(1) In these Regulations, unless there is anything repugnant in the subject or context,

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1 THE GAZETTE OF PAKISTAN EXTRAORDINARY PUBLISHED BY AUTHORITY SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN THE COMPANIES (BUY-BACK OF SHARES) REGULATIONS, 2009 NOTIFICATION Islamabad, the January 2009 S. R. O. / In exercise of the powers conferred by subsection (1) of Section 506A read with Section 95A of the Companies Ordinance, 1984, the draft Companies (Buy-Back of Shares) Regulations, 2009 are hereby published by the Securities and Exchange Commission of Pakistan for the information of all persons likely to be affected by these Regulations and notice is hereby given that objections and suggestions, if any, received within the next fourteen days will be taken into consideration. 1. Short title and commencement (1) These Regulations may be called the Companies (Buy-back of Shares) Regulations, (2) They shall come into force at once. 2. Definitions (1) In these Regulations, unless there is anything repugnant in the subject or context, (a) (b) (c) (d) (e) CDC means the Central Depository Company of Pakistan Limited; Closed Period means a period of two (2) months prior to the Public Announcement of financial results or any corporate decision (announcement/recommendation of cash dividend, bonus issue, right issue, merger, de-merger etc) by the Purchasing Company; Commission means the Securities and Exchange Commission of Pakistan; Designated CDC Account means the CDC account opened in the name of the Manager to the Purchase for the purpose of Purchase; Free Float means the shares of the Purchasing Company held directly or indirectly by persons other than its sponsors, associated companies, associated 1

2 undertakings and directors; (f) Manager to the Purchase means a corporate brokerage house, a commercial bank, a development financial institution or an investment bank not being an associated company or associated undertaking of the Purchasing Company, appointed by the Purchasing Company as its agent for the Purchase through tender offer under the Regulations; (g) Ordinance means the Companies Ordinance, 1984 (XLVII of 1984); (h) Public Announcement, means announcement of an offer for Purchase on the format as prescribed in Schedule-I through publication in at least two daily newspapers, one each in Urdu and English languages, having wide circulation in the federal capital, all the provincial capitals and major cities of the country including but not limited to Faisalabad, Multan, Hyderabad, Sukkar, Sialkot and Mardan. (i) Purchase means buy-back/purchase by a company of its own shares under section 95A of the Ordinance and these Regulations; (j) Purchase Agent means a corporate brokerage house, not being an associated company or associated undertaking of the Purchasing Company holding valid brokerage license and membership of the stock exchange on which the Purchasing Company is listed, appointed by the Purchasing Company as its agent for the purpose to assist the Purchase through the stock exchange(s) under these Regulations; (k) Purchasing Company, means a company that buys back/purchases its own shares under section 95A of the Ordinance and these Regulations; (l) Purchase Price, means the price per share approved by the members of the Purchasing Company in a general meeting for Purchase under these Regulations, which: (ii) in case of Purchase through tender offer shall not be lower than the average market price of the share of the Purchasing Company for the last thirty (30) days from the date of decision by the Board of Directors or the closing price of the share on the date one day preceding the publication of the public announcement; and (iii) in case of Purchase through the stock exchange shall not be higher than 2

3 the average market price of the share of the Purchasing Company for the last thirty (30) days from the date of decision by the Board of Directors or the closing price of the share on the date one day preceding the publication of public announcement. (m) Purchase Period (i) in case of Purchase through tender offer, means the time period of 30- days commencing from the eighth (8 th ) day of the publication of the Public Announcement during which the shareholders tender their shares to the Manager to the Purchase for sale to the Purchasing Company; and (ii) in case of Purchase through the stock exchange(s), means the time period commencing from the eighth (8 th ) day of the publication of the Public Announcement till such date, the shares announced to be Purchased are Purchased or the time period of one hundred and eighty (180) days from the eighth (8 th ) day of the publication of the Public Announcement whichever is earlier during which the shareholders sell their shares to the Purchasing Company by making a sale order through the Purchase Agent. (n) (o) (p) (q) (r) Qualifying Shares means the shares that are listed and quoted on any stock exchange of the country; Regulations, means the Companies (Buy-back of Shares) Regulations, 2009; Offer Letter, means the letter containing an offer for Purchase, on the format as prescribed in Schedule IIA and Schedule IIB, to be sent by the Purchasing Company to all its members Schedule means schedule to the Regulations; Share Tender Form, means the application form, on the format as prescribed in Schedule III, through which the shareholders shall submit to the Manager to the Purchase, shares certificate(s) or the free-delivery note evidencing credit of shares in the Designated CDC Account; and (s) Treasury Shares means the shares Purchased under the Regulations and held by the Purchasing Company for the purpose to be disposed off in future 3

4 in any manner provided in the Regulations. (2) All other words and expressions used and not defined in the Regulations shall have the same meanings as are assigned to them in the Companies Ordinance, 1984, the Securities and Exchange Commission of Pakistan Act, 1997 and the Securities and Exchange Ordinance, Conditions for Purchase of Shares: (1) A company may Purchase its own shares if it fulfills the following conditions: (a) it has paid-up capital of not less than two hundred million rupees ; (b) based on the latest audited accounts, its total debt is not more than three (3) times of its equity, and its current assets are not less than its current liabilities; (c) its Free Float is not less than one hundred million rupees (face value); (d) after the Purchase, its Free Float is not less than the threshold given below: S. No. Paid-up capital Free Float after Purchase as a percentage to total paid-up capital i. Rs. 200 million to Rs. 500 million 40% ii. Above Rs. 500 million to Rs. 1,000 iii. million Above Rs. 1,000 million to Rs. 5,000 million 20% or Rs. 200 million (whichever is higher) 10% or Rs. 250 million (whichever is higher) iv. Above Rs. 5,000 million 10% or Rs. 500 million (whichever is higher) (e) (f) (g) it has obtained approval by way of special resolution held within a period of five (5) weeks of the date of meeting of the board of directors proposing the Purchase; it has obtained auditors certificate, certifying that the Purchasing Company has sufficient funds for the Purchase; and the directors including the chief executive of the Purchasing Company, by way of a resolution passed by not less than seventy five percent of the total number of directors at a meeting, have made a declaration that the Purchasing 4

5 Company is solvent. (2) A company that has obtained relaxation, if any, from the requirements of listing regulations of any stock exchange of the country or rule 9 of the Companies (Issue of Capital) Rules, 1996 regarding minimum allocation of capital to the general public, shall not Purchase shares under the Regulations unless the condition relating to increase in paidup capital or relating to disinvestment of shares by the sponsoring shareholders, imposed at the time of granting such relaxation by the Commission or the stock exchange (s) is met. (3) A share that has not completed at least two anniversaries of its formal listing on a stock exchange shall not be eligible for Purchase under the Regulation. (4) These Regulations shall not be applicable on buy-back of shares made for delisting of a company. (5) A company shall not purchase shares in case any petition for its winding up has filed with a court. (6) During the Purchase Period, a Purchasing Company shall not file petition for voluntary winding up. 4. Purchase Procedure: (1). The shares may be Purchased either through a tender offer or through the stock exchange(s) in the following manner: (a) Procedure for Purchase through tender offer: For Purchase of shares through a tender offer, the following procedure shall be followed: (i) the Purchasing Company within fifteen (15) days of obtaining approval of its members by way of special resolution, shall make a Public Announcement. The Public Announcement shall contain such information as prescribed in Schedule I; (ii) the Purchasing Company, before publication of the Public Announcement, shall appoint a Manager to the Purchase; (iii) the Purchasing Company, within three days of the publication of the Public Announcement, shall dispatch through registered mail at the addresses available at the company s record, to all its members whose names appear on the members register, the Offer Letter on the format 5

6 as prescribed in Schedule IIA along-with a copy of the Public Announcement and that of the Share Tender Form on the format as prescribed in Schedule III. Offer letter and the Public Announcement shall also be dispatched to the custodian of the securities (GDRs etc.), if any, of the Purchasing Company convertible into the shares being Purchased where the conversion period falls before the closing of the Purchase period; (iv) a shareholder holding shares in physical form and interested to sell all his shares or part thereof to the Purchasing Company in response to the Public Announcement or the Offer Letter, shall tender for sale such shares along-with the transfer deed duly verified and signed through the Share Tender Form to the Manager to the Purchase before the closing of the offer period; (v) a shareholder holding shares in scrip-less form and interested to sell all his shares or part thereof to the Purchasing Company in response to the Public Announcement or the Offer Letter, shall tender for sale such shares by dispatching the free-delivery note evidencing credit of shares in the Designated CDC Account through the Share Tender Form to the Manager to the Purchase before the closing of the offer period; (vi) the offer for Purchase shall remain open for thirty (30) days from the eighth (8 th ) day of the publication, of the Public Announcement; (vii) the Manager to the Purchase shall, within seven (7) days of the closing of the Purchase period, finalize a list of all those shareholders who tendered shares for sale, the number of shares tendered by each of them and the number of shares accepted for Purchase from each of them; (viii) in case, the shares tendered for sale exceed the number of shares announced to be purchased, the shares shall be accepted on pro-rata basis. Provided that purchase of shares from a shareholder shall not be less than the minimum marketable lot or the entire shares tendered for sale if the number of such shares is less than the minimum marketable lot; (ix) the Purchasing Company shall, before publication of the Public 6

7 (x) (xi) (xii) Announcement, open an Escrow account with any of the commercial bank for the purpose of payment against shares accepted and deposit therein, at least three (3) days before close of the Purchase Period, the entire sum payable to the shareholders against the Purchase; the payment for shares accepted shall be made by the Manger to the Purchase through bank draft or pay order out of the Escrow account mentioned in clause (ix) above within ten days of the closing of the Purchase Period; the unaccepted shares, if any, shall be returned back within ten days of the closing of the Purchase period; and the Purchase Period shall not be extended or rolled over. (b) Procedure for Purchase through the stock exchange(s): For Purchase of shares through the stock exchange(s) the following procedure shall be followed: (i) the Purchasing Company within fifteen (15) days of obtaining approval of its members by way of special resolution, shall make a Public Announcement. The Public Announcement shall contain such information as prescribed in Schedule I; (ii) the Purchasing Company shall, before publication of the Public Announcement, appoint a Purchase Agent; (iii) the Purchasing Company shall, within three days of the publication of the Public Announcement, dispatch through registered mail at the addresses available at the company s record, to all its members whose names appear on the members register, the Offer Letter on the format as prescribed in Schedule IIB along-with a copy of the Public Announcement. Offer letter and the Public Announcement shall also be dispatched to the custodian of the securities (GDRs etc.), if any, of the Purchasing Company convertible into the shares being Purchased where the conversion period falls before the closing of the Purchase period; (iv) the offer for Purchase shall remain open for one hundred and eighty days from the eighth (8th) day of the publication of the Public Announcement or till such date the number of shares announced to be 7

8 purchased are purchased, whichever is earlier ; (v) only those orders for sale of shares shall be entertained that are made through the automated trading system of the stock exchange at which the Purchase is made; (vi) the Purchase Agent, save as provided in clause (xi) below, shall accept all the sale orders executed at the Purchase Price up to the extent of the size of the Purchase; (vii) the Purchase through the Purchase Agent shall be reported separately by the stock exchange(s) on its automated trading system by adding the suffix PS * to the regular trading symbol of the respective share of the Purchasing Company; (viii) the orders for sale of shares held in physical form shall also be entertained. The National Clearing Company of Pakistan Limited (NCCPL) shall make necessary arrangements in this regard. The settlement dates for such orders may, however, be extendable by the stock exchange(s) through which the shares are purchased; (ix) save as provided in clause (x) and (xi) below, orders for sale of shares shall be routed through the automated trading system of the stock exchange and shall be entertained on first come first serve basis; (x) orders shall be queued for execution on the basis of time of entry, however, more than one orders with same UIN shall not be entertained on same day; (xi) an order for sale of shares exceeding 1% of the size of the Purchase or 10,000 shares whichever is lower shall not be entertained; (xii) orders for sale in odd lots shall also be entertained. (xiii) at the end of each trading day, the executed transactions shall be reported to the Purchasing Company by the Purchase Agent and the Purchasing Company shall remit the settlement amount in the clearing bank account of the Purchase Agent at least one (1) day before the settlement date; and (xiv) the Purchase Period shall not be extended or rolled over. 8

9 5. Role and responsibilities of the Purchasing Company: The Purchase shall be proposed by the board of directors of the Purchasing Company by way of resolution passed by not less than 75% of the total number of directors and approved by way of special resolution.. (2) Decision of the Board of Directors regarding the Purchase shall be intimated to the Commission and the Stock Exchange(s) at which the Purchasing Company is listed on the day of the decision. The decision should state the number of shares to be Purchased, the Purchase Price, mode of Purchase, purpose of the Purchase i.e. cancellation or holding as Treasury Shares, the Purchase Period, source of fund, justification for the purchase and effect of the Purchase on the financial position of the Purchasing Company. (3) Minutes of the board of director s meeting in which the Purchase is decided shall be communicated to the Commission and the stock exchange(s) at which the Purchasing Company is listed within three days of such meeting. (4) The minutes shall accompany one copy each of the following documents: (a) Memorandum and Articles of Association of the Purchasing Company; (b) latest audited accounts of the Purchasing Company; (c) debt equity ratio and current ratio of the Purchasing Company on the basis of its latest audited accounts and calculation thereof; (d) current pattern of shareholding of the Purchasing Company (e) detailed step-wise plan to be followed for approval of the Purchase by the members in general meeting of the Purchasing Company (f) auditor s certificate as required under regulation No. 3(1)(f); and (g) declaration on the format as prescribed in Schedule IV, by the board of directors as required under regulation No. 3(1)(g). (6) The notice of general meeting in which the Purchase is to be considered for approval shall accompany a statement containing all material facts required under the Ordinance, including the following:- (a) purpose of the Purchase; * Purchased Shares 9

10 (b) justification for the Purchase; (c) the number of shares to be purchased; (d) the price at which the shares will be purchased; (e) justification for the Purchase Price; (f) mode of the Purchase i.e. Purchase through Tender Offer or through Stock Exchange; (g) the Purchase Period ; (h) source of funding the Purchase; (i) effect of the Purchase on the financial position of the Purchasing Company; and (j) nature and extent of the interest, if any, of every director, whether directly or indirectly. (7) Copy of the special resolution authorizing the Purchasing Company to Purchase shares shall be submitted to the Commission and the stock exchange(s) on which the Purchasing Company is listed on the day of the general meeting in which it is passed. The resolution shall specify the exact number of shares to be purchased, the Purchase Price per share, mode of the Purchase and the Purchase Period. (8) In case of Purchase through tender offer, the Purchasing Company shall appoint the Manager to the Purchase through an agreement explicitly stating the role and responsibilities of both the parties to the agreement. (9) In case of Purchase through the stock exchange, the Purchasing Company shall appoint the Purchase Agent through an agreement explicitly stating the role and responsibilities of both the parties to the agreement. (10) The Purchasing Company shall appoint any of its officers, well conversant to the issue, as a contact person who shall be responsible to respond appropriately to the queries and complaints lodged by the shareholders of the Purchasing Company and other stakeholders. (11) In case of withdrawal of the offer for Purchase under regulation 10, the Purchasing Company shall ensure compliance with the requirements of reporting, publication and 10

11 intimation of withdrawal in the manner as prescribed therein. (12) The Purchasing Company shall ensure that holding, transfer, sale or disposal of the Treasury Shares in any manner, allowed under the Regulations, does not contravene provisions of any contract, agreement or any obligations of the Purchasing Company. (13) The Purchasing Company shall not apply for voluntary delisting and voluntary winding up within a period of 12 months of the close of the Purchase Period. (14) The sponsors, directors, associated companies, associated undertakings and such employees of the Purchasing Company who have access to non-public information about the affairs of the Purchasing Company shall not trade, directly or indirectly, in the shares of the Purchasing Company within a period of two (2) months prior to the date of the meeting of the Board of Directors of the Purchasing Company in which the Purchase is decided. (15) The Purchasing Company, Manager to the Purchase, the Purchase Agent, their sponsors, directors, associated companies & associated undertakings, consultants and employees shall not pass the non-public information about the affairs of the Purchasing Company to any person and shall not misuse their positions to gain any benefit for themselves directly or indirectly, or any of their family members. 6. Role and responsibilities of the Manager to the Purchase: (1) The Manager to the Purchase shall ensure that: (a) the Purchasing Company is able to implement the offer for Purchase and fulfil its obligations arise of the Purchase; (b) the Public Announcement is made in accordance with the Regulations; (c) the Public Announcement has been submitted to the Commission and the stock exchange(s) on which the Purchasing Company is listed at least two working days before its publication; (d) the contents of the Public Announcement and that of Offer Letter, to the best of their knowledge and belief, are true, fair, correct and adequate and an undertaking in this regard has been provided to the Commission; 11

12 (e) (f) (g) an Escrow account has been opened with a commercial bank, the Purchasing Company has transferred therein the payment against shares to be Purchased and detail of the said Escrow account and transfer of money therein has been provided to the Commission; acceptance of shares tendered for sale to the Purchasing Company has been made according to the provisions of the Regulations; and payment against all the shares accepted has been made within the time period as specified in regulation 4(a) (x). (2) In case of withdrawal of the offer for Purchase, the Manager to the Purchase shall return the shares in the manner as provided in regulation 10 (4). (3) The Manager to the Purchase shall submit a report on the Purchase to the Commission and the stock exchange (s) on which the Purchasing Company is listed within fifteen days of the closing of the Purchase period. 7. Role and responsibilities of the Purchase Agent: (1) The Purchase Agent shall not Purchase shares for the Purchasing Company over and above the number of shares announced to be Purchased. (2) The Purchase Agent shall ensure that during the Purchase Period, bids for the Purchase are available in the automated trading system of all those stock exchanges on which the Purchasing Company is listed. (3) The Purchase Agent shall accept only those orders executed at the Purchase Price. (4) A sale order exceeding 1% of the size of the Purchase or 10,000 shares, whichever is lower, shall not be entertained. (5) More than one orders with same UIN shall not be entertained on same day. (6) Orders for sale in odd lots shall also be entertained. (7) At the end of each trading day, the Purchase Agent shall report the executed transactions to the Purchasing Company. (8) In case of withdrawal of the offer for Purchase, the Purchase Agent shall ensure compliance with the provisions of regulation 10 (5). (9) The Purchase Agent shall submit to the Commission and the stock exchange (s) on 12

13 which the Purchasing Company is listed, a report on the status of the Purchase on the last day of each month till completion of the Purchase. The said report must reach the Commission and the stock exchange (s) on or before 7 th day of each succeeding month or within fifteen days of closing of the Purchase period as the case may be. 8. Role of the stock exchange(s) on which the shares being Purchased are listed: (1) The stock exchange on receipt of copy of the special resolution passed by the Purchasing Company shall circulate it to all its members, post it on its notice board, place it on its website and automated information system and announce it on its house. (2) In case of Purchase through a stock exchange, the stock exchange(s) on which the Purchasing Company is listed, shall report the Purchase separately on its automated trading system by adding the suffix PS to the regular trading symbol of the respective share of the Purchasing Company. (3) The stock exchange (s) on which the Purchasing Company is listed, pursuant to regulation No. 4(1)(b)(viii), shall make necessary arrangements for entertaining the orders for sale of shares held in physical form. 9. Contents of the Public Announcement and Time of its Publication: (1) The Public Announcement shall contain the information in the manner as provided in Schedule-I and shall be published in the manner as prescribed in regulation No.2(1)(h) at least seven days before the commencement of the Purchase period. (2) The Public Announcement shall not contain any untrue and misleading information 10. Withdrawal of the offer for Purchase: (1) An offer for Purchase once announced shall not be withdrawn except where the Purchasing Company is: i) ordered to be wound-up by a Court; or ii) declared insolvent by a Court. 13

14 (2) Decision of the board of directors regarding the withdrawal of the offer for Purchase as mentioned in clause (1) above, shall be reported to the Commission and the stock exchange (s) at which the Purchasing Company is listed, on the day of the decision and shall be published within two days of such decision in all those newspapers in which the Public Announcement was published. (3) The withdrawal of the Offer for Purchase shall also be intimated, within three days of its publication, to all members of the Purchasing Company whose names appear on the members register through registered mail at the addresses available at the company s record. (4) In case of withdrawal of the offer for Purchase, the Manager to the Purchase, in case of Purchase through tender offer, shall return the shares tendered for sale, if any, under regulation 4(1)(a) to the respective shareholders within a period of three working days of the date of publication of the withdrawal (5) In case of withdrawal of the offer for Purchase, the Purchase Agent, in case of Purchase through the stock exchange, shall decline and refuse all the sale orders made under regulation 4(1)(b) and yet not settled, if any, immediately on intimation of the withdrawal by the Purchasing Company. 11. Maximum holding of Treasury Shares: (1) Where the Purchasing Company has share capital of only one class, the number of shares held as Treasury Shares shall not exceed 10 percent of the total outstanding shares i.e. the issued and paid up shares of the Purchasing Company, at any time. (2) Where share capital of the Purchasing Company is divided into shares of different classes, the number of shares of any class held as Treasury Shares shall not exceed 10 percent of total outstanding shares i.e. the issued and paid up shares of such class of the Purchasing Company, at any time. (3) Treasury shares shall be held in the name of the Purchasing Company in CDC 14

15 Blocked Account. (4) Any shares allotted as fully paid bonus shares in respect of the Treasury Shares, shall be treated as treasury shares for the purposes of the Regulation. 12. Disposal of Treasury Shares: (1) Where shares are held as Treasury Shares, the Purchasing Company may at any time dispose off such shares in any of the following manners or combination thereof:- (a) (b) (c) (d) sell the shares in full or any part thereof against cash in the market through the Stock Exchange(s) trading system; sell the shares in full or any part thereof against cash to any person other than the existing shareholders with the approval of the members by way of special resolution and with prior written approval of the Commission; sell these shares in full or any part thereof to its employees under the Companies Employees Stock Options Scheme Rules, 2001 with the approval of the members in a general meeting by way of special resolution and with prior written approval of the Commission; or cancel these shares in full or any part thereof. (2) In case of sale of the Treasury Shares under clause (b) & (c) of sub-regulation (1), the statement of facts to be annexed to the notice of general meeting in which the approval of sale of the Treasury Shares shall be obtained, shall contain all information, required under the Ordinance and any other law, including the following: (a) (b) (c) number of shares to be sold; purpose of the sale and its benefits to the company and its shareholders; and price at which the shares will be sold. (3) In case of sale of shares through trading system of the stock exchange(s) under clause (a) of sub-regulation (1), the following procedure shall be followed: 15

16 (a) The decision of such sale shall be made by the board of directors in a meeting and such decision shall be communicated, on the same day, to the Commission and the stock exchange(s) on which the Purchasing Company is listed; (b) The stock exchange(s), on receipt of the decision mentioned in clause (a), shall immediately disseminate it to its members through circulation, by posting it on its notice board, by placing it on its website, by notifying it on the automated information system and by making an announcement on the house of the exchange. (c) The Purchasing Company shall not commence the sale of Treasury Shares prior to the expiry of the seventh day of the decision of the Board of Directors regarding the sale; (d) The quantum of Treasury Shares to be sold in a single day shall not exceed 50% of the average daily turnover of preceding six (6) months in the share of the Purchasing Company on that particular stock exchange. (4) In case the shares held as Treasury Shares are cancelled under clause (d) of subregulation (1), the Purchasing Company shall diminish the number of its issued and paid up shares by the number of the shares cancelled. However, the cancellation shall not be taken as reduction of the company's authorized share capital. (5) The Purchasing Company shall not dispose off the Treasury Shares in any manner during the offer period announced for acquisition of shares of the Purchasing Company under the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002 and Regulations made thereunder. (6) The Treasury Shares shall not be sold during the Closed Period or prior to the dissemination of the price sensitive information, if any, to the public. (7) The Treasury Shares to be sold under clause (b) & (c) of sub-regulation (1) shall not be sold at a price lower than the three month s average market price or current market price of such share whichever is higher. The three months period shall be count down from the 16

17 date, one day preceding the date of general meeting in which the sale is approved. (8) The Treasury Shares shall not be sold within a period of six (6) months from the closure of the Purchase Period. (9) A company shall not issue further capital except the bonus shares unless the treasury shares held by it are disposed off. 13. Mandatory cancellation of Treasury Shares: (1) If shares held as Treasury Shares cease to be Qualifying Shares by virtue of delisting of the Purchasing Company from the stock exchange(s), the Purchasing Company shall forthwith cancel such Treasury Shares in accordance with clause (d) of sub-regulations (1) of regulation 12. (2) For purposes of sub-regulation (1), shares are not to be regarded as ceasing to be Qualifying Shares by virtue of suspension of their trading or listing on the stock exchange. 14. Accounting Treatment:- The accounting treatment of the Purchase, cancellation and disposal of Treasury Shares shall be disclosed in the financial statements of the Purchasing Company in accordance with the requirements of the International Financial Reporting Standards. 15. Declaration of Solvency:- (1) The majority of the directors including the chief executive, shall at a meeting of the board of directors make a declaration of solvency verified by an affidavit to the effect that they have made full inquiry into the affairs of the Purchasing Company, and that after having done so, they have formed the opinion that the Purchasing Company shall continue to operate as a going concern and that it is capable of meeting its liabilities on time, for the period of 12 months from the date of such declaration. (2) The declaration shall indicate the number of directors who attended the meeting, the number of directors who voted in favour of the declaration, the number of directors who voted against the declaration and the number of directors who abstained. (3) The declaration should be signed by all those directors & Chief Executive Officer of the Purchasing Company who were present in the meeting including those directors, if any, who voted against the Purchase; however, such directors may give a note of dissent. 17

18 (4) The declaration shall have no effect for the purpose of these Regulations unless it is made within five (5) weeks immediately preceding the date of approval of the members of the Purchasing Company and is delivered to the registrar before date of general meeting. 16. Filing of return:- The Purchasing Company shall file a return, on the format as prescribed in Schedule V about the Purchase with the Commission, the registrar and the stock exchange(s) on which the Purchasing Company is listed, within 30 days of the closing of the Purchase period. 17. Power to give directions:- Where the Commission is satisfied on its own motion, or on the basis of any information received by it, that it is necessary and expedient so to do: (a) in the interest of the shareholders of the Purchasing Company; or (b) in the interest of investors or the market generally; or (c) to prevent the abuse of law or the process laid down in these regulations; it may issue directions to the Purchasing Company, the Manager to the Purchase, the Purchase Agent or any of their directors, officers or consultants, or any other person, including but not limited to: (i) (ii) (iii) stopping the Purchasing Company at any stage from making the Purchase; to do or desist from doing such acts as the Commission may determine; or carry out such changes as are necessary to rectify the situation. 18. Penalty:- Any person who fails to comply with or contravenes any provision of these Regulations, or knowingly and willfully authorizes, permits or abets such failure, refusal or contravention shall, in addition to any other liability under the Ordinance, be also punishable with a fine not exceeding five hundred thousand rupees, and in case of continuing failure, refusal or contravention, to a further fine not exceeding one thousand rupees for every day after the first day during which such contravention continues. 19. Relaxation:- Where the Commission is satisfied that it is not practicable to comply with any requirement of these Regulations in a particular case or class of cases, the Commission may for reasons to be recorded, relax such requirement subject to such conditions as it may deem fit. **** 18

19 SCHEDULE I PUBLIC ANNOUNCEMENT [See regulation 4(1)] To be published in the newspapers and to be dispatched to all the members of the Purchasing Company 1. The Public Announcement shall contain at least the following information: (i) name, registration number, UIN number, date of incorporation and address of the registered office of the Purchasing Company; (ii) purpose of the Purchase; (iii) justification for the Purchase; (iv) the exact number of shares to be purchased; (v) quantum of the Purchase in percentage term of the paid up capital of the Purchasing Company; (vi) the authorized and paid up capital of the Purchasing Company. In case the Purchasing Company has different kinds of share capital, quantum and nature of each kind of paid up capital shall be disclosed; (vii) the price at which the shares will be purchased; (viii) justification for the Purchase Price; (ix) date of commencement of the Purchase i.e. effective date of the Purchase; (x) duration of the offer period: From ( the date of commencement) to (the date of closing) both days inclusive, during the office hours (xi) source of funding the Purchase; (xii) debt/equity ratio and current ratio based on audited accounts of the Purchasing Company for the year ended (xiii) (xiv) (xv) (xvi) (xvii) (xviii) (xix) in case the Purchase is through tender offer: (a) name, Designated CDC Account number, phone number, postal and addresses of the Manger to the Purchase; (b) the process of tendering the shares by the shareholders; and (c) the mode and procedure of payment against the shares accepted for purchase. in case the Purchase is through the stock exchange; (a) name of the stock exchange(s) through which the Purchase will be made; (b) name, phone number, postal and addresses of the Purchase Agent; (c) the process of selling the shares by the shareholders; and (d) maximum size of a single order per day for sale of shares by a shareholder. number of Treasury Shares, their kind and current status, if any; name, phone number and address of the contact person(s) for seeking information regarding the Purchase; effect of the Purchase on the financial position of the Purchasing Company; nature and extent of the interest, if any, of every director of the Purchasing Company, whether directly or indirectly, and any other information the Purchasing Company or the Manager to the Purchase deem necessary to provide. 19

20 2. It is clarified that all those persons who validly hold shares of the Purchasing Company are eligible to participate in the purchase even if their names do not appear on Members Register of the Purchasing Company. Date: Place: Name, signature & address of the Secretary of the Purchasing Company 20

21 SCHEDULE IIA OFFER LETTER [See regulation No. 4(1)(a)] To be on the letterhead of the Purchasing Company and to be sent to all its members To: [Name and address of the member] Subject:- Offer for buy-back/purchase of shares by (name of the Purchasing Company). Dear Sir/Madam, 1. Pursuant to the Public Announcement dated (date of the Public Announcement) (copy enclosed) by (name of the Purchasing Company) (hereinafter referred to as the Company) and published in the daily [name of Urdu Newspaper(s)] and. the daily [name of English Newspaper(s)] on [date of the Newspapers in which the Public Announcement published] this is to inform you that the Company intends to buyback/purchase its own [number of shares] shares. 2. Therefore, the Company is making you an offer to buy-back/purchase shares held by you in it at a Purchase Price of Rs. (Purchase Price approved by members of the Purchasing Company in general meeting) per share. Please note that this offer for Purchase is valid till closing of the Purchase Period. 3. In case you are willing to sell the shares or part thereof held by you in the Purchasing Company, you may, if held in physical form, furnish the same alongwith the transfer deed(s) duly verified and signed to the Manager to the Purchase through Shares Tender Form attached herewith AND if held in scrip less form, furnish the free-delivery note evidencing credit of shares in the Designated CDC Account to the Manager to the Purchase through the Share Tender Form attached herewith. 4. Purchase shall be made in accordance with the provisions of Section 95-A of the Companies Ordinance, 1984 and the Companies (Buy-back of Shares) Regulations, The Purchase procedure, however, has been given in brief in the Public Announcement. 5. In case of any query regarding this offer for buy-back/purchase of shares, you may contact the Company or the Manager to the Purchase at the following addresses: [Name, phone & fax numbers and postal & addresses of the contact person of the Purchasing Company] [Name, phone & fax numbers and postal & addresses of the contact person of the Manager to the Purchase] 21

22 6. The directors of the Purchasing Company accept full responsibility for the correctness of information contained in this Offer Letter. Yours truly, Date: Place: [Name, signature phone number and postal address of the secretary of the Purchasing Company] 22

23 SCHEDULE IIB OFFER LETTER [See regulation No. 4(1) (b)] To be on the letterhead of the Purchasing Company and to be sent to all its members To: [Name and address of the member] Subject:- Offer for buy-back/purchase of shares by (name of the Purchasing Company) Dear Sir/Madam, 1. Pursuant to the Public Announcement dated (date of the Public Announcement) (copy enclosed) by (name of the Purchasing Company) (hereinafter referred to as the Company) and published in the daily [name of Urdu Newspaper(s)] and. the daily [name of English Newspaper(s)] on [date of the Newspapers in which the Public Announcement published] this is to inform you that the Company intends to buy-back/purchase its own [number of shares] shares. 2. Therefore, the Company is making you an offer to buy-back/purchase shares held by you in it at a Purchase Price of Rs. (Purchase Price approved by members of the Purchasing Company in general meeting) per share. Please note that this offer for Purchase is valid till closing of the Purchase Period. 3. In case you are willing to sell the shares held by you in the Purchasing Company, you may sell such shares or part thereof through the stock exchange by placing a sale order with any of the members of the (name of the stock exchange) or agent thereof at he Purchase Price. 4. Purchase shall be made in accordance with the provisions of the Companies (Buy-back of Shares) Regulations, The Purchase procedure, however, has been given in brief in the Public Announcement. 5. In case of any query regarding this offer for buy-back/purchase of shares, you may contact the Company or the Purchase Agent at the following addresses: [Name, phone & fax numbers and postal & addresses of the contact person of the Purchasing Company] [Name, phone & fax numbers and postal & addresses of the contact person of the Purchase Agent] 6. The directors of the Purchasing Company accept full responsibility for the correctness of information contained in this Offer Letter. Yours truly, Date: Place: [Name, signature phone number and postal address of the secretary of the Purchasing Company] 23

24 SCHEDULE III SHARES TENDERED FORM [See regulation No. 4(1)(a)] Letter to be sent to the Purchasing Company by all those shareholders of the Purchasing Company who accepts the offer for Purchase and intend to sell shares in full or part thereof held by them in the Purchasing Company To, The Chief Executive Officer, (full name of the Manager to the Purchase and address of its registered) Subject:- Tendering of shares for sale to (name of the Purchasing Company) Pursuant to Offer Letter dated (date of Offer Letter) and the Public Announcement dated (date of the Public Announcement) published in the newspapers, I hereby tender (No. of shares) shares held by me in (full name of the Purchasing Company) for sale to (full name of the Purchasing Company) through you being the Manager to the Purchase. For members holding shares in physical form: [No. of the certificate(s)] certificates containing (No. of shares) shares each are attached herewith alongwith verified and signed transfer deed(s) in original. Detail of these share certificates is as under:- S. No. i. ii. iii. Folio No. Certificate No. Distinctive Nos. Total: No. of shares For members holding shares in scrip-less form: Free-delivery note evidencing credit of shares in the Designated CDC Account is attached herewith in original. Detail of the transfer is as under:- CDC Transaction ID CDC sub-account Participant ID Subaccount No CDC Investor account No. No. of shares It is stated that I have read contents of the Offer Letter and that of the Public Announcement and confirm that the shares tender letter being sent by me is irrevocable, that I shall have no objection if the shares being tendered through this letter are not Purchased in full or part thereof for any reason and that I will never ask the Purchasing Company or the Manager to the Purchase for showing me the reason of not purchasing the shares tendered or part thereof. Yours truly, Date: [Full name, father s name/husband s name, CNIC No., signature, phone number and postal & addresses of the shareholder] 24

25 SCHEDULE IV DECLARATION OF SOLVENCY (See regulation No. 3(1)(g) and 15) (On non-judicial stamp paper) Declaration of Solvency We, (names of the directors including the Chief Executive Officer of the purchasing Company voted in favor of the Purchase) being majority of the directors of (name of the Purchasing Company) do solemnly affirm and declare that we have made a full enquiry into the affairs of the company, and that, after having done so, we are of the opinion that the company shall continue to operate as a going concern and that it is capable of meeting its liabilities on time during the current financial year. We make this declaration believing the same to be true. S. Name Signature S. No. Name Signature No. i. ii. iii. iv. v. vi. vii. viii. Total: [Name and signature of all those directors including the Chief Executive Officer of the Purchasing Company who have voted in favor of the Purchase and those who voted against it along with a note of dissent.] Solemnly affirm and declare at (place) the (date) day of (name of the month) 20, before me. [Stamp and signature of the oath commissioner or the notary public] 25

26 SCHEDULE V RETURN ABOUT THE BUY-BACK/PURCHASE OF SHARES [See regulation 16] 1. Name of Purchasing Company: 2. Company s registration No. 3. Date of listing of the Purchasing Company: 4. Name(s) of the stock exchange(s) on which the Purchasing Company is listed: Presented by: (name and designation of the officer of the Purchasing Company signing this return). Fee paid Rs:. [amount of fee paid].. through. [name and address of the bank] vide receipt No... dated. or bank draft/pay order No.. dated.. (To be attached in original). To (i) (ii) (iii) The Securities and Exchange Commission of Pakistan 63-Jinnah Avenue, Blue Area,Islamabad. The Registrar of Companies Companies Registration Office, The Stock Exchange(s) on which the Purchasing Company is listed... INFORMATION RELATING TO BUY-BACK/PURCHASE OF THE COMPANY'S OWN SHARES (i) mode of the Purchase i.e. whether the Purchase made through tender offer or through stock exchange; (ii) date of dispatch of the notice of the meeting to all the members of the Purchasing Company; (iii) date of the board of directors meeting in which the Purchase was decisded; (iv) date of the general meeting of the members of the Purchasing Company in which special resolution regarding the Purchase was passed; (v) date of declaration of solvency by the board of directors of the Purchasing Company; (vi) date of publication of the Public Announcement. (vii) date of dispatch of the Offer Letter; (viii) total number of shares tendered for sale, in case of Purchase through tender offer; (ix) criteria/procedure adopted for acceptance of shares; (x) total number of shares Purchased under the Companies (Buy-back of Shares) Regulations, 2009; (xi) date-wise breakup of the Purchase; (xii) date and mode of payment against the shares accepted; (xiii) total amount of cash paid for the Purchase; and 26

27 (xiv) date of return of unaccepted shares. The following documents should be provided along with this return: (i) (ii) (iii) (iv) (v) (vi) copy of the board of directors resolution regarding the Purchase; copy of the special resolution authorizing the Purchase; copy of the notice of the general meeting in which the special resolution was passed; copy of the declaration of solvency on the format as prescribed in Schedule IV. copy of the Public Announcement; copy of the agreement executed with the Manager to the Purchase or the Purchase Agent as the case may be; (vii) Copy of the Memorandum and Articles of Association of the Purchasing Company if the same has not been provided earlier. Yours truly, Date: Place: [Name, signature phone number and postal address of the secretary of the Purchasing Company] *** 27