INVESTMENT COMPANIES AND INVESTMENT ADVISERS
RULES, 1971
(As amended upto 1st May, 1999)
CHAPTER I
PRELIMINARY
(ii) An investment purchased and awaiting payment
RULES, 1971
(As amended upto 1st May, 1999)
CHAPTER I
PRELIMINARY
(ii) An investment purchased and awaiting payment
CHAPTER II
REGULATION OF THE BUSINESS OF INVESTMENT COMPANIES
(i) that the applicant is eligible for registration; and
(b) unless the offer has been underwritten by an underwriter appointed by the investment company with the prior approval in writing of the Authority.
12. Power of Authority to give certain directions.- The
(b) ledgers (or other comparable record) reflecting asset,
CHAPTER III
REGULATION OF THE BUSINESS OF INVESTMENT ADVISERS
THE **FIRST SCHEDULE
FORM I
FORM OF APPLICATION FOR REGISTRATION AS AN
INVESTMENT COMPANY
1. General
2. Statement of assets and liabilities.
3. Income statement.
4. Distribution statement.
5. Statement of movements in reserves.
6. Notes to the accounts.
7. Contents of the auditors' report.
8. Investment portfolio.
9. Performance table.
(Syed Samsamul Haq)
Joint Secretary
FORM II
CERTIFICATE OF REGISTRATION AS IN INVESTMENT
COMPANY
* CORPORATE LAW AUTHORITY
Signature of the officer.
FORM III
FORM OF APPLICATION FOR REGISTRATION AS INVESTMENT ADVISER
Yours faithfully,
FORM IV
CERTIFICATE OF REGISTRATION AS AN
INVESTMENT ADVISER
Islamabad, the 19
...............................
Signature of the officer
(Published
in the Gazette of Pakistan Extraordinary, dated 12th March, 1972)
S.R.O. 78(I)/71.- In exercise of the
powers conferred by section 32 of the Securities and Exchange Ordinance, 1969
(XVII of 1969), the Federal Government is pleased to make the following rules
to regulate the business of investment advisers and investment companies,
namely:-
1. Short title and commencement.- (1) These
rules may be called the Investment Companies and Investment Advisers Rules,
1971.
(2) They shall come into force at once.
2. Definitions.- In the rules, unless there is anything
repugnant in the subject or context,--
(b)
“closed-end company”, in relation to an investment
company, means a company which does not continuously offer for sale a security
which entitle the holder of such security on demand to receive his proportionate
share of the net assets of the company;
[2][(ba)
"connected person" in relation to an investment company means, __
(i)
any person or company beneficially owning,
directly or indirectly, ten per cent or more of ordinary share capital of
investment company or investment advisor or the company, or able to exercise,
directly or indirectly, ten per cent or more of the total votes in that company
or the investment advisor;
(ii)
any person or company controlled by a person who
or which meets one, or both, of the descriptions given in sub-clause (i);
(iii)
any member of the group of which that company
forms part; or
(iv)
any director or officer of that company, or that
company's investment advisor or of any of their connected persons specified In
sub-clauses (i), (ii) and (iii); and]
(c)
“custodian” means a banking company within the meaning
of the Banking Companies Ordinance, 1962 (LVII of 1962) [3][or a central
depository company approved by the Commission], which is appointed to be a
custodian under these rules;
(e)
“net assets” , in relation to an investment company,
means the excess of assets over liabilities of the company, such excess being
computed in the manner specified hereunder:-
(i)
A security listed on a stock exchange shall be
valued at its last sale price on such exchange on the date as of which it is
valued, or if such exchange is not open on such date, then at its last sale
price on the next preceding date on which such exchange was open and if no sale
is reported for such date, the security shall be valued at an amount not higher
than the closing asked price nor lower than the closing bid price.
against delivery shall be
included for valuation purposes as a security held, and the cash account of the
company shall be adjusted to reflect the purchase price, including brokers’
commission and other expenses incurred in the purchase thereof but not
disbursed as of the valuation date.
(iii)
An investment sold but not delivered pending receipt of
proceeds shall be valued at the net sale price.
(iv)
The value of any dividends, bonus shares, or rights
which may have been declared on securities in the portfolio but not received by
the company as of the close of business on the valuation date shall be included
as assets of the company, if the security upon which such dividends, bonuses or
rights were declared is included in the assets and is valued ex-dividend,
ex-bonus or ex-rights as the case may be.
(v)
Interest accrued on any interest-bearing security in
the portfolio shall be included as an asset of the company if such accrued
interest is not otherwise included in the valuation of the security.
(vi)
Any other income accrued upto the date on which
computation was made shall also be included in the assets.
(vii)
All liabilities, expenses, taxes and other charges due
or accrued up to the date of computation which are chargeable under these
rules, other than the paid-up capital of the company, shall be deducted from
the value of the assets.
(viii)
The remuneration accrued upto the date of computation
payable to the investment adviser for providing management and other services
shall be included as an expense.
(f)
“net capital”, in relation to an investment adviser,
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 the value of securities referred to in
sub-rule (2) of rule 5, 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 generally accepted accounting
principles;
(g)
“Ordinance” means the Securities and Exchange
3.
No investment
company to commence business without registration.- No company shall commence business as an
investment company unless it is registered with the Authority under these
rules.
4.
Eligibility for
registration .- A company proposing to commence business as an investment
company shall be eligible for registration under these rules if it fulfils or
complies with the following conditions or requirements, namely:-
(a)
that such company is registered as a public limited
company under the [7][5][Companies
Ordinance, 1984 (XLVII of 1984)];
(b)
that it is to function as a closed-end investment
company with a capital of not less than [8][6][one
hundred million rupees:]
[9][7][Provided that
an existing investment company shall raise its capital to one hundred million
rupees within a period of three years;"];
(c)
that no director, officer or employee of such company
has been convicted of fraud or breach of trust;
(d)
that no director, officer or employee of such company
has been adjudicated as insolvent or has suspended payment or has compounded
with his creditors;
(e)
that the promoters of such company are, in the opinion
of the Authority, persons of means and integrity and have special knowledge of
matters which the company may have to deal with as an investment company.
5.
Registration.-
(1) Any company which is eligible for registration under rule 4 as an
investment company may make an application in Form I to the Authority for
registration under these rules.
(2)
An application under sub-rule (1) shall, besides the
other documents referred to in Form I, be accompanied by 10[a
receipt evidencing a payment of an application processing fee of twenty-five
thousand rupees and] an undertaking by the investment adviser of the company
that the investment adviser will at all times hold or beneficially own equity
securities of the company of an amount which is neither less than ten per cent
nor 11[8]more
than twenty percent of the paid-up value of such securities12[9][:]
13[10][Provided that in case an investment
adviser is an adviser to more than one investment company, the application
shall be accompanied by an undertaking that the investment adviser shall invest
or arrange the investment for a minimum period of two years."];
(3)
The Authority, if it is satisfied after such enquiry
and after obtaining such further information as it may consider necessary:--
(ii) that it
would be in the interest of the capital market so to do, may grant a
certificate of registration to such company in Form II.
6. Investment policy and diversification.- (1) The investment policy of an investment
company shall be clearly and concisely stated in its Memorandum and Articles of
Association and the public offer for the sale of its securities:
(2) An investment
company shall not enter into any transaction in any security other than a
security which is listed on a stock exchange or for the listing of which an
application has been made to a stock exchange14[11][:]
10 10 Inserted by SRO No.46(1)/2001 dated 25th
January 2001
[8][9]Inserted
by Notification SRO 29(I)/99 dated 14Amended by Notification No. SRO No. 553(I)/84,
dated 13.06.1984-1-1999
[10]Inserted
by Notification SRO 29(I)/99 dated 14-1-1999
[11]Inserted by Notification SRO 29(I)/99 dated 14-1-1999
[10][12][Provided
that an investment company may invest in the unlisted securities upto ten per
cent in the goverment securities and rated fixed income securities having
minimum investment grade rating upto twent per cent of its total investment
portfolio subject to such conditions as the Authority may notify in the
official Gazette.];
(3) The investment of
an investment company in any other company shall not, at any time, exceed an
amount equal to [11][12][13]ten
percent of paid-up capital of the investment company or an amount sufficient to
acquire ten per cent of 17[issued capital] of that other company[13][:
Provided
that the Commission may, on application of investment company, relax any or all
conditions in case of an investment company established for a specific
investment objective where the intention to that effect was expressed in the
prospectus].
7. Sale of securities and cost thereof.- (1)
Securities representing the capital of an investment company shall be
offered to the public at par; but no
such offer shall be made-
(a) until
the investment adviser of the investment company has made [14][14][or
has arranged to make] an investment of the amount referred to in sub-rule (2)
of rules 5; and
(2)
An investment company shall not sell any securities for
any consideration other than cash.
(3)
All expenses incurred in connection with the
incorporation of an investment company
and the offer for sale of the securities of the company and the distribution
of such securities, including commission payable to the underwriters, shall be
borne by the investment adviser and shall be reimbursable by the company in
equal amounts paid annually over a period of
not less than five years.
(4)
[15][15][Interest
at the prevailing bank rate] shall be payable by the company in respect of the
expenses referred to in sub-rule (3).
(5)
The expenses referred to in sub-rule (3) shall be
reported to the Authority, giving their break-up under separate heads, as soon
as the distribution of the securities is completed.
8.
Prohibitions.- No
investment company shall-
(a)
merge with, acquire or takeover any other investment
company, unless it has obtained the prior approval of the Authority in writing
to the scheme of such merger, acquisition or takeover;
(c)
make a loan or advance of money to any person except in
connection with the normal business of the
investment company;
(d)
effect a short sale in any security;
(e)
purchase any security in a forward contract;
(f)
purchase any security on margin;
(g)
participate in a joint account with others in any
transaction;
(h)
apply any part of its assets to real estate,
commodities or commodities contracts;
(i)
acquire any security of which another investment
company is the issuer [17][but
this clause shall not apply in case of floatation of an investment company
established with a specific investment objective of investing in other
investment companies];
(j)
make an investment in a company which has the effect of
vesting the management, or control over the affairs, of such company in the
investment company;
(k)
employ as a broker, directly or indirectly, any
director, officer or employee [18][or
connected person] of the investment company or its investment adviser or any
director, officer or employee thereof;
(l)
issue at any time, without the prior approval of the
Authority in writing, a senior security which is either stock or represents
indebtedness.
9.
Transactions
with directors, etc.- No
investment company shall without the prior approval of the Authority in
writing, purchase from, or sell to, any director, officer or employee of the
investment company or of the investment adviser thereof or a person who
beneficially owns ten per cent or more of the equity securities of the company
or of its investment adviser.
10. Appointment of investment adviser.- (1)
No investment company shall appoint any person as an investment adviser except
by a contract in writing the terms of which have been previously approved by
the Authority in writing.
(2)
The contract shall, initially or on renewal, be valid
for a period not exceeding [19][17][ten]
years and shall not be renewed or modified unless such renewal or modification has been authorised
by the shareholders of the investment company in general meeting and approved
by the Authority.
(2A) [20][18]If
the contract, as initially entered into or as renewed, is terminated within the
first five years of the contract, and not later, compensation for each year of
the unexpired period of the contract shall be paid to the investment adviser at
the rate of one-fourth of his annual average remuneration during the expired
period of the contract.
Explanation.- Where the expired period is a fraction of a
year or includes a fraction of a year, the remuneration for the fraction of the
year shall be converted pro rata into full years’ remuneration and then the
average annual remuneration shall be worked out to determine the compensation
payable for the unexpired period of the contract; and
(3)
The contract shall, among other things, provide that
the investment adviser shall bear all expenditure in respect of the secretariat
and office space of the company and professional management, including all administrative,
accounting and legal services, and that the fee payable to the auditors and the
custodian, taxes on income of the company , brokerage, stamp duty and any other
duties or taxes connected with the sale or purchase of securities shall be payable
by the investment company.
11. Remuneration
payable to investment adviser.- The
investment adviser of an investment company shall be entitled to be paid
annually, after the accounts of the investment company have been audited, a remuneration:-
(a)
[21][19]during
the first five years of company’s existence, of an amount not exceeding [22][three]
per cent of the net assets of the company as at the end of its year of account
and thereafter of an amount equal to 28[two] per cent of
such assets; and
(b)
[23][20][of
an] amount not exceeding one-half of the amount by which the
dividend distributed by the company exceeds **twenty per cent.
Authority, if it is satisfied that it is necessary or
expedient so to do in the public interest or of the capital market in Pakistan,
may, by order in writing , direct an investment company, within such time as
may be specified in the order,-
(a)
to disinvest the whole or such part of the investment
portfolio as may be so specified;
(b)
to refrain from investing or disinvesting such securities as may be so specified;
(c)
to co-opt one or more persons nominated by the
Authority as members of the board of directors of the company with the same
status, powers and rights as the other members of the board.
13.
Amount
distributable to shareholders.- An
investment company shall distribute by way of dividend to its shareholders not
less than ninety per cent of its income derived from interest, dividends
received and capital gains arising from the acquisition and disposal of
securities as reduced by such expenses as are chargeable to company under these
rules, including the remuneration payable to the investment adviser.
14.
Publication of
portfolio securities.- Every investment company shall cause to be
published, in the Bulletin or other such publication of the stock exchange on
which its securities are listed, the names and the value of its portfolio
securities as at the end of each half-year.
15.
Custody of
securities.- (1) Every investment company shall place and
maintain the securities owned or held by the company with a custodian appointed
by it with the prior approval in writing of the Authority.
(2)
The investment company shall settle with the custodian
a scheme for the custody of securities which shall, among other matters,
provide for the circumstances in which the securities may be released from
custody.
(3)
The custodian shall, if it feels that the nature of any
release of a security from custody is contrary to the provisions of these
rules, report the matter to the Authority forthwith.
16. Maintenance of books of accounts and other
documents.- (1) Every investment
company shall maintain such books of accounts and other records as shall depict
a true and fair picture of its state of affairs, including--
(a)
journals, cash book and other records of original entry forming the basis of
entry in any ledger;
liability, income and expense;
(c)
ledgers (or other comparable record) showing at any
time securities which are receivable or deliverable;
(d)
record of transactions with the bank;
(e)
register of transaction in securities; and
(f)
record of the meetings of the board of directors.
(2) The books of
account and other records to be maintained under sub-rule (1) shall be
preserved for a period of not less than five years.
17. Periodical reports to shareholders,
etc.- (1) Every investment company shall transmit to
its shareholders.-
(a)
an annual report, together with a copy of the balance
sheet and income and expenditure account and the auditor’s report, not less
than [24][21](twenty
one) days before the date of the general meeting at which it is to be laid
before the shareholders; and
(2)
Such report, so far as may be applicable, shall be in
accordance with 32[23](requirements set out in the second
schedule to the these rules), and shall contain a statement showing the
securities owned at the beginning of the relevant period, securities purchased
or sold during such period, and the securities held at the end of such period
together with the value (at cost and at market),[26][24]
and the percentage in relation to its own assets and the paid -up capital of
the company whose securities are owned.
(3)
The statement of
income and expenditure of the investment company shall include a
statement of income and expenditure of the investment adviser in relation to
the investment company.
(4)
A copy of the annual report referred to in sub-rule (1)
shall, within the time specified therein, be furnished to the Authority
together with a statement containing the following information in respect of
the investment company as at the end of the year:-
(a)
Total number of security holders.
(b)
Particulars of persons holding five per cent or more of
the securities of the company at any time during the year.
(c)
Names and number of securities held by directors and
officers of the company.
(d)
Any security of any other issuer sold and then bought
during any six-month period.
(e)
Particulars of the personnel (executive, research and
other) of the investment company.
(f)
Remuneration paid to the investment adviser.
(g)
Particulars of the personnel (executive, research and
others) of the investment adviser.
(h)
Fee paid to the auditors.
(i)
The date, names of persons attending and minutes of
each meeting of the board of directors. *(j) Omitted. *(k) Omitted.
[27][25](5)
Every investment company shall, as and when required by the Authority by order
in writing and within such time as may be specified therein, furnish to the
Authority the information regarding the sale price and the capital gain or loss
in respect of each security purchased and sold.
[28][(6) Every investment company shall furnish to the
stock exchange, where the securities of the company are listed, the Commission
and any association of self-regulatory organization, or as directed by the
Commission, within fourteen days of the last day of the preceding month, information,
as on last date of the preceding month, on the net asset value of securities
issued by it, the net assets have been computed in the manner prescribed in
clause (e) of rule (2).]
18. No person to commence business without
registration.- No person shall commence business as an investment adviser
unless such person is registered with the Authority under these rules.
19. Eligibility for registration.- Any person proposing to commence business as
an investment adviser shall be eligible for registration under these rules if
it fulfils or complies with following
conditions or requirements, namely:-
(a)
that such person is registered as a company under the
Companies Ordinance, 1984 (XLVII of 1984) [29][26]and
has capital of not less than twenty million rupees:
Provided that an existing investment adviser
shall raise its capital to a minimum level of twenty million rupees within a
period of three years.";
(b)
that no director, officer or employee of such company
has been convicted of fraud or breach of trust.
(c)
that no director, officer or employee of such company
has been adjudicated as insolvent or has
suspended payment or has
compounded with his creditors;
(d)
that the directors of such company are, to the
satisfaction of the Authority, persons of means and integrity and have special
knowledge of the matters which the company may have to deal with as an
investment adviser; *and
[30][27](e)
that such a person furnishes an undertaking, within ninety days of the grant
of a certificate of registration, that
the investment adviser shall furnish evidence to the satisfaction of the
Authority that the personnel employed by it for executive, research or other related
functions possess sufficient educational qualifications and professional
experience to manage funds for te investment comapnies and rendering advisory
services.";
20. Registration.- (1) Any person who is
eligible for registration under rule 19 as an investment adviser may make an
application in Form III to the Authority for registration under these rules.
(2)
An application under sub-rule (1) shall, besides the
other documents referred to in Form III, *be accompanied by:-
[31][28]a)
an undertaking that the company will at all times maintain a net capital
balance in the capital account of an amount which is not less than one and a
half per cent of the paid-up capital;
and
(3)
The Authority, if it is satisfied after such enquiry
and after obtaining such further information as it may consider necessary,-
(i) that the applicant is eligible for
registration ; and (ii) that it would be in the interest of the capital market
so to do, may grant a certificate of registration to such person in Form IV.
21. Maintenance of books of accounts etc.-
(1) Every investment adviser shall
maintain such books of accounts and other records as shall depict a true and
fair picture of its state of affairs, including-
(a)
journals, cash book and other records of original entry
forming the basis of entry in any ledger;
(b)
ledgers (or other comparable record) reflecting asset,
liability, income and expense;
(c)
ledgers (or other comparable record) showing
securities in the portfolio;
(d)
record of transactions with banks;
(e)
record of the meetings of the board of directors; and
(f)
original record of all reports, analysis and memoranda
containing investment advice distributed.
(2) Such books
of accounts and other records shall be preserved for period of not less than
five years.
22.
Submission of
annual report to Authority.- Every
investment adviser shall submit to the
Authority an Annual report, together with a balance-sheet and income and
expenditure account and the auditor’s report, within six months of the close of
its year of account.
23.
Enquiry.- (1)
The Authority may cause an enquiry to be made by any person appointed in
this behalf into the affairs of any investment adviser registered under these
rules or any of its directors, managers or other officers.
(2)
Where an enquiry under sub-rule (1) has been undertaken
every director, manager or other officer of the investment adviser to which or
to whose director, manager or other officer the enquiry relates and every other
person who has had any dealing with such investment company, investment
adviser, director, partner, manager or officer shall furnish such information
in his custody or power or within his knowledge relating to, or having bearing
on the subject-matter of the enquiry as the person conducting the enquiry may
by notice in writing require.
(3)
The person conducting an enquiry under sub-rule (1) may
call for, inspect and seize books of account and documents in possession of any
such investment adviser or person.
24. Cancellation of registration.- (1)
Where the Authority is of the opinion that an investment adviser has
contravened any provision, or has otherwise failed to comply with any
requirement, of the Ordinance or of any rule or direction made or given
thereunder, the Authority may, if it considers necessary in the public interest
so to do by order in writing,-
(a)
cancel the registration of the investment adviser; or
(b)
remove the investment adviser from the office of
investment adviser of an investment company:
Provided that no such
order shall be made except after giving the investment adviser an opportunity
of being heard.
(2)
An investment adviser removed from office under clause
(b) of sub-rule (1), shall not be entitled to or be paid any compensation or
damages for loss of termination of office.
(3)
An investment adviser of an investment company who is
removed from office under clause (b) of sub-rule (1) shall not be appointed to
such office of that company until after the expiration of a period of five
years from the date of such removal.
(4)
Where the investment adviser of an investment company
is removed from that office under clause (b) of sub-rule (1) no director or
officer of the investment adviser shall hold the office of director of the
investment company or any other office connected with the conduct or management
of the affairs of the investment company, until after the expiration of a
period of five years from the date of such removal.
(5)
Where the investment adviser is removed from office
under clause (b) of sub-rule (1) the Authority may, by order in writing,
appoint a person, hereinafter referred to as the Administrator, to manage the
affairs of the investment company subject to such terms and conditions as may
be specified in the order.
(6)
The Administrator shall receive such remuneration from
the investment company as the Authority may determine.
(7)
The management of the affairs of the investment company
shall, on and from the date of appointment of the Administrator, vest in him.
(8)
If at any time if appears to the Authority that the
purpose of the order appointing the Administrator has been fulfilled, it may
permit the investment company to appoint another person to the office of
investment adviser; and , on the appointment of such investment adviser, the
Administrator shall cease to hold office.
[See
rule 5 (1)]
TO
[33]
The Corporate Law Authority, Government of Pakistan, Islamabad.
Dear Sir,
We hereby apply for the registration of ...........................
(Name of Investment Company)
under rule 5 of the Investment Companies and Investment
Advisers Rules, 1971.
2.
An undertaking (in original) from the investment
adviser in terms of rule 5(2) of the aforesaid Rules and four copies of each of
the following documents are enclosed:-
(i)
Memorandum and Articles of Association.
(ii)
Investment Advisory Contract.
(iii)
Custodian Agreement.
(iv)
Underwriting Agreement.
3.
We hereby undertake to take all steps necessary to have
the securities issued by us listed on a stock exchange.
4.
Necessary information required in the annex to this
form is furnished. We undertake to keep the information up-to-date at all
times.
Yours faithfully,
Signature of
the Secretary or a director of the applicant company. "THE SECOND SCHEDULE
[See
rule 17(2)]
DISCLOSURE
REQUIREMENTS FOR INVESTMENT COMPANIES
(l) Annual report must contain all the
information required in this Schedule. Interim reports must at least contain
the statement of assets and liabilities and the investment portfolio. Where the
investment company has paid or proposes to pay an interim dividend, the amount
of dividend should be disclosed.
(2)
All reports must contain comparative figures for the
previous period except for the investment portfolio.
(3)
The items listed under the statement of assets and
liabilities, income statement, distribution statement, statement of movements
in reserves and the notes to the accounts, where applicable, must be disclosed.
It is, however, not mandatory to adopt the format as shown or to disclose the
items in the same order.
The following must be separately
disclosed, namely:-
(i)
total value of investments;
(ii)
bank balances;
(iii)
preliminary and floatation costs;
(iv)
dividends and other receivable;
(v)
bank loan and overdrafts or other forms of borrowings;
(vi)
dividend payable;
(vii)
total value of all assets;
(viii)
total value of all liabilities; and
(ix)
net asset value.
(l) Total investment income net of withholding
tax, broken down by category.
(2)
Total other income, broken down by category.
(3)
Element of income and capital gains.
(4)
An itemized list of various costs which have been
debited to the scheme including,--
(a)
fees paid to the investment adviser;
(b)
remuneration of the custodian;
(c)
amortization of formation costs; director's fee and
remuneration;
(d)
safe custody and bank
charges; auditor's remuneration;
(e)
borrowing expenses; legal and other professional fees;
and
(f)
any other expense borne by the company.
(5)
Taxes.
(6)
Amounts transferred to and from reserves.
(7)
Net income to be carried forward for distribution.
(l) Amount brought forward at the beginning of
the period.
(2)
Net income for the period.
(3)
Interim dividend and date of distribution.
(4)
Final dividend per share.
(5)
Undistributed income carried forward.
(l) Net asset value per share as at the beginning
of the period.
(2)
Net asset value per share as at the end of the period.
(3)
Any item resulting in an increase or decrease in net
asset value of the share including, -
(i)
surplus or loss on sale of investments;
(ii)
exchange gain or loss;
(iii)
unrealized appreciation or diminution in value of
investments; and
(iv)
net income for the period less distribution.
(4)
Amounts transferred to and from the revenue account.
The following matters
shall be set out in the notes to the accounts.
(1)
Principal accounting policies:
(a)
The basis of valuation of the assets of the company
including the basis of valuation of unquoted and unlisted securities;
(b)
the revenue recognition policy regarding dividend
income and other income;
(c)
foreign currency translation, if any;
(d)
the basis of amortization of formation costs;
(e)
taxation; and
(f)
any other accounting policy adopted to deal with items
which are judged material or critical in determining the transactions and in
stating the disposition of the investment company.
Note.-
Any changes to the above accounting policies and their financial effects upon
the accounts should also be disclosed.
(2)
Transactions with connected persons:
The following
transactions should be disclosed, namely:-
(l)
Details of all transactions entered into during the
period between the company and the investment adviser, or any entity in which
these parties or their connected persons have a material interest; and
(2) name of any director of the investment
adviser or any connected person if such a person becomes entitled to profits
from transactions in shares or from management of the company and the amount of
profits to which such person becomes entitled.
(3)
Borrowings:
(l)
State whether the borrowings are secured or unsecured
and the duration of the borrowings.
(2)
Contingent liabilities and commitments of the company.
(3)
If the free negotiability of any asset is restricted by
statutory or contractual requirements, this must be stated.
The report of the auditor should state --
(l) whether in the auditor's opinion, the
accounts prepared for that period have been properly prepared in accordance
with the relevant provisions of the rules;
(2)
without prejudice to the foregoing, whether in the
auditor's opinion, a true and fair view is given of the disposition of the
company at the end of the period and of the transactions of the scheme of the
period then ended;
(3)
if the auditor is of the opinion that proper books and
records have not been kept by the company or the accounts prepared are not in
agreement with the company's books and records, that fact; and
(4)
if the auditor has failed to obtain all the information
and explanations which, to the best of his knowledge and belief, are necessary
for the purpose of the audit, that fact.
(l) Number or quantity of each holding together
with the description and market value.
(2)
The total investment stated at cost.
(3)
The value of each holding as a percentage of the total
investments.
(4)
Statement of movements in portfolio holdings since the
end of the preceding accounting period.
(l) A comparative table covering the last three
financial years and including, for each financial year, at the end of the
financial year.--
(a)
total net asset value; and
(b)
net asset value per share.
(2) A performance record over the last ten
financial years; or if the company has not been in existence during the whole
of that period in which it has been in existence, showing the earnings per
share and dividend distribution during each of those
years."
Annex to Form I 1. Name, address and telephone
number(s) of the Company
....................................................
2.
Date and place of incorporation
...................................................
3.
Names and addresses of directors, distinguishing between promoter directors and other directors ....................................................
4.
Whether any director has been convicted of fraud or breach of trust.
...................................................
5.
Whether any director has been adjudicated as insolvent or has suspended payment or has compounded with his creditors. ...................................................
6.
Names and addresses of officers
and employees.
...................................................
7.
Whether any officer or employee
has been convicted for fraud or breach
of trust.
...................................................
8.
Whether any officer or employee
has been adjudicated as insolvent or
has suspended payment or has
compounded with his creditors.
...................................................
9.
Names of the directors, officers
and employees of the investment
company and those of the investment
adviser thereof who are members of a
stock exchange. ...................................................
10.
Director’s interest, direct or
indirect in any other investment
company.
...................................................
11.
Previous experience of the promoters/directors in the investment field.
...................................................
12.
The financial standing of the promoters/directors (Attach proof, if any).
...................................................
13.
(a) Authorised
capital of
the
company. ....................................................
(b)
Part of such capital proposed to be
raised through public offer.
....................................................
14.
Name, address and telephone number
of the investment adviser.
...................................................
15.
Name and address of the custodian.
...................................................
16.
Name and address of the underwriter.
...................................................
17.
Financial standing and resources of
the underwriter.
...................................................
[See
rule 5(3)]
Islamabad, the________19__
The *Corporate Law Authority having considered the
application for registration under rule 5 of the Investment Companies and Investment
Advisers Rules, 1971,
by.................................................(Name of the
Investment
Company)
and being satisfied that
the
said..........................................................
......................................................(Name
of the Investment
Company)
is eligible for registration and that it would be in the
interest of the
capital market so to do, hereby grants, in exercise of the
powers conferred by rule 5 of the Investment Companies and Investment
Advisers Rules, 1971, registration
to...................................................
........................................................
(Name of the investment company) subject to the conditions stated herein below
or as may be
prescribed or imposed hereafter.
2. The draft
agreement between............................................
........................................................ (Name of the
investment company) and ...................................................
(Name of the investment Adviser) is approved subject to the following
conditions:-
-
3.
The appointment of
...............................................................
(Name of custodian)
is hereby approved subject to the following conditions:-
4.
The appointment of
*
...............................................................
(Name of
the investment adviser)
is hereby approved subject to the following conditions:-
[See
rule 20 (1)]
TO
*The Corporate Law
Authority,
Government
of Pakistan, Islamabad.
Dear Sir,
We hereby apply for
the grant of registration of
..................................................................(Name
of Investment adviser) under rule 20 of the Investment Companies and Investment
Advisers Rules, 1971.
2.
Four copies of the Memorandum and Articles of
Association are enclosed.
3.
We hereby undertake to maintain at all times a net
capital balance in the capital account of an amount which is not less than one
lac rupees.
4.
Necessary information required in the annex to this
form is furnished. We undertake to keep this information up-to-date at all
times.
Signature
of the Secretary or a director of the applicant.
*
Annex to Form III
1. Name,
address and telephone
number(s)
of applicant. ............................................................ 2. Names
and addresses of directors.
............................................................
3.
Whether any director has been convicted of fraud or breach of trust.
............................................................
4.
Whether any director has been adjudicated as insolvent or has suspended payment
or has compounded with his creditors.
............................................................
5.
Names and addresses of officers
and employees.
............................................................
6.
Whether any officer or employee has been convicted of fraud or breach of trust.
...........................................................
7.
Whether any officer or employee has been adjudicated as insolvent or has suspended payment or has compounded with his creditors.
............................................................
8.
Whether any director or officer
has any interest in any investment company.
............................................................
9.
What is the financial standing of
the directors.
............................................................
10.
Give a brief description of the
kind of investment advisory
services proposed to be provided,
the
organizational se up, previous professional experience of directors / officers, etc.
...........................................................
[see
rule 20 (3)]
*CORPORATE
LAW AUTHORITY
The *Corporate
Law Authority having considered the application for registration under rule 20
of the Investment Companies and Investment Advisers Rules 1971/-
by................................................................................(Name
of adviser) and being satisfied that the said
....................................................................................
(Name of adviser) is eligible for registration and that it would be in the
interest of the capital market so to do, hereby grants, in exercise of the
powers conferred by rule 20 of the Investment Companies and Investment Advisers
Rules, 1971, registration to
.....................................................................................(Name
of adviser) subject to the condition
stated herein below or as may be prescribed or imposed hereafter.
*
[2]
[2] Inserted by SRO No.46(1)/2001 dated 25th January 2001
[22]
Substituted by SRO No.46(1)/2001 dated
25th January 2001 28 Substituted by SRO
No.46(1)/2001 dated 25th January 2001
[25]
[22]Amended
by Notification SRO 29(I)/99 dated 14-1-1999
32[23]Amended by Notification SRO 29(I)/99 dated
14-1-1999
** Substituted by Notification SRO 29(I)/99
dated 14-1-1999
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