PRIVATISATION (MODES AND PROCEDURE) RULES, 2001

Government of Pakistan
Ministry of Privatisation
Privatisation Commission

Islamabad, the 22nd January 2007

Notification

S.R.O. (I)/2001. In exercise of powers conferred by section 40 of the Privatisation Commission Ordinance, 2000 (LII of 2000), read with sections 22 and 25 thereof, the Privatisation Commission, with the approval of the Federal Government, hereby makes the following rules, namely :-

THE PRIVATISATION (MODES AND PROCEDURE) RULES, 2001

1. Short title and commencement. — (1) These rules may be called the Privatisation (Modes and Procedure) Rules, 2001.

(2) They shall come into force at once.

2. Definition. — (1) In these rules, unless there is anything repugnant in the subject or context :-

(a) “adviser” means an external adviser hired by the Commission with the approval of the Board to advise on a particular privatisation process or any other ancillary activity leading to privatisation;

(b) “negotiated sale process” means the negotiations between the Commission and an interested party for the sale and transfer of the property to be privatised where the conditions specified in sub rule (1) of rule 6 apply; and

(c) “Ordinance” means the Privatisation Commission Ordinance, 2000 (LII of 2000)

(2) All other terms and expressions used, but not defined in these rules, shall have the same meanings as assigned to them in the Ordinance.

3. Manner and procedure for privatisation. — (1) The manner for carrying out the privatisation programme under section 22 of the Ordinance and the procedure for modes of privatisation under section 25 thereof shall, if, and to the extent, the Commission deems necessary, include

(a) legal, technical and financial due diligence of the property being privatised in order to, inter alia,

(i) identify any obstacles to privatisation and suggest, where possible, ways to remove them;

(ii) allow a fair and independent valuation of the property being privatised; and

(iii) prepare a suitable information memorandum together with other marketing instruments;

(b) pre-qualification of prospective bidders to evaluate, where a privatisation requires it, that the prospective bidders are technically and financially in a position to own, manage and operate the assets being privatised;

(c) preparation of bid documents which shall include instructions to bidders and proforma sale instruments and the bid documents shall include appropriate disclaimers to protect the Federal Government, Commission and their respective officers, employees, consultants and advisers in respect of the information provided to the bidders;

(d) holding of pre-bid conferences to discuss concerns of prospective bidders;
(e) creation of an enabling environment; and
(f) carrying out of a bidding process.

(2) Subject to the terms of appointment of an adviser, where an adviser has been appointed for the privatisation, it shall carry out or advise on any or all of the steps specified in clauses (a) to (f) of sub – rule (1).

4. Approval or rejection of highest ranked bidder. — (1) Save in the case of a negotiated sale process, the Commission shall carry out a bidding process which is suited to the needs of the privatisation with the objective of selecting the highest ranked bidder amongst the bidders that he, -
(a) has satisfied the pre-qualification criteria determined by the Commission, if required; and
(b) complied with instructions for bidding provided by the Commission to bidders.
(2) Upon selection of a highest ranked bidder as specified in sub-rule (1), the Board shall refer the matter for approval, or rejection of such highest ranked bidder with full justification, to the Cabinet.

5. Additional modes of privatisation. — In terms of clause (f) of section 25 of the Ordinance, there shall be the following additional modes of privatisation namely:-
(a) public offering of shares other than through a stock exchange; and

(b) sale of shares, assets, business and property to a person that has a pre-emptive right to acquire the same (or any part thereof) subject to fulfillment of conditions attached to such rights.

6. Negotiated sale. — (1) The Commission may adopt the negotiated sale process for any of the modes of privatisation specified in section 25 of the Ordinance and rule 5 of these rules, if -
(a) in the opinion of the Board, sufficient interest for a privatisation has not been received;

(b) the Board has recommended to the Cabinet and the Cabinet has authorised the Commission to initiate the negotiated sale process;

(c) the Board has approved the party or parties interested in purchasing the property being privatised;
(d) a team for carrying out the negotiated sale process has been constituted by the Board which shall include a representative from the Ministry under whose jurisdiction the entity being privatized falls; and
(e) the Board has delegated full power to the negotiation team for carrying out the negotiated sale process and defined the parameters for negotiation.

(2) On conclusion of the negotiated sale process, the terms and conditions of the transfer of the property to be privatised to the interested party shall be submitted to the Cabinet for consideration and approval.
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No. F. 11(1)L/PC/2000-P&C
Munir Ahmed
Director