TO BE PUBLISHED IN GAZETTE OF PAKISTAN EXTRAORDINARY
PART II
Statutory Notification
(S.R.O.)
Securities and Exchange
Commission of Pakistan
NOTIFICATION
Islamabad, the 27th February 2001
S.R.O. 131(I)/2001. – In exercise of the
powers conferred by section 43(b) of the Securities & Exchange Commission
of Pakistan Act, 1997 read with section 33 of the Securities and Exchange
Ordinance, 1969 and in pursuance of section 32 of the said Ordinance, the
Securities & Exchange Commission of Pakistan, with the approval of the
Federal Government, hereby makes the following rules to regulate the business
of venture capital companies and venture capital funds, namely:-
CHAPTER I
PRELIMINARY
1. Short title and commencement.-
(1) These rules may be called the Venture Capital Companies and Venture Capital
Funds Rules, 2001.
(2) They
shall come into force at once.
2.
Definitions.-
In these rules, unless there is anything repugnant in the subject or context, -
(a) "Administrator"
means a company or a person appointed by the Commission to manage the affairs
of a venture capital company or venture capital fund, on cancellation of
licence granted to the venture capital company or, as the case may be, venture
capital fund under these rules;
(b) "Commission"
means the Securities and Exchange Commission of Pakistan;
(c) "Form"
means a form set out in the Schedule to these rules;
(d) "venture
capital company" means a company which is engaged in financing any venture
project, through equity or other instruments whether convertible into equity or
not and provides managerial or technical expertise to venture projects, or acts
as a management company for management of venture capital fund;
(e) "venture
capital fund" means a company which is managed by a venture capital
company and raises funds through private placement of equity and other
securities, as specified in these rules and invests its resources in venture
projects; and
(f)
"venture project" means a company, registered
under the Companies Ordinance, 1984 (XLVII of 1984), or a partnership, or a
sole proprietorship, which is engaged in a business activity and has such
characteristics as may be notified by the Commission, from time to time, to be
treated as venture projects.
CHAPTER II
REGULATION
OF THE BUSINESS OF VENTURE CAPITAL COMPANIES
3.
Eligibility
conditions for grant of licence to a venture capital company.- (1) A venture capital company shall not be
granted licence unless it fulfills the following conditions, namely :-
(a) it
is incorporated as a public limited company under the Companies
Ordinance, 1984 (XLVII of 1984);
(b) it
is not engaged in any business other than that of investment in venture
projects;
(c) it
has a minimum paid-up share capital of five million rupees subscribed by the
promoters and by others through private placement;
(d) it
has certified that the chief executive of the venture capital company does not
hold such office in any competing business;
Explanation.-The phrase “competing
business” shall have the same meaning as defined in section 203 of the
Companies Ordinance, 1984 (XLVII of 1984).
(e) it
has certified that not more than twenty-five per cent of its directors are from
the same family, including spouse, dependent lineal ascendants and descendants
and dependent brothers and sisters ; and
(f)
it has appointed as its chief accounting officer a
person who is a chartered accountant or cost and management accountant or a
person having Master's Degree in Commerce or Business Administration from a
university recognized by the Universities Grants Commission with at least five
years experience in finance and accounting.
(2) The
sponsors, directors, chief executive and chairman of the Board of Directors,
fulfill the following conditions, namely:-
(a) they
have not been associated with any illegal banking business, deposit taking or
financial dealings;
(b) they
and companies in which they are directors or hold ten per cent or more
beneficial interest, have no over-due loans or installments, outstanding
towards banks or other financial institutions or defaulted in the payment of
taxes;
(c) they
have never been convicted of fraud or breach of trust or economic offense or of
an offense involving moral turpitude or removed from service for
misconduct;
(d) they
have neither been adjudged as insolvent or compounded with
their creditors;
(e) the
promoters and directors of such company are, in the opinion of the Commission,
persons of means and integrity and have special knowledge of matters which the
company may have to deal with as a venture capital company; and
(f)
the proposed chief executive and at least one of the
proposed sponsor directors have senior management level experience in
industrial enterprises or the financial sector for at least five years.
4. Condition for grant of licence.-
(1) No venture capital
company shall commence business unless a licence is granted to it under these
rules.
(2)
For obtaining a licence a venture capital company shall
__
(a) make
an application to the Commission on Form I providing information as sought in
Annex therein, along with all the relevant documents.
(b) submit
a bank draft payable to the Commission evidencing the payment of non-refundable
application processing fee amounting to twenty five thousand rupees for a
company having paid up capital up to twenty million rupees and fifty thousand
rupees for a company having paid-up capital of more than twenty million rupees;
and
(c) submit
an undertaking that no change in the memorandum and articles of association and
in the directors shall be made without prior written authorization of the
Commission and that all conditions for grant of licence shall be complied with.
(3)
On being satisfied that a venture capital company is
eligible for the grant of a licence and that it would be in the public interest
so to do, the Commission may grant a licence in Form II.
(4)
Without prejudice to any other conditions under these
rules, the Commission may while granting licence impose any conditions, as it
may deem necessary.
5.
Terms and
conditions of operation.- Unless granted a general or specific waiver by
the Commission, a venture capital company shall __
(a) not
expose more than forty per cent of its equity to any single group of companies;
Explanation.-
For the purposes of this rule group of companies shall mean companies
controlled by the members of one
family including spouse, dependent lineal ascendants and descendants and
dependent brothers and sisters.
(b) disclose
in its accounts all investments in companies and group of companies exceeding
ten per cent of paid up capital of venture capital company;
(c) ensure
that the maximum exposure of the venture capital company to its directors,
affiliated companies and companies in which any of the directors and their
family members including spouse, dependent lineal ascendants and descendants
and dependent brothers and sisters hold controlling interest shall not exceed
ten per cent of the overall portfolio of venture capital; and
(d) not
accept any investment from any investor, which is less than one million
rupees.
6.
Renewal of
Licence.- (1) The licence granted to the company under rule 4 shall be
valid for one year and shall be renewable annually on payment of a fee of
twenty thousand rupees on an application being made in Form III.
(2) The Commission may, after making such
inquiry and after obtaining such further information as it may consider
necessary, renew the licence of such company, for one year in Form IV on such
conditions as it may deem necessary.
7. Private placement.- In addition to its
paid-up capital, a venture capital company may receive monies for investment in
venture projects through private placement of such securities as may be
notified by the Commission from time to time.
8. Placement memorandum.- A venture
capital company shall, before soliciting placement of its securities, file with
the Commission a placement memorandum which shall inter alia give details of the
terms subject to which monies are proposed to be raised from such placements.
CHAPTER III
REGULATION
OF THE BUSINESS OF VENTURE CAPITAL FUND
9.
Eligibility
conditions for grant of licence to a venture capital fund.-
(1)
A venture capital fund shall not be granted licence
unless it fulfills the following conditions, namely :-
(a) it
is incorporated as a company under the Companies Ordinance, 1984 (XLVII of
1984);
(b) it
is not engaged in any business other than that of investment in venture
projects;
(c) it
has a minimum paid-up capital of fifty million
rupees raised through private placement; and
(d) for
the purpose of managing its entire business, it has entered into a contract, in
writing, with a venture capital company and a copy of which has been filed with
the Commission.
(2)
The board of venture capital fund shall not have a
director, who is on the board of any venture project being financed by the
fund.
10.
Condition for grant of licence.- (1)
No venture capital fund shall commence business unless a licence is
granted under these rules.
(2) For obtaining a licence a venture capital fund shall __
(a) make
an application to the Commission on Form V providing information as sought in
Annex therein, along with all the relevant documents;
(b) submit
a bank draft payable to the Commission evidencing the payment of non-refundable
application processing fee amounting to fifty thousand rupees; and
(c) submit
an undertaking that no change in the memorandum and articles of association and
in the directors shall be made without prior written authorization of the
Commission and that all conditions for grant of licence shall be complied with.
(3)
On being satisfied that a venture capital fund is
eligible for the grant of a licence and that it would be in the public interest
so to do, the Commission may grant a licence in form VI.
(4)
Without prejudice to any other conditions under these
rules, the Commission may while granting licence impose any conditions, as it
may deem necessary.
11.
Terms and
conditions of operation.- Unless
granted a general or specific waiver by the Commission, a venture capital fund
shall __
(a) not
expose more than forty per cent of its equity to any single group of companies;
Explanation.- For the purposes of this
rule group of companies shall mean companies managed by the members of one
family including spouse, dependent lineal ascendants and descendants and
dependent brothers and sisters.
(b) disclose
in its accounts all investments in companies and group of companies exceeding
ten per cent of paid-up capital of venture capital fund;
(c) ensure
that the maximum exposure of the venture capital fund to its directors,
affiliated companies and companies in which any of the directors and their
family members including spouse, dependent lineal ascendants and descendants
and dependent brothers and sisters hold controlling interest shall not exceed
ten per cent of the overall portfolio of venture capital; and
(d) not
accept any investment from any investor, which is less than one million
rupees.
12.
Renewal of
licence.- (1) The licence granted to the fund under rule 10 shall be valid for one year and shall be renewable annually
on payment of a fee of twenty thousand rupees on an application being made on
Form VII.
(2) The Commission may, after making such
inquiry and after obtaining such further information as it may consider
necessary, renew the licence of such fund, one year on Form VIII on such
conditions as it may deem necessary.
13.
Private
placement.- A venture capital fund shall raise and receive monies for
investment in venture projects through private placement of such securities as
may be notified by the Commission, from time to time.
14.
Placement
memorandum.- A venture capital fund shall, before soliciting placement of
its securities, file with the Commission a placement memorandum which shall inter alia
give details of the terms subject to which monies are proposed to be raised
from such placements.
CHAPTER IV
OTHER
MATTERS PERTAINING TO REGULATION OF
VENTURE
CAPITAL COMPANIES AND VENTURE CAPITAL FUNDS
15.
Enquiry.-
The Commission may cause an enquiry to be made, by any person appointed in this
behalf, into the affairs of any venture capital company or a venture capital
fund, registered under these rules or any of its directors, managers and other
officers of the venture capital company or the venture capital fund, as the
case may be, and the provisions of section 21 and 22 of the Securities and
Exchange Ordinance, 1969 (XVII of 1969), shall apply to such an enquiry.
16.
Cancellation of
licence.- (1) Where the Commission is of the opinion that a venture capital
company or venture capital fund has contravened any provision, or has failed to
comply with any requirement of any rule or direction made or given hereunder,
the Commission may, if it considers necessary in the public interest so to do,
by order in writing, cancel the licence of the venture capital company or
venture capital fund as the case may be:
Provided that no such order shall
be made except after giving the company an opportunity of being heard.
(2)
Upon cancellation of the licence, the functions and
carrying on the business of venture capital company or the venture capital fund
shall cease and the Commission may move the Court for a winding up order in
respect of the venture capital company or venture capital fund take such other
action against the venture capital company or the venture capital fund, as the
Commission may deem fit.
(3)
Notwithstanding cancellation of licence under sub-rule
(1), the directors, chief executive, chairman and other responsible officer of
the venture capital company or venture capital fund shall not be absolved of
any civil and criminal liability under these rules, the Securities and Exchange
Ordinance, 1969 (XVII of 1969), or any other law for the time being in force.
(4)
Where the licence of the venture capital company has
been cancelled under sub-rule (1), the Commission may, by order in writing,
appoint a person as the Administrator or another venture capital company to
manage the affairs of the venture capital company whose licence has been
cancelled and the funds so managed by such venture capital company subject to
such terms and conditions as may be specified in the order.
(5)
The management of the affairs of the venture capital
company or the venture capital fund, shall vest in the Administrator on and
from the date of the Administrator's appointment until a liquidator is
appointed by the Court.
(6)
On an application by another venture capital company
the Commission may, if so satisfied that any venture capital company and
venture capital fund can be managed and that such an action would be in public
interest, may grant a licence to such an applicant for the management of
venture capital company which has been entrusted to the Administrator along
with the venture capital fund, if any.
17.
Filing of annual report with the Commission.- (1) A copy of the annual
report together with copies of the balance sheet, profit and loss account and
the auditors' report of the venture capital company and all the venture capital
funds being managed by such companies shall be filed with the Commission within
four months of the close of the accounting period. The annual report shall inter alia
include the results of each investment in venture projects in abridged form.
(2) A copy of the report of the directors to
the share holders in respect of the first half of the year together with copies
of balance sheet, profit and loss account of the venture capital company and
funds managed by the venture capital companies shall be furnished to the
Commission within two months of the close of the relevant accounting period.
18. Appointment of auditor.-
A venture capital company shall appoint an auditor, who is a Chartered
Accountant provided that the auditor
so appointed __
(i) is
not the auditor of any venture project in which the venture capital company or
fund has made an investment; and
(ii) is a
partner of a firm, which has at least five partners.
19. Powers of the Commission to
call information.- The Commission may at any time call for any information
or give a direction to a venture capital company or venture capital fund with
respect to any matter relating to its activity as a venture capital company or
fund.
THE
SCHEDULE
FORM I
[See rule 4(2)]
APPLICATION FORM FOR
GRANT OF LICENCE
AS A VENTURE CAPITAL COMPANY
Securities and Exchange
Commission of Pakistan, Government of Pakistan, Islamabad.
Dear sir,
We hereby apply for grant of licence
to*.................... under rule 4 of the
Venture Capital Companies Rules, 2001.
2. Two copies
of the memorandum and articles of association are enclosed. Necessary
information required under rule 3 and 4 of the said Rules has been annexed. We
undertake to keep this information up to date at all times.
Yours faithfully,
Name/Signature
of the Secretary or a director of the company. ________________________
* Name of the company.
Annex to Form I Information
to be enclosed at the time of application for grant of licence.
PART I
Please provide information in
respect of directors, chief executive and chairman:
(1)
Name, former Name (if any).
(2)
Father's name.
(3)
Nationality.
(4)
Residential address.
(5)
Business address.
Year.
|
Institution
attended.
|
Degree / Certificate.
|
Training:
|
||
Year.
|
Institution
attended.
|
Certificate / Diploma.
|
(6)
Qualifications: (Please attach copies of matriculation
certificate and that of last degree obtained).
(7)
(8)
|
Experience.
|
(9)
Financial standing:
Notes:
(i) Please
attach credit worthiness certificate from the bank.
(ii) Please
attach evidence for payment of income tax and wealth tax in individual capacity
as well as in respect of the companies, firms, etc., wherein they are or have
been directors during the preceding five years.
(10)
Financial performance during the past three years of
the companies in which the proposed directors, sponsors, chairman and chief
executive have been holding office or have been or have ten per cent or more
beneficial interest, on the following pattern:
(please attach copies of annual reports of the companies).
(in
Rs)
Year.
|
Paid-up capital.
|
Free reserve.
|
Profit/Loss after tax.
|
%
Dividend paid.
|
(11)
Feasibility report:
PART II
1 Whether the
company has been incorporated as a
public limited company under the Companies Yes No
Ordinance, 1984.
2.
If yes, whether copy of certificate of incorporation issued by CRO and two copies
of Yes No memorandum and article of association have been enclosed with the
application.
3.
Whether processing fee amounting to Rs…………… has been deposited in favour of
Yes No the Securities and Exchange Commission of Pakistan in designated branch
of the bank.
4.
Whether Chief Executive of the company is holding the same position in a bank,
Non-Banking Yes No Financial Institution or insurance company or any competing
business.
5.
Whether the company is engaged in any other business i.e., other than financing and
providing Yes No technical and managerial services to a venture project.
6.
If yes, does the business corroborate with object
clause of the company. Yes
No
7.
How much share capital has been contributed by each sponsor. Please give information on
the following pattern:
8.
Please give details in respect of all directors
who hold same position in other companies or have
Yes No
beneficial owner ship of 10% or more as follows.
Name of director.
|
Official position.
|
Name of the company.
|
9.
Whether twenty-five per cent of the directors of the company are from same family i.e.,
spouse, Yes No dependent lineal ascendants
and descendants and dependent brothers and sisters.
10.
(i) Whether any of the sponsors, directors, chief executive, chairman has been
associated with any illegal banking
business, Yes No deposit taking or financial dealing.
(ii)
Whether any of the sponsors, directors, chief executive, chairman and persons Yes
No holding ten percent beneficial interest have been convicted of fraud or breach of trust
or economic offense or an offense
involving moral turpitude or removed from service for misconduct.
(iii)
Whether any of the sponsors, directors, chief executive, chairman and persons holding ten percent beneficial interest
or the companies in which they hold
such Yes No
positions have defaulted in
payment of taxes or have overdue bank loan or defaulted on such loans or have
accumulated over-due loans or installments towards banks or other financial
institutions or have ever been adjudged as insolvent or have defaulted in
making payments to creditors.
Note:
Please attach affidavit on non-judicial
stamp paper in support of statement made in this part.
FORM-II
[See rule 4(3)]
THE
SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN
LICENCE TO CARRY ON THE BUSINESS OF A
VENTURE CAPITAL COMPANY
Islamabad,
the .................
The Securities and Exchange Commission of
Pakistan, having considered the application for grant of licence and being
satisfied that *...............................is eligible for grant of licence
and that it would be in the public interest so to do, in exercise of the powers
conferred by rule 4 of the Venture
Capital Companies Rules, 2001, hereby grants licence to
*...............................for a period of one year
from.........to.........and subject to
the provisions of the Securities and Exchange Ordinance, 1969, and the rules
made thereunder and subject to further conditions stated herein below:
.........................................
(Signature
of the officer)
________________________ * Name of the company.
FORM
III
[See rule 6(1)]
APPLICATION FOR RENEWAL OF LICENCE TO OPERATE
AS VENTURE CAPITAL COMPANY
Islamabad the ...................
Securities and Exchange Commission of Pakistan,
Government of Pakistan,
Islamabad
Dear Sir,
We hereby apply for
renewal of the licence of *............................... under rule 6 of the
Venture Capital Companies Rules, 2001.
2.
The licence issued or renewed earlier is due to expire
on.......................
3.
Original receipt of challan evidencing payment of
renewal fee of Rs.............. is enclosed.
4.
Schedule of investment clearly indicating project-wise
investment made, results of investment as on the date of application and
results expected in future is enclosed herewith.
5.
It is requested that the licence may be renewed w.e.f.
..................... for a period one year.
Yours
faithfully,
Name/Signature of the
Secretary or a director of the
company. ________________________ *
Name of the company.
FORM
IV
[See rule 6(2)]
THE
SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN
LICENCE TO CARRY ON THE BUSINESS OF A
VENTURE CAPITAL COMPANY
Islamabad,
the ............
The Securities and Exchange Commission of
Pakistan, having considered the application for renewal of licence submitted by
*..............................under rule 6(1) of the Venture Capital Companies
Rules, 2001, and being satisfied that it would be in the public interest so to
do, in exercise of powers conferred by rule 6(2) of the said Rules, hereby
renew the licence of*.......................... subject to the provisions of
the Securities and Exchange Ordinance, 1969, and the rules made thereunder.
.........................................
(Signature
of the officer)
________________________ * Name of the company.
FORM V
[See rule 10(2)]
APPLICATION FORM FOR GRANT OF LICENCE AS A VENTURE CAPITAL FUND
Securities and Exchange
Commission of Pakistan, Government of Pakistan, Islamabad.
Dear Sir,
We hereby apply for grant of licence
to*.................... under rule 10(2) of the Venture Capital Companies
Rules, 2001.
2. Two copies of the memorandum and articles
of association are enclosed. Necessary information required under rule 9 and 10
of the said Rules has been annexed. We undertake to keep this information
up-to-date at all times.
Yours faithfully,
Name/Signature
of the Secretary or a director of the venture capital fund
________________________
* Name of the venture capital fund.
Annex
to Form V
Information to be enclosed at the time of application for grant of licence.
PART I
Please provide information in
respect of directors, chief executive and chairman:
(1)
Name, former Name (if any).
(2)
Father's name.
(3)
Nationality.
(4)
Residential address.
(5)
Business address.
PART
II
1.
Whether the company has been incorporated as a public limited company under the Companies
Yes No Ordinance, 1984.
2.
If yes, whether copy of certificate of incorporation issued by CRO and two copies
of Yes No memorandum and article of association have been enclosed with the application.
3.
Whether processing fee amounting to Rs……….
has been deposited in favour of the
Securities and Yes No Exchange Commission of Pakistan in designated branch of
the bank.
4.
Feasibility report is enclosed. Yes No
FORM
VI
[See rule 10(3)]
THE
SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN
LICENCE TO CARRY ON THE BUSINESS OF A
VENTURE CAPITAL FUND
Islamabad, the
.................
The Securities and Exchange Commission of
Pakistan, having considered the application for grant of licence and being
satisfied that *...............................is eligible for grant of licence
and that it would be in the public interest so to do, in exercise of the powers
conferred by rule 10(3) of the Venture
Capital Companies Rules, 2001, hereby grants licence to
*...............................for a period of one year
from.........to.........and subject to
the provisions of the Securities and Exchange Ordinance, 1969, and the rules
made thereunder and subject to further conditions stated herein below:
.........................................
(Signature
of the officer)
________________________
* Name of the venture capital fund.
FORM
VII
[See rule 12(1)]
APPLICATION FOR RENEWAL OF
LICENCE TO OPERATE AS VENTURE
CAPITAL FUND
Islamabad
the ...................
Securities and Exchange Commission of Pakistan,
Government of Pakistan,
Islamabad
Dear Sir,
We hereby apply for
renewal of the licence of *............................... under rule 12(1) of
the Venture Capital Companies Rules, 2001.
2.
The licence issued and renewed earlier is due to expire
on.......................
3.
Original receipt of challan evidencing payment of
renewal fee of Rs.............. is enclosed.
4.
Schedule of investment clearly indicating project-wise
investment made, results of investment as on the date of application and
results expected in future is enclosed herewith.
5.
It is requested that the licence may be renewed w.e.f.
..................... for a period one year.
Yours
faithfully,
Name/Signature of the
Secretary or a director of the fund
________________________
* Name of the venture capital fund.
FORM
VIII
[See rule 12(2)]
THE
SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN
LICENCE TO CARRY ON THE
BUSINESS OF A
VENTURE CAPITAL FUND
Islamabad,
the ............
The Securities and Exchange Commission of
Pakistan, having considered the application for renewal of licence submitted by
*..............................under rule 12(2) of the Venture Capital
Companies Rules, 2001, and being satisfied that it would be in the public
interest so to do, in exercise of powers conferred by rule 12(2) of the said
Rules, hereby renew the licence of*.......................... subject to the
provisions of the Securities and Exchange Ordinance, 1969, and the rules made
thereunder.
.........................................
(Signature
of the officer)
________________________
* Name of the
venture capital fund.
F.No.1(1)CF/Policy/96
(ABDUL HALEEM JADRAN)
Joint
Director
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