THE SECURITIES AND EXCHANGE RULES, 1971
[Published in
Extraordinary Gazette, dated 19th March, 1971]
S.R.O. 92 (I)/71.- In exercise of the powers conferred by
section 33 of the Securities and Exchange Ordinance, 1969 (XVII of 1969), read
with the Ministry of Finance
Notification No. S.R.O. 261(I)/70, dated the 26th October, 1970, the
Securities and Exchange [Commission][1]
of Pakistan is pleased to make the following rules, namely:-
1.
Short title and commencement.-(1) These rules may be
called the Securities and Exchange Rules, 1971.
(2) They shall come into force at once.
2.
Definitions.-
In these, rules, unless the context otherwise requires,-
(a)
[Commission means Securities and Exchange Commission of
Pakistan established under Securities and Exchange Commission of Pakistan Act,
1997 (XLII of 1997)][2].
(b)
“Chartered Accountant” means a person who is a chartered
accountant within the meaning of the Chartered Accountants Ordinance, 1961 (X
of 1961);
(c)
“Form” means a form set out in the First Schedule;
[(d)][3] “net capital” means excess of current assets
over the liabilities determined in accordance with the Third Schedule to these
rules;
(e)
“officer” in relation to an issuer includes managing
agents, manager, secretary or accountant of the issuer and any other person who
by virtue of his office may be in possession of any material information with
regard to the affairs of the issuer;
(f)
“Ordinance” means the Securities and Exchange
Ordinance, 1969 (XVII of 1969);
(g)
“section” means section of the Ordinance.
3. Qualifications for stock exchange membership, etc.-[The
qualifications for
membership of, and admission
into, a stock exchange, shall be as follows][4]:
(a) No person shall be eligible to be a
member of a stock exchange if
(i)
he is less than twenty-one years of age;
(ii)
he is not a citizen of Pakistan;
(iii)
he is a lunatic or a person of unsound mind;
(iv)
he has been convicted of an offence involving fraud or
breach of trust;
(v)
he has been adjudicated as insolvent or has suspended
payment or has compounded with his
creditors;
(vi)
he has not had experience in the business of securities
for a period of not less than two years:
Provided that the regulations
of a stock exchange may authorise the governing body thereof to waive
compliance with the foregoing condition relating to experience in the business
of securities if such person is, in respect of means, integrity and background,
considered by the governing body to be otherwise qualified for membership;
[(b) A member shall, at all times, maintain a
net capital balance of an amount which is,-
(i)
in the case of a stock exchange which in the previous
calendar year had on the cash counter a turn over of securities exceeding
fifteen billion, Rs.2.5 million;
(ii)
in the case of a stock exchange which in the previous
calendar year had on the cash counter a turn over of securities exceeding 7.5
billion rupees but not exceeding fifteen billion, Rs. 1.5 million; and
(iii)
in the case of a stock exchange which in the previous
calendar year had on the cash counter a turn over of securities not exceeding
7.5 billion, Rs. 0.75 million;
Provided
that a member who is also the member of other stock exchange
shall maintain a net capital
balance upto aggregate net capital balance requirement of all such exchanges
put together:
Provided further that, in the case of
partnership firm, the amount of net capital balance to be maintained shall be
the amount obtained by multiplying the net capital balance required for each
member of the stock exchange or exchanges, as the case may be, by the number of
such partners of the firm as are members of the stock exchange;][5]
(c)
A member shall cease to be a member if, at any
time,
(i)
he ceases to be a citizen of Pakistan:
Provided
that, in the case of a stock exchange functioning immediately before the
commencement of these rules, the membership of a member thereof who is not a
citizen of Pakistan shall become suspended on such commencement and shall
remain so suspended until he becomes a citizen of Pakistan; or
(ii)
he is declared a lunatic or a person of unsound mind;
or
(iii)
he is convicted of an offence involving fraud or breach
of trust; or
(iv)
he has been adjudicated as insolvent or has suspended
payment or has compounded with his creditors;
(d)
the membership of a member or members who
are
partners in a firm and who are in active business shall
become suspended as soon as the net capital balance falls short of the amount
specified in clause
(b) and shall remain so suspended
until the net capital balance is increased so as not to fall short of the amount;
(e) Every member shall report
to the stock exchange weekly that he or the firm of which he is a partner had,
at all times during the week to which the report relates, a net capital balance
of an amount not less than that specified in clause (b) and shall forthwith
inform the stock exchange if, at any time, such balance falls short of that
amount.
4. Manner of transaction of member’s business.- (1) All orders to
buy or sell securities which a member may receive shall be entered, in the
chronological order, in a register to be maintained by him in a form which
shows the name and address of the person who placed the order, the name and
number of the securities to be bought or sold, the nature of the transaction
and the limitation, if any, as
(b) A
member shall at all times maintain a net capital balance in the capital account
of an amount which is-
(i)
in the case of a stock exchange which in the previous
calendar year had on the cash counter a turnover of securities, other than bonus
vouchers, exceeding one crore in number-not less than two hundred fifty
thousand rupees; and
(ii)
in any other case - not less than seventy five thousand rupees:
Provided that
a member who is also the member of any other stock exchange shall maintain a
net capital balance of not less than fifty thousand rupees:
Provided further that, in the case of firm, the amount
of the net capital balance to be maintained shall be the amount obtained by
multiplying fifteen thousand rupees or fifty thousand rupees, as the case may
be, by a number of such partners of the
firm as are members of the stock exchange;
to the price of the securities
or the period for which the order is to be valid.
(2)
(a) A member who has an “at best” order from
a customer
to buy a security shall not, while such
order
remains unexecuted, buy the same security
on
the stock exchange for his own account or for
the
account of the firm of which he is a partner or for
the account of any of the partners therein or
for
any account in which he, such firm or partner,
directly
or indirectly, has an interest.
(b) A
member who has an “at best” order from
a customer to sell a security shall not, while
such order remains unexecuted, sell
the same security
on the stock exchange for his own
account or for the account or the firm of which he is partner or for
the account of any of the partners therein or
for
any account in which he, such firm or partner,
directly
or indirectly, has an interest.
(c)
A member who has a limit order from a customer
to buy a security shall not while such order remains unexecuted, buy the same
security at or below the limit price on the stock exchange for his own account
or for the account of the firm of which he is partner or for the account of any
of the partners, therein or for any account in which he, such firm or partner,
directly or indirectly, has an interest.
(d)
A member who has a limit order from a customer
to sell a security shall not, while such order remains unexecuted, sell the
same security at or above the limit price on the stock exchange for his
own account or for the account of the firm of which he is a partner or for
the account of any of the partners therein or for any account in which he, such
firm or partner, directly or indirectly, has an interest.
(3)
A member who has an order to buy or to sell a security
shall not fill such order by selling or buying for his own account or for the
account of the firm of which he is a partner or for the account of any of the
partners therein or for any account in which he, such firm or partner, directly
or indirectly, has an interest, except when-
(a) the order is limit order;
or
(b) (i)
he sells the security at a
price not exceeding the
price at which the
transaction immediately preceding
the receipt of the order by him
actually
took place; or
(ii)
he buys the security at a
price which is not less
than the price at which the transaction
immediately
preceding the receipt of the order
by him actually took place.
(4)
A member executing an order of a customer shall, within
twenty four hours of the execution of the order, transmit to the customer a
confirmation which shall include the following information, namely:-
(a)
date on which the order is executed;
(b)
name and number of the securities;
(c)
nature of transaction (spot, ready or forward
and also whether bought or sold);
(d)
price;
(e)
commission, if the member is acting as a
broker;
(f)
whether the order is executed for the member’s
own account or from the market.
(5)
Maintenance of
accounts and audit.-(1) Every member shall prepare once every year a
balance sheet and a statement of income and expenditure.
(2)
A member shall have his accounts audited by an
auditor who is a chartered accountant to be appointed by the Authority whenever
such audit is required by the Authority in the public interest.
(3)
The auditor shall furnish his report to the
Authority within such time as the Authority may specify.
(6)
Form of
application for registration.- An application for the registration of a
stock exchange under section 5 shall be made to the [Commssion][6]
in Form I.
7.Maintenance of books of account and other
documents by the stock exchanges.- (1) Every stock exchange shall prepare
and maintain, as required by sub-section (1) of section 6, such books of
account and other documents as will accurately disclose a true and fair picture
of the state of affairs of the exchange at any point of time.
(2)
The books of account and other documents referred to in
sub-rule (1) shall include:
(a)
journals (or other comparable record), cash book and
any other records of original entry, forming the basis of entries into any
ledger;
(b)
ledgers (or other comparable record) reflecting asset,
liability, reserve, capital, income and expense;
(c)
ledgers (or other comparable record) showing the
position in respect of each member as on the settlement day of the securities
which the member had bought or sold since the last preceding settlement day and
which had been transferred through a Clearing House maintained by the stock
exchange;
(d)
daily record of quotations and transactions on the
stock exchange showing the time at which each transaction took place;
(e)
record of transactions with banks;
(f)
record of security deposits;
(g)
register of members;
(h)
register of authorised clerks; and
(i)
minute books of the meetings of-
(i)
members;
(ii)
governing body;
(iii)
any committee of the general body of members or of the
governing body.
(3)
The books of accounts and documents referred to in
sub-rule (1) shall be preserved for a period of not less than five years.
8. Maintenance of books of account, etc. by
members.- (1) Every member shall
prepare and maintain, as required by sub-section (1) of section 6, the
following books of account and other documents in a manner that will disclose a
true, accurate and up-to-date position of his business, namely:-
(a)
journal (or other comparable record), cash book and any
other books of original entry, forming the basis of entries into any ledger,
the books of original entry being such as contain a daily record of all orders
for purchase or sale of securities, all purchases and sales of securities, all
receipts and deliveries of securities and all other debits and credits;
(b)
ledgers (or other comparable records) reflecting asset,
liability, reserve, capital, income and expense accounts;
(c)
ledgers (or other comparable records) reflecting
securities in transfer, securities borrowed and securities loaned and
securities bought or sold, of which the delivery is delayed;
(d)
record of all balance of all ledger accounts in the
form of trial balances to be prepared at least once at the end of the six
months of every year of account;
(e)
record of transactions with the banks;
(f)
contact books showing details of all contracts entered
into by a member with other members of the exchange or counterfoils or
duplicates of memos of confirmation issued to
such other members;
(g)
duplicates or counterfoils of memos of confirmation
issued to customers.
(2) The books of accounts and other documents referred to in
sub-rule (1) shall be preserved for a period of not less than five years.
9.
Submission
of periodical returns by stock exchange.- The periodical return relating to
the affairs of a stock exchange, as required by sub-section(2) of section 6,
shall be submitted to the [Commission][7]
monthly in Form II within fifteen days of the close of the month to which it
relates.
10.
Submission
of annual report by stock exchange.-(1) The annual report relating to the
affairs of a stock exchange, as required by sub-section (2) of section 6, shall
be submitted to the [Commission]8 not less than fourteen days before
the meeting of the shareholders of the stock exchange before which it is to be
laid.
(2) Every such report shall be
accompanied by a copy of the balance sheet and profit and loss account of such
year audited by an auditor who is a chartered accountant.
11. [Listing of security on stock exchange,
etc.-An application under sub-section (1) of
section 9 for listing of a
security on a stock exchange shall be made in Form-III;]9
[11-A. Limitation for petitions to Federal Government under section 9.-
A petition to the Federal Government under sub-section (3) or sub-section (6)
of section 9 shall be made within thirty days of the stock exchange refusing to
list or, as the case may be, delist the security.]10
[]11
[]12
[]13
[]14
9 Inserted by
Notification SRO No. 1274(I)/80, dated 20th December, 1980.
10 Inserted by
Notification SRO No. 1274(I)/80, dated 20th December, 1980.
11 Rule 12
omitted by Notification No. SRO 1234(I)/85 dated December 12, 1985. Before
omission it read as
12.
Submission of annual report by issuers. (1) The annual report required by
section 11 to be furnished by an issuer of a listed security shall include a
balance shaeet and profit and loss account.
(2)The
balance sheet and profit and loss account included in the annual report shall,
except in the case of an issuer which is required to prepare a balance sheet
and profit and loss account in form prescribed by the Banking Companies
Ordinance, 1962 (LVII of 1962), or the Insurance Act, 1938 (IV of 1938), be
prepared in accordance with the requirements laid down in the Second Schedule
and the Balance Sheet so prepared shall be be in form ‘A’ annexed to that
Schedule or as near thereto as circumstances may admit.
(3)
The balance sheet and profit and loss account shall be
audited by an auditor who is a chartered accountant and the report of the
auditor shall be in Form ‘B’ annexed to the Second Schedule.
(4)
Every issuer shall furnish the annual report, together
with the balance sheet and profit and loss account referred to in Sub-rile (1)
to the security holder at least fourteen days before the general meeting of the
shareholders of the issuer at which the report is to be laid before them and
shall simataneously furnish a copy of such report to the Stock Exchange or
exchanges on which its securities are listed and to the Authority.
(5)
Notwithstanding anything contained in Sub-rule (4), the
first annual report to be furnished by an issuer shall be in respect of the
year of account of the issuer ending after the commencement of these rules.
(6)
An issuer shall, within three months of the genral
meeting referred to in Sub-rule (4), submit to the Authority a list of the
members of the issuer stating the facts as they stood on the date of that
general meeting.
(7)
The list required to be submitted under sub-rule (6)
shall be the list required by Section 2 of the Companies Act, 1913 (VII of
1913), to be submitted to the Registrar.
12 Rule 13
omitted by Notification No. SRO 1234(I)/85 dated December 12, 1985. Before
omission it read as follows:
13. Submission of periodical report by issuers.- Every issuer
shall, within two months of the close of the first half of its year of account,
prepare and submit to the Stock Exchange or exchanges on which its securities
are listed and to its securityholders and the Authority a profit and loss
account for, a balance sheet as at the end of, that half year, whether audited
or otherwise.
13 Rule 14
omitted by Notification No. SRO 1234(I)/85 dated December 12, 1985. Before
omission it read as follows:
14. Submission of return by certain beneficial owners, etc.- (1) The return required by Section
12 to be submitted by a director, officer of beneficial owner shall be
submitted to the Authority in Form IV every month within ten days of the close
of the month to which it relates.
(2) The first
retun under this rule shall be for the month of March, 1971, and shall be
submitted to the Authority within thirty days of the commencement of these
rules.
16. Mode of filing or submission of returns, etc.- Any person
required by the Ordinance or any of these rules to furnish any document,
statement, return or report to the [Commission]15 shall furnish it,
either in person or through an agent, to the [Commission]16 at its
head quarters at Islamabad or send it to the [Commission]17 by
registered post.
14 Rule 15
omitted by Notification No. SRO 1234(I)/85 dated December 12, 1985. Before
omission it read as follows:
15. Calculation of amount to be tendered to an issuer by certain
beneficial owner, etc.- (1) For
calculating the amount required by Section 14 to be reported and tendered to an
issuer, the person by whom the amount is to be so reported and tendered may
deduct from the amount of gain referred to in that section the amount of
brokerage, stamp duty and other expenditure actually paid or incurred in making
that gain.
(2)
Any deduction made under Sub-rule (1) shall be
supported by documentary evidence acceptable to the issuer as proof of the
brokerage, stamp duty and other expenditure having been actually paid or
incurred.
(3)
Any loss arising out of any transaction in any security
shall not, for the purposes of Sub-rule (1), be deemed to be expenditure to be
paid or incurred in making gain out od a transaction in that security.
15 Substituted
for “Authority” by Notification No. SRO 87(I)/2001, dated February 8, 2001
16 Substituted
for “Authority” by Notification No. SRO 87(I)/2001, dated February 8, 2001 17
Substituted for “Authority” by Notification No. SRO 87(I)/2001, dated February
8, 2001
[1] Substituted for
“Authority” by Notification No. SRO 87(I)/2001, dated February 8, 2001. Before
substitution it read as
“Authority” means the [Corporate Law
Authority]
[2] Clause (a)
Substituted by Notification No. SRO 87(I)/2001, dated February 8, 2001.
[3] Clause (d) Substituted by
Notification No. SRO 87(I)/2001, dated February 8, 2001. Before substitution it
read as (d) “net capital”, in relation to a member of
stock exchange, means an amount by which the current assets, namely, cash in
hand or in bank, money receivable within a period of twelve months from the
date of the balance sheet and such other assets, not being value of the
membership card of the stock exchange, as are so classified under generally
accepted accounting principles, exceed the current liabilities, namely, money
payable within a period of twelve months from the date of the Balance sheet and
such other liabilities as are so classified under generaly accepted accounting
principles;
[4] Substituted for “The
regulation of a stock exchange relating to the qualification for membership of,
and admission into, the stock exchange shall, among other matters, provide
that-” by SRO-1032(I)/85, dated 22-10-1985
[5] Clause (b) substituted by
Notification No. SRO 87(I)/2001, dated February 8, 2001. Before substitution
clause (b) read as follows:
[6]
Substituted for “Authority” by Notification No. SRO 87(I)/2001, dated February
8, 2001.
[7] Substituted for “Authority”
by Notification No. SRO 87(I)/2001, dated February 8, 2001. 8
Substituted for “Authority” by Notification No. SRO 87(I)/2001, dated February
8, 2001.
No comments:
Post a Comment