05-04-2010, 08:54 PM
F.E. Circular No. 29
16th February, 1991
All Authorised Dealers
in Foreign Exchange
Dear Sirs,
ISSUE AND TRANSFER OF SECURITIES IN FAVOUR OF NON-RESIDENTS
Section is 13 (1) of the Foreign Exchange Regulation Act, 1947 provides, inter-alia, that no person shall except with the general or special permission of the State Bank, issue any security, which is registered or to be registered in Pakistan, to a person resident outside Pakistan or transfer any security in favour of a person resident outside Pakistan or send any security to any place outside Pakistan. The State Bank, in exercise of these powers, has granted certain exemptions as laid down in Chapter XX of the Exchange Control Manual and F.E. Circular No. 55 of 1983. It has now been decided to grant certain further exemptions. Accordingly, paragraphs 6 & 7, Chapter XX of the Exchange Control Manual have been revised as under-
"6. The State Bank has granted the following exemptions from the provisions of Section 13(1) of the Act in connection with the issue, transfer and export of securities registered or to be registered in Pakistan-
a) Issue of Pakistani securities of all types including NIT Units but excluding shares of public and private limited companies, except as provided in sub-para (b), below, in favour of "persons resident outside Pakistan" is allowed provided the securities are registered at the Pakistan address of the purchasers and a clear undertaking is furnished by the purchasers that no repatriation of capital and profits/dividends accepting thereon will be claimed at any stage.
B) Transfer of shares of public limited companies, quoted on Pakistan Stock Exchanges to Pakistan nationals residing abroad subject to the following conditions--
(i) Payment for the value of shares is made to the Dollar/Stock Exchange Broker by a remittance from abroad for which a certificate from the bank through whom the remittance has been received, is produced.
(ii) The shares are registered at the Pakistan address of the buyer.
(iii) The buyer has given an undertaking in writing that he will not apply for remittance of dividend or sale proceeds of the shares.
c) Sale of Pakistani securities hold by "persons resident outside Pakistan," on the basis of non-repatriation of capital and profits/dividends, to a person whether resident in or outside Pakistan is allowed provided the securities are registered at the Pakistan address of the purchaser and a clear undertaking is given by him that no repatriation of capital and profits/dividends accruing thereon will be claimed at any stage.
d) Transfer of Pakistani securities hold by " a person resident outside Pakistan" on repatriable basis to other "persons resident outside Pakistan" on the same basis, against payment outside Pakistan, provided a certificate to this effect is given by the transferee.
e) Issue of shares out of new public share offers, to Pakistan nationals resident outside Pakistan on repatriable basic, provided the purchase price is paid by the subscriber from abroad in foreign exchange either as a remittance through normal banking channel or out of a foreign currency account maintained by the subscriber in Pakistan. This permission is subject to the condition that repatriation of dividend and the dis-investment proceed of the security will be allowed provided the subscriber continues to be resident abroad and his stay in Pakistan does not exceed six months.
f) Issue or transfer of shares on repatriable basis to a person, who is not a citizen of Pakistan, or who holds two nationalities including Pakistani nationality by those manufacturing concerns which do not require specific approval of the Government for establishment or which have been established with the permission of the Government, shares shall be issued transferred by the concerned company on receipt of Authorised Dealer's certificate concerning payment of purchase price, (the issue price in the case of new issues and the market price as certified by a stock exchange broker, in the case of quoted shares) to the company/holder in Pakistan in foreign exchange, either by a remittance from abroad or out of a foreign currency account maintained by the subscriber/buyer in Pakistan.
g) Transfer of shares on repatriable basis to a Pakistan national resident abroad, provided the purchase price, as certified by a stock exchange broker is paid in foreign exchange and a certificate to that effect is produced from an Authorised Dealer.
h) Issue of NIT Units and other government securities to foreign nationals residents in Pakistan, on the basis of repatriation of capital and profits subject to the following conditions--
i) The investment is made exclusively for the purpose of availing of income tax relief provided the amount does not exceed the investment allowance admissible under the Income Tax Rules.
ii) The investment is made out of genuine savings of the investors in Pakistan or out of funds received from abroad for the purpose through banking channel.
iii) remittance of dis-investment proceeds will be allowed by the State Bank at the time of retirement on production of certificate from the applicant's banker certifying the position set out in sub-paras (i) and (ii) above.
a) Companies issuing shares on repatriable basis, as permitted in sub-paragraphs (e) & (f) of paragraph 6, may open foreign currency collection accounts with banks abroad for receiving the subscription in foreign currency. They may also allow refund to unsuccessful applicants. The amounts subscribed by the successful applicants should be repatriated to Pakistan and foreign currency accounts, closed within a week of the allotment of shares and a Proceeds Realisation Certificate obtained from the concerned Authorised Dealer in Pakistan. In the case of allotment of shares to a Pakistan national resident outside Pakistan a declaration in the form attached at Annexure 'A' should also be obtained. The Proceeds Realisation Certificate and the declarations should be submitted to the Exchange Control Department (Investment Division), State Bank of Pakistan, Central Directorate, Karachi alongwith a list (Annexure 'B") of all the persons (non-resident Pakistanis and foreigners) to whom the shares have been allotted, through an Authorised Dealer, to be designated for this purposes. One copy of the list will be returned by the Exchange Control Department to the designated Authorised Dealer after verification.
b) In case shares are to be issued to non-residents against the value of plant and machinery supplied by them, an application should be submitted to the Area Exchange Control Office for issue of "exchange Entitlement Certificates" alongwith the Invoices, Bills of Lading, Bills of Entry and Import Permit. Once the Exchange Entitlement Certificate has been issued, the company concerned may issue shares to the non-resident investors and surrender the 'Exchange Entitlement Certificate' to the Investment Division in place of bank's encashment certificate.
c) After registering transfer of shares in favour of a non-resident, as permitted vide sub-paragraph (f) and (g) of paragraph 6, the company concerned shall send and intimation by letter (in duplicate) to the Investment Division, showing the name, nationality, and address of the non-resident shareholder and the number of shares registered in his name alongwith its face value. The letter should be accompanied by proceeds realisation certificate, showing the amount of sale price received in Pakistan. The State Bank would return one copy of the letter after its verifications.
d) The verification by the Exchange Control Department as mentioned in sub-paragraph (a) & (c) above will form the authority for the following-
(I) Issue of the shares to the eligible persons and its export outside Pakistan.
(ii) Remittance of dividend not applicable tax.
(iii) Remittance of the disinvestment proceeds provided the amount to be remitted is not in excess of the sale price as certified by a stock exchange broker and tax if applicable has been paid.
Yours faithfully,
(A. L. SHAHID)
SENIOR DEPUTY DIRECTOR
ANNEXURE 'A'
Dated
The Director,
Exchange Control Department,
State Bank of Pakistan,
Central Directorate,
KARACHI.
Dear Sir,
APPLICATION FOR SHARES_____________________
M/S._____________________________
I declare that I am a Pakistan national ordinarily resident outside Pakistan holding Pakistan Passport No. ___________issued at _______________________on __________________ and I hold residence visa/work parmit No. _________________________issued by the Government of _____________________________. I undertake to inform you if my stay in Pakistan exceeds six months.
Yours faithfully,
(SIGNATURE)
Name
Address
REGISTRATION OS SHARES HELD BY 'PERSON RESIDENT OUTSIDE PAKISTAN'.
NAME OF THE COMPANY_________________
S.No.
Name & Address of the share holder
Nationality
No. of shares held.
Value
1
2
3
4
5
Total
________________________
________________________
________________________
________________________
Date
16th February, 1991
All Authorised Dealers
in Foreign Exchange
Dear Sirs,
ISSUE AND TRANSFER OF SECURITIES IN FAVOUR OF NON-RESIDENTS
Section is 13 (1) of the Foreign Exchange Regulation Act, 1947 provides, inter-alia, that no person shall except with the general or special permission of the State Bank, issue any security, which is registered or to be registered in Pakistan, to a person resident outside Pakistan or transfer any security in favour of a person resident outside Pakistan or send any security to any place outside Pakistan. The State Bank, in exercise of these powers, has granted certain exemptions as laid down in Chapter XX of the Exchange Control Manual and F.E. Circular No. 55 of 1983. It has now been decided to grant certain further exemptions. Accordingly, paragraphs 6 & 7, Chapter XX of the Exchange Control Manual have been revised as under-
"6. The State Bank has granted the following exemptions from the provisions of Section 13(1) of the Act in connection with the issue, transfer and export of securities registered or to be registered in Pakistan-
a) Issue of Pakistani securities of all types including NIT Units but excluding shares of public and private limited companies, except as provided in sub-para (b), below, in favour of "persons resident outside Pakistan" is allowed provided the securities are registered at the Pakistan address of the purchasers and a clear undertaking is furnished by the purchasers that no repatriation of capital and profits/dividends accepting thereon will be claimed at any stage.
B) Transfer of shares of public limited companies, quoted on Pakistan Stock Exchanges to Pakistan nationals residing abroad subject to the following conditions--
(i) Payment for the value of shares is made to the Dollar/Stock Exchange Broker by a remittance from abroad for which a certificate from the bank through whom the remittance has been received, is produced.
(ii) The shares are registered at the Pakistan address of the buyer.
(iii) The buyer has given an undertaking in writing that he will not apply for remittance of dividend or sale proceeds of the shares.
c) Sale of Pakistani securities hold by "persons resident outside Pakistan," on the basis of non-repatriation of capital and profits/dividends, to a person whether resident in or outside Pakistan is allowed provided the securities are registered at the Pakistan address of the purchaser and a clear undertaking is given by him that no repatriation of capital and profits/dividends accruing thereon will be claimed at any stage.
d) Transfer of Pakistani securities hold by " a person resident outside Pakistan" on repatriable basis to other "persons resident outside Pakistan" on the same basis, against payment outside Pakistan, provided a certificate to this effect is given by the transferee.
e) Issue of shares out of new public share offers, to Pakistan nationals resident outside Pakistan on repatriable basic, provided the purchase price is paid by the subscriber from abroad in foreign exchange either as a remittance through normal banking channel or out of a foreign currency account maintained by the subscriber in Pakistan. This permission is subject to the condition that repatriation of dividend and the dis-investment proceed of the security will be allowed provided the subscriber continues to be resident abroad and his stay in Pakistan does not exceed six months.
f) Issue or transfer of shares on repatriable basis to a person, who is not a citizen of Pakistan, or who holds two nationalities including Pakistani nationality by those manufacturing concerns which do not require specific approval of the Government for establishment or which have been established with the permission of the Government, shares shall be issued transferred by the concerned company on receipt of Authorised Dealer's certificate concerning payment of purchase price, (the issue price in the case of new issues and the market price as certified by a stock exchange broker, in the case of quoted shares) to the company/holder in Pakistan in foreign exchange, either by a remittance from abroad or out of a foreign currency account maintained by the subscriber/buyer in Pakistan.
g) Transfer of shares on repatriable basis to a Pakistan national resident abroad, provided the purchase price, as certified by a stock exchange broker is paid in foreign exchange and a certificate to that effect is produced from an Authorised Dealer.
h) Issue of NIT Units and other government securities to foreign nationals residents in Pakistan, on the basis of repatriation of capital and profits subject to the following conditions--
i) The investment is made exclusively for the purpose of availing of income tax relief provided the amount does not exceed the investment allowance admissible under the Income Tax Rules.
ii) The investment is made out of genuine savings of the investors in Pakistan or out of funds received from abroad for the purpose through banking channel.
iii) remittance of dis-investment proceeds will be allowed by the State Bank at the time of retirement on production of certificate from the applicant's banker certifying the position set out in sub-paras (i) and (ii) above.
a) Companies issuing shares on repatriable basis, as permitted in sub-paragraphs (e) & (f) of paragraph 6, may open foreign currency collection accounts with banks abroad for receiving the subscription in foreign currency. They may also allow refund to unsuccessful applicants. The amounts subscribed by the successful applicants should be repatriated to Pakistan and foreign currency accounts, closed within a week of the allotment of shares and a Proceeds Realisation Certificate obtained from the concerned Authorised Dealer in Pakistan. In the case of allotment of shares to a Pakistan national resident outside Pakistan a declaration in the form attached at Annexure 'A' should also be obtained. The Proceeds Realisation Certificate and the declarations should be submitted to the Exchange Control Department (Investment Division), State Bank of Pakistan, Central Directorate, Karachi alongwith a list (Annexure 'B") of all the persons (non-resident Pakistanis and foreigners) to whom the shares have been allotted, through an Authorised Dealer, to be designated for this purposes. One copy of the list will be returned by the Exchange Control Department to the designated Authorised Dealer after verification.
b) In case shares are to be issued to non-residents against the value of plant and machinery supplied by them, an application should be submitted to the Area Exchange Control Office for issue of "exchange Entitlement Certificates" alongwith the Invoices, Bills of Lading, Bills of Entry and Import Permit. Once the Exchange Entitlement Certificate has been issued, the company concerned may issue shares to the non-resident investors and surrender the 'Exchange Entitlement Certificate' to the Investment Division in place of bank's encashment certificate.
c) After registering transfer of shares in favour of a non-resident, as permitted vide sub-paragraph (f) and (g) of paragraph 6, the company concerned shall send and intimation by letter (in duplicate) to the Investment Division, showing the name, nationality, and address of the non-resident shareholder and the number of shares registered in his name alongwith its face value. The letter should be accompanied by proceeds realisation certificate, showing the amount of sale price received in Pakistan. The State Bank would return one copy of the letter after its verifications.
d) The verification by the Exchange Control Department as mentioned in sub-paragraph (a) & (c) above will form the authority for the following-
(I) Issue of the shares to the eligible persons and its export outside Pakistan.
(ii) Remittance of dividend not applicable tax.
(iii) Remittance of the disinvestment proceeds provided the amount to be remitted is not in excess of the sale price as certified by a stock exchange broker and tax if applicable has been paid.
Yours faithfully,
(A. L. SHAHID)
SENIOR DEPUTY DIRECTOR
ANNEXURE 'A'
Dated
The Director,
Exchange Control Department,
State Bank of Pakistan,
Central Directorate,
KARACHI.
Dear Sir,
APPLICATION FOR SHARES_____________________
M/S._____________________________
I declare that I am a Pakistan national ordinarily resident outside Pakistan holding Pakistan Passport No. ___________issued at _______________________on __________________ and I hold residence visa/work parmit No. _________________________issued by the Government of _____________________________. I undertake to inform you if my stay in Pakistan exceeds six months.
Yours faithfully,
(SIGNATURE)
Name
Address
REGISTRATION OS SHARES HELD BY 'PERSON RESIDENT OUTSIDE PAKISTAN'.
NAME OF THE COMPANY_________________
S.No.
Name & Address of the share holder
Nationality
No. of shares held.
Value
1
2
3
4
5
Total
________________________
________________________
________________________
________________________
Date
