Note: This Chapter was updated, revised and renumbered via
the reprint of Chapter 20 as published and released by the
State Bank of Pakistan (31 December 1994).

CHAPTER  XX
SECURITIES

1. Definition.
2. Import of Securities.
3. Export of Foreign Securities.
4. Export of Pakistani Securities.

5. Transfer of Securities to Non-Residents.

6. General Exemption.

(a)  Issue of Pakistani Securities to Persons Resident outside Pakistan on

Non-Repatriation Basis.

(b)Transfer of Shares of Public Limited Companies to Pakistan Nationals

residing abroad on Non- Repatriation Basis.

(c)Transfer of Securities held by Persons Resident outside Pakistan to

Persons whether Resident in or outside Pakistan on Non-Repatriation
Basis.

(d) Transfer of Securities held by a Person Resident outside Pakistan to

mother Person Resident outside Pakistan against Payment outside
Pakistan.

(e) Issue of NIT Units and other Government Securities to Foreign

Nationals temporarily Resident in Pakistan on Repatriation Basis.

6 (A) -No title-

7. Sources of Finance for Purchase of Securities etc.

8. (a) Trading of Quoted-Shares by Non-Residents.
(b) Trading of Federal Investment Bonds & Treasury Bills in the
Secondary Market.
9. Issue and Encashment of Foreign Exchange Bearer Certificates / U.S.
Dollar Bearer Certificates / Five Years Foreign Currency Bearer
Certificates.
10. Issue of foreign exchange against Encashment of Foreign Exchange
 Bearer Certificates / U. S. Dollar Bearer Certificates / Five Years Foreign
Currency Bearer Certificates.
11. Export and Transfer of Foreign Exchange Bearer Certificates / U.S. Dollar
Bearer Certificates / Five Years Foreign Currency Bearer Certificates.
12. Transfer between Registers.
13. (a) Holding and Disposal of Foreign Securities.
(b) Investment Abroad by Resident Pakistanis.
14. Registration of Foreign Securities.
15. Under-writing of shares, term certificates and Modaraba certificates by
foreign banks.
16. Permission of Pakistani Branches of Foreign Banks to invest in Corporate
Fixed Income Securities.

1. Definition.

Section 2 of the Act defines "security" as shares, stocks, bonds, debentures,

debenture stock and Government securities as defined in the Securities Act,
1920, deposit receipts in respect of deposit of securities and units or sub-units
of unit trusts but does not include bills of exchange or promissory notes other
than Government promissory notes. A "foreign security" is defined as a security
issued elsewhere than in Pakistan and any security the principal of or interest on
which is payable in any foreign currency or elsewhere than in Pakistan. For the
purpose of Section 13 of the Act, the term "security" also includes coupons or
warrants representing dividends or interest and life or endowment insurance
policies.

For the purposes of Section 13 of the Act, the term "a person resident outside
Pakistan" covers a foreign national including a foreign national of Indo-Pakistan
origin as also a Pakistani holding dual nationality for the time being resident in
Pakistan and a company registered in Pakistan which is controlled directly or
indirectly by a person resident outside Pakistan. In this connection a reference is
also invited to para 2 of Chapter-XIX.

2. Import of Securities.

There are no restrictions under the Act on import into Pakistan of any securities
whether Pakistani or foreign.

3. Export of Foreign Securities.

In terms of clause(a) of sub-section 1 of Section 13 of the Act, the taking or

sending of any securities to any place outside Pakistan except with the general
or special permission of the State Bank, is prohibited. Persons in Pakistan who
are holders of foreign securities and who wish to send such securities to banks,
brokers or agents abroad for purpose of sale, transfer, etc., should apply to the
State Bank through an Authorised Dealer for necessary export licence.

Permission for export of such securities will be granted provided the securities
are sent through an Authorised Dealer who should give an undertaking that the
securities will be received back in Pakistan within a specified period or in the
case of sale, the sale proceeds in foreign currency will be repatriated to
Pakistan. State Bank may also consider applications for exchange of foreign
shares and/or securities held by residents of Pakistan with Pakistan shares
and/or securities held by residents abroad. Applications for this purpose should
be made to the State Bank through an Authorised Dealer or stock and share
broker.

4. Export of Pakistani Securities.

Pakistan nationals as also "persons resident outside Pakistan" holding Pakistani

securities desirous of sending or taking out the Pakistani securities not covered
under the succeeding para 7 are required to obtain prior permission of the State
Bank. Application for the purpose should be made to the State Bank through an
Authorised Dealer.

5. Transfer of Securities to Non-Residents.

In terms of clause (b) of sub-section 1 of Section 13 of the Act, transfer of any

security or creation or transfer of any interest in a security to, or in favour of "a
person resident outside Pakistan" is prohibited except with the general or special
permission of the State Bank. The above prohibition applies to transfer of (i) all
Pakistani securities (i.e. securities expressed to be payable in Pakistan currency
or registered in Pakistan) whether held by persons resident in or outside
Pakistan and (ii) all foreign securities held by Pakistan nationals. Pledging or
hypothecation of securities to or in favour of non-residents e.g., as collateral or
security for credit facilities abroad, (see Chapter XIX) or utilizing them for
forming trusts or settlements of which a non-resident is the beneficiary is also
prohibited under Section 13 of the Act. In the case of securities registered in
Pakistan, the companies concerned must obtain permission of the State Bank
before registering its transfer in the name of "persons resident outside
Pakistan". In terms of Section 13 of the Act Authorised Dealers are required to
obtain permission of the State Bank before purchasing shares or securities
registered in Pakistan on behalf of "persons resident outside Pakistan".

6. General Exemption.

Read directive by SBP regarding  the procedure for reporting transactions

routed through the 'Special Convertible Rupee Account' and the relative
code numbers.
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) I.

Issue of shares/Modaraba Certificates / Trust & Fund Units out of new public
offers including right issues, on repatriable basis and transfer of shares quoted
on the stock exchange on repatriable basis, to the following, provided the issue
price or purchase price, as certified by a stock exchange broker, is paid in
foreign exchange either by a remittance from abroad through normal banking
channels or out of a foreign currency account maintained by the subscriber/
buyer in Pakistan:

Above Paragraph 6 (a) I  Updated via F.E. Circular 7, dated 28th 16th March, 1998

(i) a Pakistan national resident outside Pakistan;

(ii) a person who holds two nationalities including Pakistani nationality;

(iii) a person who is not a citizen of Pakistan;

(iv) a firm (including Partnership & Trust) registered outside Pakistan and a
company or other body corporate (‘Company’) incorporated outside Pakistan
(excluding branches in Pakistan of such firms and companies and a
firm/company owned or controlled by a foreign government);

Above Paragraph 6 (a) I (iv) Updated via F.E. Circular 37, 16th October, 1996

In case where the price of the quoted shares including right shares has been
negotiated privately, it should not be less than the price quoted on the stock
exchange on the date of finalization of the deal.

Above Paragraph  Updated via F.E. Circular 37,dated  28th March, 1998

This exemption also applies to a private placement of new shares  with foreign
investors by a manufacturing concern which is, either a Public Limited or a
Private Limited company provided payment is made by the investors in foreign
exchange or through the supply of plant and machinery.

     II.

Transfer of shares in favour of non-residents as mentioned under sub-para (I)

above on repatriable basis by a manufacturing concern which is either a Private
Limited Company or an unlisted Public Limited Company provided the purchase
price is paid in foreign exchange and is not less than the break-up value of
shares as certified by a practicing Chartered Accountant.

(b) Transfer of Pakistani securities held by "a person resident out side 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 to the company concerned.

(c) Companies issuing shares to non-residents/registering transfer of shares in

favour of non-residents, in accordance with the exemptions provided in sub-
paragraphs (a) and (b) and the buyers and sellers of the shares transferred to a
non-resident, are exempted from the operation of restrictions contained in
Section 18(1) of the Foreign Exchange Regulation Act.

(d) Issue of Pakistani Securities of all types including NIT Units but excluding
shares of companies not quoted on stock exchange, in favour of persons
resident outside Pakistan, on non-repatriable basis, if payment is made in
Pakistan rupees provided the securities are registered at the Pakistan address of
the purchaser and a clear undertaking is furnished by him that no repatriation of
capital and profits/dividends accruing thereon will be claimed at any stage.

Paragraph 6 (d) Updated via F.E. Circular 76, dated 28th November, 1993.

(e) Sale of Pakistani securities held by "persons resident outside Pakistan" on

the basis of non-repatriation of capital and profit/ dividend to a person, whether
resident in or outside Pakistan, on the same basis, 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 profit/dividend accruing thereon
will be claimed at any stage.

(f)

i. Issue of government securities to foreign nationals resident in or outside

Pakistan, on the basis of repatriation of capital and profits, subject to the
condition that the price is paid in foreign exchange either as a remittance
through banking channels or out of a foreign currency account maintained in
Pakistan. Remittance of profit and dis-investment proceeds will be allowed by
the State Bank on submission of evidence of inward remittance or of payment
from a Foreign Currency Account.

ii.  Issue of NIT Units to Pakistan Nationals resident outside Pakistan and foreign
nationals resident in or outside Pakistan on the basis of repatriation of capital
and profits, subject to the condition that payment is made to the National
Investment Trust Limited in foreign exchange, either as a remittance through
banking channels or out of a Foreign Currency Account maintained in Pakistan.
Remittance of profits and dis-investment proceeds of the Units may be made by
the National Investment Trust Limited through an Authorized Dealer designated
for the purpose in terms of paragraph 13(b), Chapter XIV of the Exchange
Control Manual.

(g) Issue / transfer of rupee denominated registered Corporate Debt

Instruments (viz. PTCs, TFCs etc); and Registered WAPDA Bonds which non-
residents are eligible to purchase under the WAPDA Bonds Regulations for the
respective issue as notified by the Government, in favour of non-residents
(including overseas Pakistanis) on the basis of repatriation of capital &
profits/interest subject to the condition that the issue/purchase price is paid in
foreign exchange either as a remittance through banking channels or out of
foreign currency/Special Convertible Rupee Account maintained with a bank in
Pakistan. Remittance of profit/interest and sale/maturity proceeds will be
allowed by the State Bank on submission of evidence of inward remittance or of
payment out of Foreign Currency Account.

Above Paragraph 6 (g) Updated via F.E. Circular 8, 30th April, 1997

Above Paragraph 6 (g) Updated via F.E. Circular 37, 16th October, 1996

Above Paragraph 6 (g) Added via F.E. Circular 8, 23rd January, 1994.

Above Paragraph 6 (f) Updated via F.E. Circular 68, 30th July, 1992.

6 (A). No Title.

Issue of shares by companies incorporated in Services / Infrastructure, Social

and Agriculture Sectors, to 'persons resident outside Pakistan' on reportable
basis against payment in foreign exchange, provided the conditions prescribed in
the Government's current Investment Policy have been fulfilled and an
'Entitlement Certificate' issued by the State Bank.

Above Paragraph Added via F.E. Circular 31 dated 15th December, 1997.
7. Sources of Finance for Purchase of Securities etc.

Read directive by SBP regarding  the procedure for reporting transactions

routed through the 'Special Convertible Rupee Account' and the relative
code numbers.
(a) Companies issuing shares on repatriable basis, as permitted in sub-
paragraph (a) of paragraph 6, may open foreign currency collection accounts
with banks abroad for receiving the subscription in foreign currency. They may
also allow refunds 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
Realization Certificate obtained from the concerned Authorised Dealer in
Pakistan. The Proceeds Realization Certificate should be submitted to their
banker which is designated by them for the purpose of remittance of dividend
and dis-investment proceeds as per procedure out lined in Para 13(b), Chapter
XIV. A list (Appendix V-96) in duplicate of all the persons (non-resident
Pakistanis and foreigners) to whom the shares have been allotted, should also
be submitted. The designated Authorised Dealer will retain a copy of the list for
its records and pass on another copy alongwith the Proceeds Realization
Certificate to the Exchange Control Department (Investment Division), State
Bank of Pakistan, Central Directorate, Karachi.

Above Paragraph is Updated via F.E. Circular 7, dated 28th March,   1998.

(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 Certificate"
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" in place of bank's encashment certificate.

(c) I  Procedure for issue of shares

After registering transfer of shares in favour of a non-resident as permitted

vide sub-paragraphs (a) and (b) of paragraph 6, the company concerned shall
send within 30 days of such registration, an intimation by letter (in duplicate) to
the designated banker 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 realization
certificate, showing the amount of sale price received in Pakistan, certificate of
the transferee as applicable and practicing Chartered Accountant’s Certificate of
break-up value of shares in case of Private Limited or unlisted Public Limited
Companies. The designated bank will retain a copy of the letter for its record
and keep the second copy alongwith the proceeds realization certificate,
certificate given by the transferee, and practicing Chartered Accountant’s
certificate of break-up value if applicable for onward submissions to the Foreign
Exchange Department (Investment Division), State Bank of Pakistan, Central
Directorate, Karachi in the consolidated form before remittance of dividend with
a copy of Appendix V-59and/or alongwith application for issue and export of
bonus / right shares as above, as the case may be. the designated Authorised
Dealer, before passing on the documents to the State Bank, will ensure that the
following particulars of the inward remittance have been further certified by the
concerned Authorised Dealer (issuing bank) under his signature and seal on the
bank of each proceeds realization certificate:-

i. Amount of Foreign Currency

ii. Date of receipt
iii. Rate of exchange applied.
iv. Rupee equivalent
v. Page No. Item No. reference of schedule and period of monthly
exchange returns under which the transaction has been reported
to the state bank.

II  Special Instructions regarding shares transferred under Central

Depository System (CDS) of Central Depository Companies.

(i) General

a. Separate account or sub-account will be opened & maintained at CDC for

each non-resident investor eligible for investment in registered
shares/securities quoted at stock exchange in Pakistan
b. It must be ensured that all transactions at CDS i.e., deposit into or with
drawl from the account/sub-account of a non-resident is supported by
actual movement of funds. In other words, there should not be any
netting / adjustments and payment/receipt in respect of each purchase /
sale should be settled independent of other transactions of the non-
resident. In case the investment by the non-resident is made/routed
through his Special Convertible Rupee Account( SCRA) maintained with
an Authorised Dealer in Pakistan, the SCRA should never show an
overdrawn position.

(ii) Initial transfer in the name of CDC

While approving the initial / first-time transfer of shares / securities

purchased/held by non-residents, in the name of CDC for deposit into CDS the
company concerned will ensure that the shares are already registered in its
record on repatriable basis inthe name of the non-resident concerned. If the
shares are not already so registered, the company will obtain requisite
documents issued in the name of investor concerned, i.e., broker’s memo,
proceeds realization certificates (PTCs)’ for cost of shares purchased and
transfer stamp duty, or where the shares have been purchased from another
non-resident sharehodler against payment outside Pakistan, Transferee
Certificate alongwith PRC for transfer stamp money.
(iii) Subsequent transactions i.e., deposit/withdrawal at CDS.

a. Where investments are madet hrough SORS, the Authorised Dealer

concerned will continue to ensure that complete / proper record of all
transactions is kept at their end and the annual statements of SCR’s is
furnished to the State Bank as usual. as at present documents involving
such investment would not be required to be submitted to the company
at any stage.
b. In case of investments not involving SCRA, the original documents as
listed at (ii)above will be submitted as usual to the respective company
by the ‘Participant’ concerned alongwith a certificate that the shares are
in the name of CDS and have since been deposited into / withdrawn from
the respective non-resident’s account at CDS. the company after making
necessary entry in it's record to update CDC’s non-resident holding, will
furnish the same to it's designated Authorised Dealer. The Authorized
Dealer will keep these documents in its record for onward submission to
State Bank in the prescribed manner alongwith returns pertaining to
dividend / bonus or right issue and will as usual make the remittence of
disinvestment proceeds of such shares subject to the prescribed drill /
rules.

(iv) Dividend Payment / allotment of bonus or right shares:

CDC will issue to the respective company a list of beneficial non-resident

shareholders certifying their individual holding as on Ex-date of dividend / bonus
/ right as per attachment of this Circular. Before issue of dividend warrant or
allotment of bonus / right shares the company will verify the holding of non-
residents not involving SCRs from its record including interalia as mentioned
in sub-para (iii) (b) above and for the non-residents investing through SCR’s, it
will obtain an undertaking-cum-certificate from the authorised Dealer concerned
on the attachment II of this Circular, and on the basis of this undertaking-cum
certificate it will certify Appendix V-59 & V-96and V-96A for such shares. The
aforesaid list provided by CDS will invariably be attached by the company to the
aforesaid returns.

Above Paragraph is Replaced via F.E. Circular 7, dated 28th March,  1998.

(d) Subject to observance of the procedure outlined in sub-

para (a), (b) & (c) above, the companies issuing/registering transfer of shares in
favour of non-residents may export the share certificates to the non-resident
owners and the designated Authorised Dealers may allow remittance in respect
of the following:

(i) Dividend net of applicable tax.

(ii) Disinvestment proceeds, provided the amount to be remitted is not in excess

of the sale price as certified by a Stock Exchange Broker or in the case of a
Private Limited Company or an unlisted Public Limited Company, the break-up
value as certified by a practicing Chartered Accountant and tax, if applicable,
has been paid.

(e) The Designated Authorised Dealer while reporting remittance of

disinvestment proceeds in favour of non-residents as permitted under sub-para
(d) above, in their monthly exchange returns should invariably attach the
following information / documents:

i. Name and address of the non-resident shareholders.

ii. Name and address of the company whose shares were sold by the
non-resident beneficiary indicating whether it is a listed Public
Limited Company or unlisted Public Limited / Private Limited
Company engaged in manufacturing.
iii. Name, address and residential status of the buyer of above
shares.
iv. Copy of Broker's Memo(s) showing, interalia, the details of shares
sold by non-resident, date of sale, sale price of the shares etc.;
and practicing Chartered Accountant's Certificate of break-up
value where applicable.
v. In case the shares were sold to another non-resident on
repatriable basis, a copy of letter with which necessary Proceeds
Realization Certificates and Annexure "A" were furnished to the
State Bank.
vi. A copy of the "Designation Letter".

8(a). Trading of Quoted Shares by Non-Residents.

(i) Non-residents are allowed to trade freely in the shares quoted on the Stock
Exchanges in Pakistan. For this purpose the non-residents will be required to
open a "Special Convertible Rupee Account" with any Authorised Dealer in
Pakistan. Such accounts can be fed by remittances from abroad or by transfer
from a foreign currency account maintained in Pakistan. The balance available
therein can be used for purchase of any share quoted on the Stock Exchange.
Payment for such purchases may be debited to the account on production of
stock broker's memo showing sale of shares to the account holder and sale
proceeds of shares may be credited provided evidence of the sale price in the
shape of stock broker's memo is produced. The fund available in such special
accounts can be transferred outside Pakistan or credited to a foreign currency
account maintained in Pakistan at any time without prior approval of the State
Bank. These accounts can also be credited with dividend income. Transfers from
one such account to another may also be made in case of transfer of shares
between the two account-holders.

(ii) The Authorised Dealers will be required to submit to the Senior Deputy
Director, Foreign Exchange Department, (Investment Division), State Bank of
Pakistan, Central Directorate, Karachi a statement showing the balance as on
30th June each year in each such individual account, the total amount of inward
remittances in the account, the total outward remittances during the year from
the account and the market value of stocks held by the account holder as on
30th June.

8(b). Trading of Federal Investment Bonds & Treasury Bills in the

Secondary Market.

Non-residents are allowed to trade freely in Federal Investment Bonds (FIBs)

and Treasury Bills (TBs) in the secondary market through Special Convertible
Rupee Accounts subject to the instructions applicable to these accounts as
contained in sub-para (a) above.

9. Issue and encashment of Foreign Exchange Bearer Certificates/ U.S.

Dollar Bearer Certificates/Five Years Foreign Currency Bearer
Certificates.

In terms of Federal Governments Notification No.575(I)/85 dated the 6th June,

1985, No.140(I)/91 dated the 25th February, 1991 and No.167(1)92 dated the
7th March, 1992 the schemes of Foreign Exchange Bearer Certificates, U.S.
Dollar Bearer Certificates and five-year Foreign Currency Bearer Certificates
respectively have been floated. Agencies authorised by the Federal Government
as offices of issue can sell and encash these certificates. The procedure for sale
and encashment of the same has been prescribed by the Securities Department
of the State Bank of Pakistan.

10. Issue of foreign exchange against Encashment of Foreign Exchange

Bearer Certificates / U. S. Dollar Bearer Certificates / Five Years Foreign
Currency Bearer Certificates.

In case encashment is made in Pakistan and the bearer desires to receive the
amount in foreign exchange, Authorised Dealers may issue Foreign Currency
Notes/Demand Drafts/T.Ts/M.Ts/Travellers Cheques in the name of the
beneficiary indicated by the bearer.

11. Export and Transfer of Foreign Exchange Bearer Certificates/ U. S.

Dollar Bearer Certificates/Five Years Foreign Currency Bearer
Certificates. Bearer Certificates.

State Bank of Pakistan vide its Notification No.F.E.2/85-SB dated the 1st August,
1985 (App. III-13) has granted general permission for doing various acts
referred to in Section 13 of the Foreign Exchange Regulation Act, 1947 in
relation to Foreign Exchange Bearer Certificates issued under Foreign Exchange
Bearer Certificates Rules 1985, U. S. Dollar Bearer Certificates Rules 1991 and
Five years Foreign Currency Bearer Certificates issued under Five years Foreign
Currency Bearer Certificates Rules 1992. In other words, persons irrespective of
their nationality and/or residential status can freely take or send out of Pakistan
the Foreign Exchange Bearer Certificates/ U.S. Dollar Bearer Certificates and
Five years Foreign Currency Bearer Certificates and transfer them to non-
residents.

12. Transfers between Registers .

Clauses (c) and (d) of sub-section (1) of Section 13 of the Act prohibit,
respectively, transfers of securities from registers in Pakistan to registers
outside Pakistan and the issuing, whether in Pakistan or elsewhere, of securities
which are registered or to be registered in Pakistan, to "persons resident outside
Pakistan" except with the general or special permission of the State Bank.

13 (a). Holding and Disposal of Foreign Securities.

Pakistan national resident in Pakistan who is or becomes owner of foreign

securities is permitted to hold or retain such securities provided he has acquired
them in a manner not involving a breach or violation of the Foreign Exchange
regulations. Holders of foreign securities who wish to sell, transfer or otherwise
dispose of or deal in securities, can do so only with the prior permission of the
State Bank.

13 (b). Investment Abroad by Resident Pakistanis.

Residents of Pakistan including firms and companies incorporated in Pakistan

can make investment in companies incorporated abroad on repatriable basis
through Foreign Exchange Bearer Certificates subject to the following
conditions:

i. The investor should make a return to the Investment Division,

Foreign Exchange Department, State Bank of Pakistan, Central
Directorate, Karachi within one month of acquiring the securities
giving particulars in respect of the said securities, in the specimen
given in Appendix V-97of the Foreign Exchange Manual.
ii. The Dividend / Sale Proceeds of the shares (including Capital
Gains) shall be repatriated to Pakistan through normal banking
channels. Such amount will not be credited to the Foreign
Currency Account or for purchase Foreign Exchange Bearer
Certificates / other Pakistani securities on repatriable basis.

14. Registration of Foreign Securities.

Under Section 19(I) of the Act, the Federal Government have issued
a Notification No.I(1)-2-FE/56 dated the 1st August, 1956, requiring all persons
resident in Pakistan who are or become the owners of any security in respect of
which the principal, interest or dividends is or are payable in the currency of any
foreign country or in respect of which the owner has the option to acquire the
payment of principal, interest or dividends in such currencies to make a return
to the State Bank within one month of their acquiring the securities giving
particulars in respect of the said securities. The specimen of the form in which
these particulars are required to be furnished in duplicate is given inAppendix V-
97. Foreign nationals residing in Pakistan are not required to submit the above
returns.

15. Under-writing of shares, term certificates and Modaraba certificates

by foreign banks.

Underwriting of shares, participation term certificates etc., by foreign banks

eventually involves holding of those shares/securities which are not taken up by
the general public, and as such attracts the provisions of Section 13(1) of the
Foreign Exchange Regulation Act, 1947. State Bank has given general
permission under which foreign banks can under-write the issue of shares to the
extent of 30% of the public offering or 30% of its own paid-up capital and
reserves whichever is less. They are also permitted to under-write public issues
of participation term certificates, term finance certificates and modaraba
certificates provided that where the terms and conditions of issue of such
securities grant an option to the holders to convert the securities into ordinary
shares, the restrictions of 30% as mentioned above would apply.

16. Permission of Pakistani Branches of Foreign Banks to invest in

Corporate Fixed Income Securities.

Branches of foreign banks in Pakistan and foreign controlled investment banks

incorporated in Pakistan are permitted to invest in Pak. Rupee denominated
registered listed corporate debt. Instrument issued in Pakistan, provided such
investment is made through initial public of offerings and secondary market
purchases, and further provided that investment in those debt instruments
which are convertible into shares does not exceed 30% of the paid-up capital
and reserves of the investing institution, which ever is less. The profit / interest
accruing on such investment will be treated as their income for the purpose of
profit / dividend remittance

Above Paragraph is Revised via F.E. Circular 35, dated 9th July,  1997.
Above Paragraph is Added via F.E. Circular 21, dated 13th August,   1997.

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