition of their shares at the same price at which the divestiture of majority shares was contemplated. Where the offer price to minority shareholders is lower than the price offered for acquisition of controlling interest, such offer price shall be subject to the approval of the Securities and Exchange Commission of Pakistan.

AUDIT COMMITTEE

COMPOSITION

xxx.                        The Board of Directors of every listed company shall establish an Audit Committee, which shall comprise not less than three members, including the chairman. Majority of the members of the Committee shall be from among the non-executive directors of the listed company and the chairman of the Audit Committee shall preferably be a non-executive director. The names of members of the Audit Committee shall be disclosed in each annual report of the listed company.

FREQUENCY OF MEETINGS

xxxi.                      The Audit Committee of a listed company shall meet at least once every quarter of the financial year. These meetings shall be held prior to the approval of interim results of the listed company by its Board of Directors and before and after completion of external audit. A meeting of the Audit Committee shall also be held, if requested by the external auditors or the head of internal audit.

ATTENDANCE AT MEETINGS

xxxii.                     The CFO, the head of internal audit and a representative of the external auditors shall attend meetings of the Audit Committee at which issues relating to accounts and audit are discussed.

Provided that at least once a year, the Audit Committee shall meet the external auditors without the CFO and the head of internal audit being present.

Provided further that at least once a year, the Audit Committee shall meet the head of internal audit and other members of the internal audit function without the CFO and the external auditors being present.

TERMS OF REFERENCE

xxxiii.                   The Board of Directors of every listed company shall determine the terms of reference of the Audit Committee. The Audit Committee shall, among other things, be responsible for recommending to the Board of Directors the appointment of external auditors by the listed company�s shareholders and shall consider any questions of resignation or removal of external auditors, audit fees and provision by external auditors of any service to the listed company in addition to audit of its financial statements. In the absence of strong grounds to proceed otherwise, the Board of Directors shall act in accordance with the recommendations of the Audit Committee in all these matters.

The terms of reference of the Audit Committee shall also include the following:

a.      determination of appropriate measures to safeguard the listed company�s assets;

b.      review of preliminary announcements of results prior to publication;

c.       review of quarterly, half-yearly and annual financial statements of the listed company, prior to their approval by the Board of Directors, focusing on:

n        major judgmental areas;

n        significant adjustments resulting from the audit;

n        the going-concern assumption;

n        any changes in accounting policies and practices;

n        compliance with applicable accounting standards; and

n        compliance with listing regulations and other statutory and regulatory requirements.

d.      facilitating the external audit and discussion with external auditors of major observations arising from interim and final audits and any matter that the auditors may wish to highlight (in the absence of management, where necessary);

e.      review of management letter issued by external auditors and management�s response thereto;

f.        ensuring coordination between the internal and external auditors of the listed company;

g.      review of the scope and extent of internal audit and ensuring that the internal audit function has adequate resources and is appropriately placed within the listed company;

h.      consideration of major findings of internal investigations and management's response thereto;

i.         ascertaining that the internal control system including financial and operational controls, accounting system and reporting structure are adequate and effective;

j.        review of the listed company�s statement on internal control systems prior to endorsement by the Board of Directors;

k.       instituting special projects, value for money studies or other investigations on any matter specified by the Board of Directors, in consultation with the Chief Executive and to consider remittance of any 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 the Board of Directors.

REPORTING PROCEDURE

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

INTERNAL AUDIT

xxxv.                    There shall be an internal audit function in every listed company. The head of internal audit shall have access to the chair of the Audit Committee.

xxxvi.                   All listed companies shall ensure that internal audit reports are provided for the review of external auditors. The auditors shall discuss any major findings in relation to the reports with the Audit Committee, which shall report matters of significance to the Board of Directors.

EXTERNAL AUDITORS

xxxvii.                 No listed company shall appoint as external auditors a firm of auditors which has not been given a satisfactory rating under the Quality Control Review 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 the International Federation of Accountants' (IFAC) Guidelines on Code of Ethics, as adopted by the Institute of Chartered Accountants of Pakistan.

xxxix.                   The Board of Directors of a listed company shall recommend appointment of external auditors for a year, as suggested by the Audit Committee. The recommendations of the Audit Committee for appointment of retiring auditors or otherwise shall be included in the Directors� Report. In case of a recommendation for change of external auditors before the elapse of three consecutive financial years, the reasons for the same shall be included in the Directors� Report.

xl.     No listed company shall appoint its auditors to provide services in addition to audit except in accordance with the regulations and shall require the auditors to observe applicable IFAC guidelines in this regard and shall ensure that the auditors do not perform management functions or make management decisions, responsibility for which remains with the Board of Directors and management of the listed company.

xli.   (A) All Listed Companies in the Financial Sector shall change there External Auditor every five years. Financial Sector, for this purpose, means Banks, Non Banking Finance Company (NBFCs), Modarabas and Insurance Company; and

      (B) All Listed Companies other than those in the financial sector shall, at a minimum rotate the engagement partner after every five years

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

xliii. Every listed company shall require external auditors to furnish a Management Letter to its Board of Directors not later than 30 days from the date of audit report.

xliv.                        Every listed company shall require a partner of the firm of its external auditors to attend the Annual General Meeting at which audited accounts are 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 the best practices of corporate governance set out above.

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

xlvii.                       Where the Securities and Exchange Commission of Pakistan is satisfied that it is not practicable to comply with any of the best practices of corporate governance in a particular case, the Commission may, for reasons to be recorded, relax the same subject to such conditions as it may deem fit.


 

 

Appendix

Clause Reference

Brief Description

Manner of Enforcement

Effective Date

(i)

Representation of independent non-executive directors, including those representing minority interests, on the Board of Directors of listed companies

Voluntary

When next election is due

(ii)

Filing of consent by directors

Mandatory

When next election is due

(iii) and (iv)

Qualification and eligibility to act as a director

Mandatory

When next election is due

(v)

Election/ nomination of a broker on the Board of Directors

Voluntary

When next election is due

(vi)

Tenure of office of directors

Mandatory

Immediate

(vii), (viii)and (ix)

Responsibilities, powers and functions of the Board of Directors

Mandatory

July 1, 2024

(x), (xi)and (xii)

Meetings of the Board of Directors

Mandatory

Immediate

(xiii)

Significant issues to be placed for decision by the Board of Directors

Mandatory

July 1, 2024

(xiv)

Orientation courses

Mandatory

July 1, 2024

(xv)

Appointment and removal of CFO and Company Secretary

Mandatory

July 1, 2024

(xvi) and(xvii)

Qualification of CFO and Company Secretary

Mandatory

Immediately for new appointments

(xviii)

Requirement for CFO and Company Secretary to attend Board meetings

Mandatory

Immediate

(xix)

The directors' report to shareholders

Mandatory

For accounting periods ending on or after June 30, 2024

(xx), (xxi),(xxii) and

(xxiii)

Frequency of financial reporting

Mandatory

For accounting periods ending on or after June 30, 2024

(xxiv) and(xxv)

Responsibility for financial reporting and corporate compliance

Mandatory

For accounting periods ending on or after June 30, 2024

(xxvi)

Disclosure of interest by a director holding company's shares

Mandatory

Immediate

 

 

 

(xxvii)

Auditors not to hold shares

Mandatory

Immediate

(xxviii)

Corporate ownership structure

Mandatory

July 1, 2024

(xxix)

Divestiture of shares by sponsors/ controlling interest

Mandatory

July 1, 2024

(xxx),(xxxi),(xxxii),

Audit Committee

Mandatory

July 1, 2024

(xxxiii) and(xxxiv)

 

 

 

(xxxv) and (xxxvi)

Internal Audit

Mandatory

July 1, 2024

(xxxvii), (xxxviii),

Appointment of external auditors

Mandatory

When next appointment of auditors is due

(xxxix) and (xl)

 

 

(xli)

Rotation of external auditors

Mandatory

When next appointment of auditors is due

(xlii)

Appointment of a partner or employee of the external auditors in a key position within the listed company

Mandatory

Immediately for new appointments

(xliii)

Management letter issued by external auditors

Mandatory

For accounting periods ending on or after June 30, 2024

(xliv)

Attendance of external auditors at Annual General Meeting

Mandatory

For accounting periods ending on or after June 30, 2024

(xlv) and (xlvi)

Compliance with the Code of Corporate Governance

Mandatory

For accounting periods ending on or after June 30, 2024

 

 

 XII.    TRANSFER PRICING

 

37        (1)        No listed company shall use a price other than the arm�s length price except in rare circumstances where, subject to the approval of the Board of Directors and for reasons to be recorded in writing, it is in the interest of the company to do so.

 

            (2)        The Board of Directors of a listed company shall approve the transfer pricing policy for a related party transaction before such transaction is entered into.

 

            (3)        For each related party, every listed company shall prepare a statement to record the methods for determining transfer prices of various types of transactions with such party, which shall form the basis on which these transactions are entered into.

 

            (4)        Every listed company shall maintain a party wise record of transactions, in each financial year, entered into with related parties in that year along with all such documents and explanations as shall enable the ascertainment of arm�s length price of the transactions. The record of related party transaction shall include the following particulars in respect of each transaction:

 

(i)         Name of related party;

(ii)        Nature of relationship with related party;

(iii)       Nature of transaction;

(iv)       Amount of transaction;

(v)        Terms and conditions of transaction, including the amount of consideration received or given;

(vi)       Basis or method for determining such consideration;

(vii)      Detailed assumption and estimates underlying the transfer price and details of computation of transfer price; and

(viii)      A statement whether, in management�s opinion, such consideration is an arm�s length price along with appropriate explanation in case of an exception to arm�s length price.

 

            (5)        Where an officer (as defined in the Companies Ordinance, 1984) of a listed company possesses knowledge that a transaction may not be consummated at an arm�s length price, he/she shall inform the same to the Company Secretary at least 15 business days before the execution of transaction, giving reasons for departure from the arm�s length price. The Company Secretary shall immediately notify the matter to the Board of Directors.

 

            (6)        The record of all related party transactions (including exceptional transactions that are not executed at arm�s length price) shall be placed before the �Audit Committee of the company.

 

            (7)        The record of all related party transaction shall also be placed before the Board of Directors at each Board meeting for formal approval.

 

            (8)        The related party transactions which are not executed at arm�s length price will also be placed separately at each Board meeting along with necessary justification for consideration and approval of the Board and before the Audit Committee of the company.

 

            (9)        The listed companies shall present the record of related party transactions together with all relevant documents, agreements, calculations and explanations to the statutory auditor for the purposes of the statutory audit.

 

            (10)      All listed companies shall publish and circulate a statement along with their annual reports to setout the status of their compliance with the best practices on Transfer Pricing as setout above.

 

            (11)      All listed companies shall ensure that statement of compliance with the best practices of Transfer Pricing is reviewed and certified by statutory auditors.

 

 

 

 

 

                                                         F O R M - I

 FORM OF APPLICATION UNDER SECTION 9 OF THE SECURITIES AND EXCHANGE ORDINANCE 1969 FOR LISTING A SECURITY ON STOCK EXCHANGE.

                                                                                                            Dated:______________

 The Secretary

Islamabad Stock Exchange (Guarantee) Limited

Islamabad.

 Dear Sir,

 We hereby apply for the listing of our  ________________________________________

on your Stock Exchange.                                                           (Name of Company)

 2.         Necessary information and documents as required in the annexure to this form are furnished.

 

Yours faithfully,

                                                                                                                    ____________________

SIGNATURE & ADDRESS

  

Copy to: 

The Securities and Exchange Commission, ISLAMABAD.

 

 

 

                                                    ANNEXURE TO FORM - I

 The following particulars and documents shall be annexed to the listing application, namely:

 *1.        Memorandum & Articles of Association and, in case of Participatory redeemable Capital, a copy of the trust deed.

 *2.        Copies of prospectus issued by the Company in respect of any security already listed on the Stock Exchange.

 *3.        Copies of the balance sheets and audited accounts for the last five completed years or for a shorter number of years if the company has been in existence only for such years.

 **4.      A brief history of the company since incorporation giving details of its activities including any re-organization, changes in its capital structure and borrowings.

 **5.      A statement showing:-

                         (a)        dividends and cash bonuses paid during the last 10 years or such shorter period as the company may have been in existence;

                         (b)        dividends or interest in arrears, if any.

 **6.      Certified copies of agreements or other documents relating to arrangements with or between:

             (a)        vendors and/or promoters

            (b)        underwriters

            (c)        brokers

 **7.      Certified copies of agreements with:-

             (a)        managing agents

            (b)        selling agents

            (c)        managing director and technical directors

 **8.      A statement containing particulars, dates of and all parties to all material contracts agreements (including agreements for technical advice and collaboration), concessions and similar other documents except those entered into in the normal course of the company's business or intended business together with a brief description of the terms of such agreements.

 **9.      Certified copies of the agreements with the NIT, ICP, PICIC, IDBP and any other financial institution.

 **10.    Names and Addresses of the directors and persons holding ten percent or more of any class of equity security as on the date of application together with the number of share or debentures held by each.

 *11.      Particulars of security for which listing is sought.

 *12.      Additional information/documents that may be called by the Exchange.

 Note:

 *          To be submitted alongwith the application.

**         May be submitted at your convenience.

 

 

 

 

 

                                    

 

                                                           F O R M - II

               FORM FOR SUBMISSION OF UNDERTAKING AND PAYMENT OF FEES*

                                                                                                                  Dated:________________

The Secretary

Islamabad Stock Exchange (Guarantee) Limited

Islamabad.

                                          Re: LISTING ON THE STOCK EXCHANGE

             With reference to our Listing application under Section 9 of the Securities and Exchange Ordinance, 1969, we enclose herewith the following:-

 

            (1)        An unconditional undertaking under the Common Seal of the Company duly signed in accordance with the provisions contained in our Articles of Association.

 

            (2)        *A cheque of Rs.__________________ towards annual Listing Fee as per your Listing Regulations.

 

                                                                                                                                     Yours faithfully

                                                                                                                                    ____________

                                                                                                                                       SIGNATURE  

 

 Note: *If Initial Listing Fee have not been waived by ISE

                                              

 

 

 

      ANNEXURE TO FORM - II

 FORM OF UNCONDITIONAL UNDERTAKING UNDER LISTING REGULATION NO. 5

                                          ON NON-JUDICIAL STAMP PAPER

                                                                                              Dated: _______________

The Governing Board of Directors

Islamabad Stock Exchange (Guarantee) Limited

Islamabad.

                                                            U N D E R T A K I N G

We undertake, unconditionally, to abide by the Listing Regulations of the Islamabad Stock Exchange (Guarantee) Limited which presently are, or hereinafter may be in force.

 We further undertake:-

 (1)        That our shares and securities shall be quoted on the Ready Quotation Board and/or the Cleared List at the discretion of the Exchange.

 (2)        That the Exchange shall not be bound by our request to remove the shares of securities from the Ready Quotation Board and/or the Cleared List.

 (3)        That the Exchange shall have the right, at any time to suspend or remove the said shares or securities for any reason which the Exchange consider sufficient in public interest.

 (4)        That such provisions in the Articles of Association of our company or in any declaration or agreement relating to any other security as are or otherwise not deemed by the Exchange to be in conformity with the Listing Regulations of the Exchange shall, upon being called upon by the Exchange, be amended to supersede the Articles of Association of our company or the nominee relating to the other securities to the extent indicated by the Exchange for purposes of amendment and we shall not raise any objection in relation to a direction by the Exchange for such amendment; and

 (5)        That our company and/or the security may be de-listed by the Exchange in the event of non-compliance and breach of this undertaking.

                                                                                                                                    Yours faithfully,  

(Signature of authorized person)                Common seal of the company

 

 

 

 

 

                                                          COMPANY PROFILE

                                     (For Companies Already Listed at other Exchanges)

 Name of Company:______________________________

Address (Registered Office): ______________________

Telephone Numbers:_____________________________

Mills - Other Addresses:__________________________

Telephone Numbers:_____________________________

Board of Directors:_____________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

 Auditors:_________________________________________________________________

________________________________________________________________________

Legal Advisors:_________________________________________________________________

________________________________________________________________________

Bankers:_________________________________________________________________

________________________________________________________________________

________________________________________________________________________

 Registrar of Shares:_______________________________________________________________

 

 

 

 

 

 

Appendix 1

 

ISSUE/OFFER OF SHARES THROUGH BOOK BUILDING

 

 

1    Eligibility:

 

A public limited company or a body corporate which intends to issue shares to the general public under Section 57 of the Companies Ordinance, 1984 and makes an application to a stock exchange for listing of its shares or an Offeror who intends to offer shares under Section 62 of the Companies Ordinance, 1984 and makes an application to a stock exchange for listing of such shares, where applicable, and is in compliance with Listing Regulations of the stock exchange, is eligible to issue/offer its shares through Book Building mechanism.

 

2.   Offer through Book Building:

 

A Company or a body corporate or an Offeror, which fulfills the eligibility criteria mentioned in clause 4 above, may subject to the requirements specified under this appendix of the Regulations, offer shares through Book Building process subject to the following conditions:

 

(a)             not more than 75% of the total offer shall be allocated for offer through book building process to institutional investors and HNWI; and

(b)             not less than 25% of the total offer shall be allocated for offer to the general public �.

 

  1. Procedure of Issue/Offer under Book Building Process:

 

3.1               The Issuer or Offeror, as the case may be, proposing to offer shares to the Institutional Investors and HNWI through the book building process shall appoint a Lead Manager (LM) and a Book Runner (BR). An Issuer/Offerer need not appoint a LM, if so desired by it, provided such Issuer/Offerer is eligible to act as LM under this appendix of the Regulations.  Nothing in this appendix of the Regulations shall restrict an Issuer/ Offerer to appoint a single person as Book Runner and Lead Manager or to appoint more than one Book Runner or Lead Manager.

 

3.2               The Issuer/Offeror in consultation with LM and BR shall issue a preliminary prospectus to selected Institutional Investors and HNWIs.

 

3.3               Apart from meeting the disclosure requirements as specified under various clauses of this appendix of the Regulations and under various provisions of the Companies Ordinance, 1984, the following disclosures shall be suitably made in the preliminary prospectus:

 

 

(i)                  The particulars of LM, BR, the share registrars and the bankers to the issue/offer             etc.;

(ii)                Role and functions of LM and BR

(iii)               The following accounting ratios, shall be given in a separate para under the heading           �Financial Ratios� for each of the accounting periods for which the financial            information is given:

a.                   EPS, where applicable, as adjusted for changes in capital;

b.                   P/E ratio, where applicable;

c.                   Break-up value per share / Net-Asset value per share;

d.                   Return on Assets and Average return on net-worth in the last five years (where  applicable);

 

Note: The accounting ratios disclosed in the prospectus should be calculated after giving effect to the consequent increase of capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital shall be exercised.

 

(iv)              The dates and time of opening and closing of the bidding period;

(v)                The method and process of bidding;

(vi)              Mechanism for determination of the strike price containing illustration, for easy understanding, based on hypothetical data;

(vii)             Basis of allotment of shares out of Book Building offer;

(viii)           The addresses of the bid collection centres; and

(ix)              Separate statements by both the Issuer/Offerer and LM confirming that all the material information as required under the Companies Ordinance, 1984 and this this appendix of the Regulations have been disclosed in the prospectus and that whatever stated in the prospectus and the supporting documents is true and correct             to the best of their knowledge and belief and that nothing has been concealed.

 

3.4        The preliminary prospectus/offer for sale document shall, after clearance by the stock exchange(s), be submitted to the Commission for approval under Section 57 or Section 62 of the Companies Ordinance, 1984 as the case may be;

 

3.5        Copy of the preliminary prospectus approved by the Commission shall be circulated by the Issuer/Offerer through LM and BR to the prospective institutional investors and HNWI and shall also be placed on the websites of the Issuer/Offeror, LM and BR;

 

3.6        In addition to circulation of the preliminary prospectus in the manner as mentioned in para 3.5 above, an advertisement, approved by the Commission, shall be published at least in one Urdu and one English daily Newspaper having wide circulation in the federal and all the provincial capitals, inviting the institutional investors and HNWI to participate in the bidding;

 

3.7        After approval of the preliminary prospectus by the Commission, LM and BR may jointly conduct awareness campaigns like advertisement, road shows, presentations, meetings etc.;

 

Note:    The Issuer/Offerer shall obtain prior approval of the Commission for issue, circulation and publication of advertisement, if any, regarding the issue/offer of shares. 

 

3.8        The electronic system/software used by BR in the book building process may be subject to audit/examination by the Commission directly or through stock exchange(s) or through other persons appointed by the Commission for this purpose where required;

 

3.9        LM and BR shall be entitled to remuneration for arranging and conducting the Book Building process and all the expenses including remuneration of LM and BR shall be disclosed in the preliminary prospectus; and

 

3.10      In case the Issuer/Offerer does not receive bids for the minimum number of shares offered at floor price or in the absence of the floor price, at any other price acceptable to the Issuer/Offerer, it may withdraw the offer.

 

 

4.         Main Parties to the Issue/Offer and their role & responsibilities:

 

4.1               The Issuer/Offerer:   

 

The Issuer/Offerer shall be responsible to;

 

                        (i)         appoint LM, save as provided in para 3.1, and BR;

(ii)        ensure that BR has adequate infrastructure to properly undertake and perform book building process on its behalf;

                        (iii)       obtain all approvals/consents/NOCs/clearance relating to the issue/offer;

(iv)              ensure that all disclosures as required under the Companies Ordinance, 1984 and this appendix of the Regulations have been made in the prospectus;

(v)                ensure that all the documents required by the Commission to be submitted along with the application under Section 57 or 62, as the case may be, have been provided. In case certain documents are to be provided later on, list of all such documents and reason for its late submission should be provided in the application under Section 57 or 62 as the case may be;

(vi)              ensure that whatever stated in the prospectus and the supporting documents is true and correct to the best of their knowledge and belief and that nothing has been concealed;

(vii)             submit final report about issue/circulation/publication of the prospectus, subscription received, strike price discovered, basis of allotment, refund made and related matters within 30 days of the last date for public subscription to the Commission;  and

(viii)      maintain record of the issue/offer, based on book building process, for a period of at least three years from the date of closing of book building process.

 

4.2               The Lead Manager:  

 

The Lead Manager to the issue/offer shall be responsible to;

 

(i)      conduct awareness campaigns like presentations, meetings, road shows etc jointly with BR;

(ii)     ensure that all disclosures as required under the Companies Ordinance, 1984  and this appendix of the Regulations have been made in the prospectus;

(iii)    ensure that necessary infrastructure and electronic system/software is available to collect bids and to carry out book building process in a fair, efficient and transparent manner;

(iv)        obtain, on behalf of the Issuer/Offerer, all approvals/consents/NOCs relating to the issue/offer;

 

4.3               The Book Runner:    

 

The Book Runner to the issue/offer shall be responsible to;

 

(i)         conduct awareness campaigns like presentations, meetings, road shows etc. jointly with LM;

(ii)        arrange and ensure that necessary infrastructure and electronic system/software is available to collect bids and to carry out book building process in a fair, efficient and transparent manner;

(iii)       collect bid applications and applications� money, security, margin as the case may be from the Institutional Investors and HNWI in the manner as mentioned in this appendix of the Regulations.

(iv)       put serial number, date and time on each bidding form at the time of  collection of the same from the bidders;

(v)        vet the bidding applications;

(vi)              build an order book showing demand for the shares at various prices;

(vii)             discover the strike price at the close of the bidding period;

(viii)           enter into underwriting agreement with the Issuer/Offerer; and

(ix)              maintain record of the bids received for subscription of the shares.

 

5.                   Underwriting:

 

The offering of shares through book building should be compulsorily underwritten in the following manner:

(a)    BR shall enter into an underwriting agreement with the Issuer/Offerer indicating the number of shares that it would underwrite at the Strike price and the underwriting Commission/Fee to be paid to BR;

(Note:      Purpose of the underwriting of the Book Building Offer is to cover the risk of default/back out by any of the successful bidders.)

(b)    the Book Building Offer shall be underwritten within 2 working days of the closing of bidding period; and

(c)    In the event, a bidder backs out of his commitment, BR shall, save as provided in para 3.10, be responsible for subscribing to the amount involved.

 

6.                   Publication of the Final Prospectus:

 

On finalization of the underwriting arrangement LM shall, on the same day or on any other day but not later than the third day of the closing of bidding period, shall submit application to the Stock Exchange(s) concerned for allocation of dates for publication of the final prospectus and subscription of shares by the general public.

 

The final prospectus in full or in abridged form must be published within ten working days of the closing of the bidding period in the manner as specified in Section 53 of the Companies Ordinance, 1984.

 

Public subscription for the shares shall be held at any date(s) within thirty days of the publication of the final prospectus but not earlier than seven days of such publication.

 

7.   Bidding Form:

 

7.1               Standardised bidding forms shall be prescribed by the BR;

 

7.2               Bids shall be submitted through the Bid Collection Centres on the standard bidding form duly filled in and signed in duplicate;

 

7.3               The bidding form shall be serially numbered at the bid collection centres and date and time stamped, at the time of collection of the same from the bidders;

 

7.4               The serial number may be system generated or stamped with an automatic numbering machine;

 

7.5               The bidding form shall be issued in duplicate signed by the investor and countersigned by the BR, with first copy for BR, and the second copy for the investor;

 

7.6               The identities of the investors participating in the bidding process shall not be made public;

 

8.   Procedure for bidding:

 

8.1        The method and process of bidding shall be subject to the following:

 

8.1.1     Bids can be at a �limit price� or at �strike order� or can be a �step bid�;

8.1.2     The institutional investors and HNWI shall place their bids through BR who shall vet the bid forms;

8.1.3     The institutional investors and HNWI shall have the right to revise or withdraw their bids during the bidding period.

 

8.2        The BR shall collect an amount to the extent of 100% of the application money as margin money in respect of bids placed by HNWI;

 

8.3        The BR shall collect an amount of not less than 10% of the application money as margin money in respect of bids placed by institutional investors. However, at least 25% margins shall be collected in respect of bids placed by institutional investors having credit rating  grade below AA(double A);

 

8.4        BR may reject a bid placed by an institutional investors and/or HNWI for reasons to be recorded in writing and the reasons should be disclosed to such bidder forthwith. Decision of BR shall not be challengeable by the bidder or its associates;

 

8.5        BR shall maintain record of the bids received for bidding of the shares;

 

8.6        BR on receipt of the bids shall build an order book showing the demand for shares at various prices;

 

8.7        BR shall approach and circulate the preliminary prospectus to a maximum number of the institutional investors and HNWI, but not less than ten in each category, inviting them for participation in the bidding process;

 

8.8        At the close of the bidding period, the Issuer/Offeror in consultation with LM and BR shall determine the strike price;

 

8.9        The offer price to general public shall be equal to or at a discount to the strike price;

 

8.10      Once the strike price is determined all those bidders whose bids have been found successful shall become entitled for allotment of shares;

 

8.11      Successful bidders shall be intimated, within one working day of the closing of the bidding period, the strike price and the number of shares provisionally allotted to each of them. The successful institutional bidders shall, within three working days of the closing of the bidding period, deposit the balance amount as consideration against allotment of shares. Where a successful bidder defaults in payment of shares allotted to him, the margin money deposited by such bidder shall be forfeited;

 

8.12      Margin money of the unsuccessful bidders shall be refunded within three working days of the close of the bidding period;

 

8.13      The Issuer/Offeror shall open two separate bank accounts for collection of applications� money, one each for both the Book Building offer and the Public Issue/ offer; and

 

8.14      Final allotment of shares out of the Book Building Offer shall be made after receipt of full subscription money from the successful bidders; however, shares to such bidders shall be issued/ transferred at the time of issuance/transfer of shares out of the Public Issue/ Offer to the successful applicants.

 

9.       Provisional listing:

 

The company whose shares are issued/offered may in accordance with the �Regulations for Future Trading in Provisionally Listed Companies�, of the Stock Exchange(s) concerned be provisionally listed for futures trading and for quotation of its shares from the date of publication of the final prospectus in the Newspapers.

 

10.  Maintenance of Books and Record:

 

10.1      The Issuer/Offerer, LM, BR and other intermediaries associated with the issue/offer of shares shall maintain record of the issue/offer for a period of at least three years from the closing of the public subscription list; and

 

10.2      The Commission shall have the right to call such information/documents as it deems fit from the Issuer/Offeror, LM, BR and other intermediaries associated with the issue/offer. The Commission may also inspect such records and books which are maintained by the Issuer/Offeror, LM, BR and other intermediaries involved in the issue/offer.

 

11. Relaxation:

 

Where the Exchange is satisfied that it is not practicable to comply with any of the requirement(s) specified in this appendix of the Regulations, in a particular case or class of cases, the Exchange may, for reason(s) to be recorded, relax such requirement(s) subject to such conditions as it may deem fit, with the approval of the Commission.