Updated: Saturday April 06, 2013/AsSabt
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Chaitra 16, 1935, at 04:33:40 PM
The Central Depositories’ Act, 1997
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Sections |
Contents |
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1 |
Short title, extent and commencement. |
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2 |
Definitions. |
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3 |
Overriding effect. |
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4 |
Central depository system. |
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5 |
Central depository not to be a member of an issuer etc. |
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6 |
Transfers under book-entry system. |
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7 |
Effect of book-entry transfer on transferee. |
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8 |
Central depository discharged from liability if acting on instructions. |
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9 |
Central depository to supply information. |
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10 |
Bonus issue by an issuer. |
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11 |
Bar on rectification of central depository register. |
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12 |
Pledge of book-entry securities. |
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13 |
Consolidation or sub-division of securities by an issuer. |
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14 |
Regulations for issue or offer for sale of securities. |
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15 |
Conversion of non-equity securities into equity securities. |
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16 |
Issuance of Jumbo Certificates. |
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17 |
Inspection of the central depository register. |
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18 |
Record of an entry prime facie evidence. |
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19 |
Borrowing or lending of securities. |
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20 |
Duty to maintain secrecy. |
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21 |
Permitted disclosures. |
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22 |
Regulation of access to the computer system. |
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23 |
Central
depository to provide assistance to the Registrar, the Authority, the State
Bank of |
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24 |
Handling book-entry securities without authority |
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25 |
Nomination and transmission |
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26 |
Settlement of securities transactions using the central depository system |
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27 |
Power of Registrar and Authority to call for information or appoint inspectors |
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28 |
Offences |
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29 |
Cognizance of offences by courts |
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30 |
Offences to be non-cognizable |
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31 |
Punishment and adjudication of fine or penalty |
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32 |
Review and appeal |
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33 |
Powers of the Authority in relation to proceedings |
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34 |
Amendment of Ordinance XLVII of 1984. |
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35 |
Central depository to have power to make own regulations. |
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36 |
Removal of
difficulties. |
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SCHEDULE |
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THE CENTRAL
DEPOSITORIES’ ACT, 1997
(XIX OF 1997)
10th June, 1997
An Act to make provision for the
establishment and operation of book-entry
systems for the
transfer of securities by central depository companies;
WHEREAS it is expedient to
make provision for the establishment and operation of book-entry systems for
the transfer of securities by central depository companies;
It is hereby enacted
as follows:---
1.
Short title, extent and commencement.- (1) This Act may be called the Central
Depositories Act, 1997.
(2) It extends to the whole of
(3) It shall come into force at Once.
2.
Definitions.- in this Act, unless there is anything repugnant in the
subject or context,---
(1) “access”,
in relation to the central depository system maintained by a central
depository, means the placing of information on that system or the retrieval of
information therefrom;
(2) “account”
means an account maintained by a central depository in the name of an account
holder so as to record the title of the account holder to any book-entry securities
entered in such account;
(3) “account-holder”
means a person who opens and maintains an account with a central depository and
operates such account;
(4) “Authority”
means the Corporate Law Authority constituted under section 11 of the Companies
Ordinance, 1984 (XLVII of 1984);
(5) “book-entry
security”, in relation to a central depository, means a security which is
transferable by book-entry in the central depository register pursuant to a
declaration made by the central depository under sub-section (6) of section 4
and which is,---
(a)
in the case of a security transferable by registration, registered in the name
of the central depository or issued to the central depository pursuant to
section 14; or
(b)
in the case of a security transferable by delivery or endorsement, deposited
with or transferred by endorsement to the central depository.
(6) “central
depository” means a central depository as defined in clause (cc) of section
2 of the Securities and Exchange Ordinance, 1969 (XVII of 1969), and registered
with the Authority under section 32A of that Ordinance;
(7) “central
depository register” means a computerized electronic register maintained by
a central depository in respect of book-entry securities;
(8) “central
depository system” means central depository system established under
section 4;
(9) “debenture”
means a debenture as defined in clause (12) of sub-section (1) of section 2 of
the Companies Ordinance, 1984 (XLVII of 1984), and includes a debenture issued
by an issuer other than a company;
(10) “document
evidencing title” includes,---
(a)
in the case of any security which is not a Government security, the share
certificate, debenture certificate, modaraba certificate or any other
certificate representing the security; and
(b)
in the case of any security which is a Government security, such document or
other evidence of title thereto as a central depository may require,
(11) “eligible pledgee”
means any person who, in accordance with the regulations, is recognized by a
central depository as eligible for the purpose of receiving any pledge of
book-entry securities;
(12) “handling”,
with its grammatical variations and cognate expressions, in relation to a
book-entry security, means the transfer of a book-entry security by electronic
or similar means, the pledging of a book-entry security in accordance with
section 12 or the withdrawal from the central depository system of the security
represented by the book-entry security;
(13) “information”
includes data recorded in a form which can be processed by equipment operating
automatically in response to instructions given for a particular purpose;
(14) “issuer” means
any person, the Federal Government or a Provincial Government who or which has
issued or proposes to issue any security;
(15) “jumbo
certificates” mean one or more consolidated certificates of the securities
of one kind or class issued by an issuer which are registered in the name of a
central depository;
(16) “member” means
a member as defined in clause (21) of sub-section (1) of section 2 of the
Companies Ordinance, 1984(XLVII of 1984), and includes the registered owner of
any equity security of an issuer which is established under any other law;
(17) “participant”
means,---
(a)
an account-holder who is a member of a stock exchange; and
(b)
any other account-holder who meets the qualifications of a participant
prescribed in the regulations:---
Provided that such
account holders,---
(i)
perform services for sub-account holders in
accordance with the terms of an agreement entered into between the central
depository and each of the participants;
(ii)
transfer any securities to the central depository to the credit of any
sub-accounts under their respective accounts; and
(iii)
handle, on behalf of sub-account holders, the book-entry securities in the
sub-accounts under their respective accounts;
(18) “prescribed”
means prescribed by regulations made under this Act;
(19) “record”
includes, in addition to a record in writing,---
(a)
any photograph;
(b)
any disc, tape, sound-track or other device in which sounds or other data (not
being visual images) are embodied so as to be capable (with or without the aid
of some other instrument or machine) of being reproduced therefrom in audible
or readable form; and
(c)
any film, tape or other device in which visual images
are embodied so as to be capable (with or without the aid of some other
instrument) of being reproduced therefrom in visual form; and
(d)
any reference to a copy of a record includes,---
(i)
in the case of a record falling within paragraph (b) but not paragraph (c) of
this clause, a transcript of the sounds or other data embodied therein;
(ii)
in the case of a record falling within paragraph (c) but not paragraph (b) of
this clause, a still reproduction of the images embodied therein, whether
enlarged or not; and
(iii)
in the case of a record falling within both paragraph (b) and paragraph (c) of
this clause, the transcript of the sounds or other data embodied therein
together with the still reproduction of the images embodied therein;
(20) “register of
members” means the register of members referred to in section 147 of the
Companies Ordinance, 1984 (XLVII of 1984), and includes the register of owners
of any equity securities of an issuer established under any other law;
(21) “register of
debenture-holders” means the register of debenture holders referred to in
section 149 of the Companies Ordinance, 1984 (XLVII of 1984), and includes the
register of holders of any non-equity securities of an issuer other than a
company;
(22) “Registrar”
means the Registrar as defined in clause (31) of sub-section (1) of section 2
of the Companies Ordinance, 1984 (XLVII of 1984);
(23) “regulations”
means the regulations made pursuant to section 35;
(24) “security”
means,---
(a)
a security as defined in sub-clause (i) of clause (1) of section 2 of the
Securities and Exchange Ordinance, 1969 (XVII of 1969);
(b)
any Government security;
(c)
any derivative relating to a security or a Government security; or
(d)
any other instrument specified by the Federal Government, by a notification in
the official gazette, to be a security for the purposes of this Act;
(25) “State Bank”
means the State Bank of Pakistan established under the State Bank of Pakistan
Act, 1956 (XXXIII of 1956);
(26) “stock exchange”
means a stock exchange registered under the Securities and Exchange Ordinance,
1969 (XVII of 1969);
(27) “sub-account”
means a sub-account maintained, as part of the account of a participant, in
accordance with the regulations by a central depository in the name of a
sub-account holder so as to record the title of the sub-account holder to any book-entry
securities entered in such sub-account; and
(28) “sub-account
holder” means a person in whose name a sub-account is opened and maintained
by a participant with a central depository and is operated by that participant.
3.
Overriding effect.- The provisions of this Act shall have effect notwithstanding
anything contained in the Companies Ordinance, 1984 (XLVII of 1984), or in any
other law or in any charter, statute or memorandum or articles of association
or in any applicable document or resolution.
4.
Central depository system.- (1) A central depository shall establish a central
depository system whereby, in accordance with the regulations,---
(a)
(i) accounts may be opened and maintained with
the central depository by the account-holders so as to record the title of the
account-holders to book-entry securities entered in such accounts; or
(ii) where the
account holders are participants, sub-accounts may be opened and maintained, as
part of the accounts of the participants, with the central depository by the
participants on behalf of the sub-account holders so as to record the title of
the sub-account holders to book-entry securities entered in such sub-accounts;
(b)
transfers of such book-entry securities shall be effected electronically or by
any similar means, and
(c)
pledging of such book-entry securities may be effected in accordance with
section 12.
(2)
Where any securities are issued to or registered in the name of a central
depository or transferred by endorsement to or deposited with a central
depository, such securities shall, in accordance with the regulations, be
entered in the relevant accounts or sub-accounts, as the case may be, as
book-entry securities.
(3)
Notwithstanding anything contained in sub-section (1), a participant may, with
the written authorization of his clients, enter book-entry securities
beneficially owned by the clients in his own account without establishing
sub-accounts in the names of such clients in the central depository system:---
Provided that the central
depository may at its discretion, enquire whether such authorization has been
obtained by the participant.
(4)
Subject to the provisions of this Act, a central depository system shall be
operated by a central depository for holding book-entry securities as a nominee
for account holders and for facilitating the transfer of such book-entry
securities.
Provided that nothing contained
herein shall be construed as preventing a central depository from holding
book-entry securities, as a beneficial owner of such securities, in its own
account opened and maintained on its own central depository system.
(5)
The title to any book-entry securities entered in an
account shall vest in the account holder and the title to any book-entry
securities entered in a sub-account shall vest in the sub-account holder.
(6)
The central depository system of a central depository shall handle such
securities as book-entry securities as are declared as such by the central
depository.
(7)
Different types of accounts and sub-accounts for different classes of persons
may be opened with a central depository in accordance with the regulations.
5.
Central depository not to be a
member of an issuer etc.- (1) Where a central depository is named in the
register of members of an issuer,---
(a)
the central depository shall be deemed not to be a member of the issuer; and
(b)
the persons named as the account-holders or, as the case may be, the sub-account
holders shall, for such period as the book-entry securities representing
securities carrying voting rights in the issuer are entered against their names
in the central depository register, be deemed to be members of the issuer in
respect of such securities and shall, except as is otherwise provided in this
Act, be entitled to all the rights, powers and privileges and be subject to all
the liabilities, duties and obligations of a member as are or may be conferred
by the Companies Ordinance, 1984 (XLVII of 1984), or by any other law for the
time being in force or by the charter, statute or memorandum or the articles of
association of the issuer.
(2)
Where a central depository is a debenture-holder of an issuer or is the owner
of securities of an issuer (whether equity securities or debt securities) which
do not carry voting rights in the issuer,---
(a)
the central depository shall be deemed not to be the owner of such securities;
and
(b)
the persons named as the account holders or, as the case may be, the
sub-account holders shall, for such period as the book-entry securities
representing such securities are entered against their names in the central
depository register, be deemed to be the owners of such securities and shall,
except as is otherwise provided in this Act, be entitled to all the rights,
powers and privileges and be subject to all the liabilities, duties and
obligations of the owners of such securities as are or may be conferred by the
Companies Ordinance, 1984 (XLVII of 1984), or by any other law for the time
being in force or in terms of any documents creating such securities.
(3)
Nothing in this Act shall be construed as affecting,---
(a)
the obligation of an issuer to keep a register of its members or debenture holders
or allow inspections of such register under the provisions of the Companies
Ordinance, 1984 (XLVII of 1984), or under any other law for the time being in
force:---
Provided that
(a) the issuer shall not be obliged to enter in any registers
maintained by it the names and particulars of persons who are members of the
issuer under clause (b) of sub--section (1) or owners of the securities of the
issuer under clause (b) of sub-section (2);
(b)
(i) the right of an account holder to request withdrawal
of his securities from the central depository system at any time and, where
applicable, to have them registered in his name, or where the account-holder is
a participant, in any other name; or
(ii)
the right of a participant to request a withdrawal of his sub-account holders”
securities from the central depository system at any time and, where
applicable, to have them registered in the name of his sub-account holder; or
(c)
the right of a central depository to hold book-entry securities beneficially in
its own behalf.
(4)
Notwithstanding any-thing contained in this Act, an account-holder or a
sub-account holder, who is named in the central depository register, at the
close of business hours of the central depository on the day before the first
day of the period of closure of register of members of an issuer, as the holder
of book-entry securities representing securities carrying voting rights in the
issuer, shall be regarded as a member of the issuer for the purpose of
attending and exercising all rights at a general meeting of the members of the
issuer in respect of which the register of members has been closed.
(5)
Notwithstanding any-thing contained in this Act, an
account-holder or a sub-account holder, who is named in the central depository
register, as at the close of business hours of the central depository on the
day before the first day of the period of closure of register of non -equity
securities of an issuer, as the owner of book-entry securities representing
such securities of the issuer, shall be regarded as an owner of such securities
for the purpose of attending and exercising all rights at a general meeting of
the owners of such securities of the issuer in respect of which the register of
such securities has been closed.
6.
Transfers under book-entry system.-(1) Subject
to the provisions of this Act, a transfer of book-entry securities from
accounts or sub-accounts to other accounts or sub-accounts shall be made in
such manner as may be prescribed and shall be effected by making of an
appropriate entry in the central depository register in accordance with such
regulations.
(2)
A transfer of book-entry securities in the manner set
out in sub-section (1) shall be a valid and effective transfer of title to the
securities represented by the book-entry securities.
7.
Effect of book-entry transfer on
transferee.- If a transfer of book-entry securities takes place at a
particular time in accordance with the provisions of section 6,---
(a)
the transferee shall be deemed to have agreed to have accepted the transfer of
such book-entry securities subject to the terms and conditions on which the
transferor held them immediately before the time of such transfer, and
(b)
the transferee shall be deemed to have, where applicable, agreed to become a
member of the issuer and to be bound by the issuer’s charter, statute or
memorandum and articles of association, as the case maybe.
8.
Central depository discharged from liability if acting on instructions.-
(1) A central depository, if
acting in good faith and without negligence, shall not be liable to for any
loss, damages, compensation, costs and expenses in tort or under any law or
contract for any breach of trust or duty where the central depository has, in
the accounts or sub-accounts maintained by it, made or allowed to be made
entries or handled or allowed handling of any book-entry securities, according
to the instructions of an account-holder or a participant, notwithstanding that
the account holder or the participant, as the case may be, had no right to
dispose of or take any other action in respect of such book-entry securities.
(2)
A central depository, if acting in good faith and without negligence, shall be
fully discharged of its obligations to an account-holder and participant, upon
the transfer or delivery of book-entry securities under the instructions of the
account holder or participant, as the case may be.
(3)
A central depository shall not be required to enquire
whether or not,---
(a)
an account-holder or a participant, has a right to handle any book-entry
securities entered in his account or in any sub-account under his account, as
the case may be, or to take any action in that regard; or
(b)
the document evidencing title in respect of a security deposited with an issuer
for the purpose of registration of the transfer of the security in the name of
the central depository is genuine.
(4)
Except as provided in this Act, a central depository
shall not owe any fiduciary or any other obligations whatsoever, including,
without limitation to the generality of the foregoing, any obligations in law,
contract, tort, warranty or strict liability, to the sub-account holders in
whose names sub-accounts are maintained in the central depository system.
(5)
Without prejudice to the provisions of any other law for the time being in
force, if any loss is caused to an account holder or a sub-account holder due
to any negligent or wrongful act or omission of a central depository or any of
its employees, the central depository shall compensate such account holder or
sub-account holder for such loss.
9.
Central depository to supply
information.- (1) Every issuer which is a company or other body corporate
and whose securities are entered in the central depository system of a central
depository shall request the central depository, at such times as may be
prescribed in the regulations, for a list of the names and other relevant
details of the account-holders and sub-account holders, holding the book-entry
securities of such issuer together with details of the book-entry securities of
such issuer entered in the accounts of such account holders or sub-account
holders, as the case may be,---
(a)
for sending notices to any account-holders and
sub-account holders of general meetings of the holders of any securities of the
issuer;
(b)
for sending any other notices or documents to any account holders and
sub-account holders which are required to be sent by the issuer to holders of
any securities of the issuer;
(c)
for the purpose of allowing any account-holders and sub-account holders to
attend general meetings of any holders of securities of the issuer or to
appoint proxies for this purpose;
(d)
for dispatching dividend or other warrants to any account-holders and
sub-account holders;
(e)
for dispatching to any account-holders and sub-account holders any other
payments or benefits paid by the issuer; or
(f)
for dispatching to any account holders and sub-account holders formal offers
for subscription of securities of the issuer.
(2)
A participant may, in respect of such book-entry securities as are beneficially
owned by his clients and entered in his account, supply to the central
depository the names and other details of such clients together with
instructions that such names and other details be forwarded to the issuer upon
a request for information made by the issuer under sub-section (1);
Provided that the persons whose
names are supplied by a participant under this sub-section shall be deemed to
be sub-account holders holding the book-entry securities to which they are
stated by the participant to be entitled and shall be entitled to the rights of
sub-account holders set out in section 5.
(3)
Subject to sub-section (2), the central depository shall supply to an issuer
the information requested by the issuer under sub-section (1) in such manner
and within such time as may be prescribed in the regulations:---
Provided that in cases where the
information requested by the issuer under sub-section (1) is for the
determination of entitlement of any account-holders and sub-accountholders, in
relation to the book-entry securities of the issuer held by them, to attend any
meetings of the issuer or to receive payments of any dividends or other amounts
payable by the issuer or to receive any offers for subscription of any shares
in the issuer or for any other purpose as required by any law or the issuer’s
charter, statute or memorandum or articles of association, the central
depository shall supply such information to the issuer as is correct as at the
close of business hours of the central depository on the day before the first
day of the period of closure of register of members, debenture holders or any
other securities of the issuer.
(4)
Subject to sub-sections (5) and (6), an issuer to whom sub-section (1) applies
shall rely upon the information supplied by the central depository under
sub-section (3).
(5)
An issuer who is liable to pay any dividend or other
amount or issue any offer for subscription of any securities to any
account-holders or sub-account holders shall pay such dividend or other amount
or issue such offer for subscription of securities in accordance with such
information as a central depository may give in accordance with the regulations
and such payment or issue shall discharge the issuer from any liability in
respect of that payment or issue to the relevant account holders or sub-account
holders.
(6) All notices and other documents which an issuer is obliged or required to send to its members or holders of any of its securities, shall in cases where an account-holder or a sub-account holder is deemed to be a member or holder of any securities of the issuer, be sent directly to the account-holder or the sub-account holder, as the case may be, on the basis of information provided by the central depository under sub-section (3) and in such manner as notices and documents are required to be sent by the Companies Ordinance, 1984 (XLVII of 1984), or any other applicable law or articles of association.
10. Bonus issue by an issuer.- (1) Where an issuer whose securities are entered in the central depository system makes a bonus issue, the securities to be issued on the number of securities of that issuer registered in the name of the central depository shall be allotted to the central depository.
(2)
The central depository shall, upon allotment of securities under sub-section
(1), determine the entitlements of the relevant account-holders and sub-account
holders to such securities in proportion to the other securities of the same
issuer standing in their accounts and sub-accounts, as of the close of business
hours of the central depository on the day before the first day of the period
of closure of register of members, debenture holders or any other securities of
the said issuer and enter the book-entry securities in the relevant accounts
and sub-accounts in accordance with the determined entitlements:---
Provided that fractional
entitlements to book-entry securities relating to the bonus securities shall
not be credited by the central depository to the relevant accounts and
sub-accounts but the book-entry securities representing such fractional
entitlements shall be consolidated and dealt with in accordance with the
regulations.
11.
Bar on rectification of central depository register.- Notwithstanding
anything contained in section 152 of the Companies Ordinance, 1984 (XLVII of
1984), if,---
(a)
an account-holder or a sub-account holder did not consent to a transfer of any
book-entry securities from, or to, his account or sub-account, as the case may
be, or
(b)
the name of any account-holder or sub-account holder is fraudulently or without
sufficient cause entered in, or omitted from, the central depository register, the
aggrieved party may apply to the court for relief and the court may award damages
to the aggrieved party but shall not order rectification of the central
depository register.
Explanation: The expression “court”
for the purposes of this section shall mean the High Court having jurisdiction
over the defendant.
12.
Pledge of book-entry securities.- (1)
Book-entry securities shall be pledged only in favour of an
eligible pledgee to secure the payment of a debt or liability or performance of
any obligation by any account holder directly or by any sub-account holder
through instructions given to a participant when the book-entry securities are
blocked in the manner set out in sub-section (2).
(2)
The book-entry securities to be pledged shall be
blocked when an account holder or a participant gives instructions to the
central depository system in a manner that the pledger or the relevant
participant when the pledger is a sub-account holder ceases to handle the
pledged book-entry securities and notice of the blocking is available through
the central depository system to the eligible pledgee.
(3)
A pledgee of the pledged book-entry securities shall, in addition to the powers
available to him under the Contract Act, 1872 (Act IX of 1872), have the
following powers:---
(a)
a power, upon the default of the pledger, to transfer
the pledged book-entry securities or any part thereof; and
(b)
any other power which may be granted to him in writing by the pledger in
relation to the pledged book-entry securities provided that the central
depository shall not be concerned with or affected by the exercise of any such
power.
(4) The central
depository system shall only allow the pledgee to remove the block from the
pledged book-entry securities in such manner that they are available to the
pledger for the purpose of handling them.
(5) The central
depository system shall not allow the pledger to handle the pledged book-entry
securities save upon the removal by the pledgee of the block from such pledged
book-entry securities.
(6)
A participant shall not create a pledge over any
book-entry securities entered in any sub-accounts maintained under his account
with the central depository without the authorization of the sub-account holder
concerned.
(7)
No pledge of any book-entry securities may be made
except as provided in this section.
(8)
Except as otherwise provided in this section, the provisions of the Contract
Act, 1872 (Act IX of 1872) shall be applicable to pledging of book-entry
securities.
Explanation: For the purpose
this section, the account-holder or sub-account holder, as the case may be,
pledging any book-entry securities shall be called the “pledger”, the eligible
pledgee in whose favour a pledge of book-entry securities is made be called the”pledgee”
and the book-entry securities when blocked are be called the “pledged
book-entry securities”.
13.
Consolidation or sub-division of securities by an
issuer.-
When an issuer announces a consolidation or sub-division of his securities, the
book-entry securities of such issuer as are entered in the accounts and
sub-accounts maintained in the central depository register shall in like manner
and in accordance with the regulations shall be consolidated or sub-divided, as
the case may be, in the central depository register.
14.
Regulations for issue or offer for sale of securities.- (1)
A central depository may make regulations which
permit any issuer to enter into an arrangement with the central depository
whereunder the issuer may register in the name of the central depository all
the securities of one class after making allocation of such securities to the
subscribers of the securities.
(2)
Where any issuer enters into an arrangement referred
to in sub-section (1) with a central depository and registers the securities in
the name of the central depository, the central depository shall ensure that
every subscriber of the securities or any account holder designated by such
subscriber is credited with book-entry securities representing his entitlement
to such securities.
(3)
A central depository may make regulations which permit
any person intending to make an offer for sale of securities to the public to
enter into an arrangement with the central depository whereunder the securities
which are to be offered for sale by that person may be transferred in the name
of the central depository after the acceptance of offer from persons who apply
to purchase such securities.
(4)
Where any person intending to make an offer for sale
of securities to the public enters into any arrangement referred to in
sub-section (3) with a central depository and transfers the securities in its
name, the central depository shall ensure that every purchaser of the
securities or any account holder designated by such purchaser is credited with
book-entry securities representing his entitlement to such securities.
15.
Conversion of non-equity securities into equity
securities.- Where any debentures, bonds or any other non-equity securities,
whether partly or wholly convertible into equity securities or with warrants to
subscribe to equity securities of an issuer, are converted into equity
securities, a central depository shall take appropriate action, in accordance
with the regulations, in respect of the book-entry securities representing such
debentures, bonds or other non-equity securities to give effect to such
conversion.
16. Issuance of Jumbo Certificates.- Every issuer of the securities registered in the name of a central depository shall, if so requested by the central depository in writing, issue to it jumbo certificates, of such denominations as may be requested by the central depository, upon the occurrence of any increase or decrease in the number of the securities of such issuer held by the central depository.
17.
Inspection of the central depository register.- (1) The central
depository register shall, to the extent that it records the holdings of
book-entry securities representing securities of an issuer, be open to
inspection at the registered or head office of the issuer in the same manner
and to the extent provided in any law for the time being in force pursuant to
or by which such issuer was established or is governed.
Explanation : For the purposes
of this sub-section, the expression “law” shall include any rules or regulations
governing such issuer.
(2)
The information made available upon any request for inspection under
sub-section (1) shall be correct as of the close of business hours of the central
depository on its first working day in the month preceding the month in which
the request for inspection is made:---
Provided that where any closure
of the register of members or debenture holders or of the holders of any other
equity or non-equity securities, of the issuer has occurred subsequent to the
first working day of the central depository in the month preceding the month in
which the request for inspection is made, the information made available upon
any request for inspection shall be correct as of the close of business hours
of the central depository on the day before the first day of the latest period
of closure of register of members or debenture holders or of the holders of any
other equity or non-equity securities, as the case may be, of the issuer:---
Provided further that where notice of a general meeting of the members or debenture holders or of the holders of any other equity or non-equity securities of the issuer has been issued, the information made available upon any request for inspection under sub-section (1) shall be correct as of the close of business hours of the central depository on the third day before the date of receiving the request for inspection.
18.
Record of an entry prima facie evidence.- A record of an
entry in an account or a sub-account shall be prima facie evidence of the truth
of the matters so recorded.
19.
Borrowing or lending of securities.- Book-entry
securities may, in accordance with the regulations, be borrowed or lent in the
interest of the smooth and orderly functioning of stock exchanges.
20.
Duty to maintain secrecy.- (1) Except as
provided in this Act or in any other law for the time being in force, no
director or officer of a central depository or a participant, whether during his
tenure of office or during his employment or thereafter, and no other person
who has by any means knowledge of any information or document whatsoever
relating to the affairs of any of the account holders, and in particular,
relating to their accounts or sub-accounts, shall give, divulge, reveal or
otherwise disclose such information or document to any other person.
(2)
A person who has any information or document which to
his knowledge has been disclosed in contravention of sub-section (1) shall not
in any manner howsoever disclose it to any other person.
21.
Permitted disclosures.- Subject to the
provisions of this Act, the provisions of section 20 shall not entitle any
person to refuse to disclose any information or documents,---
(a)
which an account-holder or a sub-account holder has
authorized in writing to dis-close;
(b)
in a case where an account-holder or a sub-account holder is declared a
bankrupt, or, if the account-holder or sub-account holder, as the case may be,
is a company or body corporate and is being or, has been, wound up within or
outside Pakistan;
(c)
in the case of any litigation or other legal proceedings;
(d)
to any person duly authorized by a competent court, the Authority or the State
Bank of
(e)
for the purpose of enabling or assisting the Authority to exercise any power
conferred on it by this Act or by any other law for the time being in force;
(f)
for the purpose of enabling or assisting the State Bank of
(g)
for the purpose of enabling or assisting a stock
exchange or clearing house of a stock exchange to discharge its functions;
(h)
for the purpose of enabling or assisting auditors of a central depository or
participant to discharge their functions; or
(i)
to the Authority if the disclosure is required in the interest of investors or
in the public interest.
22.
Regulation of access to the computer system.- (1) A central depository may, in
accordance with the regulations, authorize any account holders, the stock
exchanges on which the securities in relation to book-entry securities entered
in the central depository register of the central depository are listed,
clearing houses of such stock exchanges or issuers to have access to its
computer system within such limits and for such purposes as may be specified in
such regulations.
(2)
No person,---
(a)
who, being a person authorized to have access under sub-section (1), shall gain
access, or attempt to gain access, to a computer system of a central
depository, whether by means of any device or apparatus forming part of the computer
system or by any other means, beyond the limits or for purposes other than for
which he is authorized thereunder;
(b)
who, not being a person authorized to have access under sub-section (1), shall
gain access, or attempt to gain access, to a computer system of a central
depository, whether by means of any device or apparatus forming part of the
computer system or by any other means; or
(c)
shall unlawfully interfere with, or impede, or attempt to interfere with or
impede, the operation of a computer system of a central depository.
23.
Central depository to provide assistance to the
Registrar, the Authority, the State Bank of Pakistan and the stock exchanges.-A central
depository shall provide such assistance to the Authority, the State Bank, of
Pakistan, the Registrar, stock exchanges and to any person acting on their
behalf, as they reasonably require for the performance of their functions and
duties under this Act or under any other law for the time being in force.
24.
Handling book-entry securities without authority.-(1) A participant
shall not handle or authorize or permit any handling of book-entry securities
entered in the sub-accounts maintained under his account without authority of
the sub-account holder.
(2)
A participant shall not, except with the authority of his clients, handle or
authorize or permit any handling of book-entry securities beneficially owned by
such clients and entered in his account.
25.
Nomination and transmission.- The provisions of sections 79, 80 and 81 of the
Companies Ordinance, 1984 (XLVII of 1984), shall, mutatis mutandis, apply to
book-entry securities and all references to member or holder of debentures in
those sections shall be construed as references to account-holders or sub-account
holders, and all references to a company shall be construed as references to a
central depository in case the book-entry securities belong to an
account-holder and to a participant in case the book-entry securities belong to
a sub-account holder.
26.
Settlement of securities transactions using the
central depository system.- (1) Subject to the provisions of this Act, no
transfer of book-entry securities shall be effected on the central depository
system unless at least one party to the transaction in respect of which the
transfer of book-entry securities is sought to be effected is a member of a
stock exchange.
(2)
Notwithstanding the provisions of sub-section (1), a central depository shall
make regulations prescribing transactions, other than the transactions referred
to in that sub-section, in respect of which transfers of book-entry securities
may be effected on the central depository system:---
Provided that a central
depository may, before making or allowing the entry to be made, require the
production of such documentary evidence as may be prescribed in the
regulations.
27.
Power of Registrar and Authority to call for
information or appoint inspectors.- (1) Nothing contained in this Act shall
be construed to impose any limits on the powers of the Registrar or the
Authority under the Companies Ordinance, 1984 (XLVII of 1984), as regards
calling for any information from and appointing any persons as inspectors to
investigate the affairs of a central depository or of any participant which is
a company or is a corporation to which the provisions of the Companies
Ordinance, 1984 (XLVII of 1984), apply.
(2)
Nothing contained in this Act shall be construed to impose any limits on the
powers of any competent authority under any other law for the time being in
force as regards calling for any information from or carrying out any
investigation into the affairs of a participant which is established under or
is otherwise governed by such law.
(3)
The Authority, on being satisfied that the affairs of a participant, not being
a participant referred to in sub-sections (1) or (2), in relation to his
account on a central depository system are being or have been conducted with
intent to defraud his creditors or any other persons or for a fraudulent or
unlawful purpose, may by order in writing,---
(a)
call upon such participant to furnish in writing such information relating to
book-entry securities held by him on the central depository register, whether
on his own behalf or on behalf of a client; or
(b)
authorize any one or more competent persons as
inspectors to investigate the affairs of such participant:---
Provided that before making an
order for enquiry or inspection, the Authority shall give the participant an
opportunity to show cause against the action proposed to be taken.
(4)
A person appointed as inspector under sub-section (3)
shall, for the purposes of his investigation, have the same powers as are
vested in a court under the Code of Civil Procedure, 1908 (Act V of 1908),
while trying a suit, in respect of the following matters, namely:---
(a)
enforcing the attendance of persons and examining them on oath or affirmation;
(b)
compelling the discovery and production of books and
papers and any material objects; and
(c) issuing
commissions for the examination of witnesses;
and every proceeding before such person shall be deemed to be “judicial
proceeding” within the meaning of sections 193 and 228 of the Pakistan Penal
Code, 1860 (Act XLV of 1860).
(5)
Any contravention of or non-compliance with any orders, directions or
requirement of the inspector exercising powers of a court under sub-section (4)
shall, in all respects, entail the same liabilities, consequences and penalties
as are provided for such contravention, non-compliance or default under the
Code of Civil Procedure, 1908 (Act V of 1908), and the Pakistan Penal Code 1860
(Act XLV of 1860).
(6)
Every past and present partner, proprietor or employee of a participant shall
on demand produce before inspector all information or such records and other
documents in his custody having a bearing on the subject-matter of the
investigation.
(7)
The inspector may, and if so directed by the Authority shall, make interim
reports to the Authority, and on the conclusion of the investigation, shall
make a final report to the Authority on the basis of which it may take such
action as it deems expedient.
(8)
If, from any report made under sub-section (7), it appears to the Authority
that any participant or any other person has been guilty of any offence for
which he is criminally liable, the Authority may prosecute such participant or
other person for the offence.
(9)
When an investigation is ordered to be made under this section, the expenses of
the investigation shall, in the first instance be defrayed by the Authority;
but any person who is convicted on a prosecution instituted in pursuance of
sub-section (8) may, in the same proceedings, be ordered to pay the said
expenses to such extent as may be specified by the Authority or as the court
may so direct.
(10)
The amount of expenses which any person is liable under this section to
reimburse to the Authority shall be recoverable from that person as arrear of
land revenue.
(11)
In so far as the expenses to be defrayed by the Authority under this Section
are not recovered thereunder, those shall be borne by the Federal Government.
(12) A
copy of any report of any inspector or inspectors appointed under this section
authenticated in such manner as may be prescribed, shall be admissible in any
legal proceedings as evidence of the opinion of the inspector or inspectors in
relation to any matter contained in the report.
28.
Offences.- (1) Whoever knowingly and willfully
contravenes or attempts to contravene or abets the contravention of any of the
provisions of this Act or the regulations made thereunder shall be punishable
with a fine which may extend to five hundred thousand rupees and to a further
fine not exceeding ten thousand rupees for every day if such contravention
continues after the imposition of the fine.
(2)
Notwithstanding anything contained in sub-section (1), whoever knowingly and
willfully contravenes or attempts to contravene or abets the contravention of
the provisions of section 24 shall be punishable with a fine which may extend
to one million rupees and to a further fine not exceeding twenty thousand
rupees for every day after the first contravention during which the
contravention continues or with imprisonment for a term which may extend to
five years, or with both.
(3)
Where an offence under this Act has been committed by a company, every person
who at the time the offence was committed was in charge of, and was responsible
to, the company for the conduct of the business of the company shall be deemed
to be guilty of the offence and shall be liable to be proceeded against and
punished accordingly.
(4)
Notwithstanding anything contained in sub-section (3), where an offence under this
Act has been committed by a company and it is proved that the offence has been
committed with the consent or connivance of, or is attributable to any neglect
on the part of any director, manager, secretary or other employee of the
company, such director, manager, secretary or other employee shall also be
deemed to be guilty of the offence.
Explanation: For the purposes
of this section,---
(a)
“company” means any body corporate and includes a partnership firm or other
association of individuals; and
(b)
“director”, in relation to a firm, means a partner in the firm.
29.
Cognizance of offences by courts.-No court or
authority or officer shall take cognizance of any offence punishable under this
Act or any regulations or under any bye-laws made thereunder, save on a
complaint made in writing by the Authority.
30.
Offences to be non-cognizable.- Notwithstanding
anything contained in the Code of Criminal Procedure, 1898 (Act V of 1898),
every offence under this Act shall, for the purposes of the said Code, be
deemed to be non-cognizable.
31.
Punishment and adjudication of fine or penalty.-(1) A fine for any
offence under or contravention of any provisions of this Act may be adjudged
and imposed by any Member of the Authority.
(2)
The fine as aforesaid shall be imposed after giving
the person concerned an opportunity to show cause why he should not be punished
for the alleged offence or contravention and, if he so requests, after giving
him a reasonable opportunity of being heard personally or through such person
as may be prescribed in this behalf.
(3)
Where imprisonment is provided for any offence under or contravention of any
provisions of this Act, it shall be adjudged by a court not inferior to that of
a court of session.
32.
Review and appeal.- Any person,---
(a)
aggrieved by any order or sentence passed under
sub-section (1) of section 31 may, within thirty days of such order or
sentence, apply to the Member of the Authority passing the order or sentence
for a review of such order or sentence; or
(b)
aggrieved by any order or sentence passed under sub-section (1) of section 31,
may within sixty days of such order or sentence, prefer an appeal to the
Authority and the Authority may pass such order in relation to the appeal as it
thinks fit;
Provided that no order enhancing
the fine shall be passed unless the applicant has been given an opportunity of
showing cause against it and, if he so requests, of being heard personally or
through such person as may be prescribed in this behalf.
33.
Powers of the Authority in relation to proceedings.- (1) The Authority
shall, for the purposes of a proceeding in exercise of its powers and discharge
of functions under this Act, have the same powers as are vested in a court
under the Code of Civil Procedure, 1908 (Act V of 1908), while trying a suit,
in respect of the following matters, namely:---
(a)
summoning and enforcing the attendance of any witnesses and examining him on
oath or affirmation;
(b)
compelling the discovery or production of any document or other material object;
(c)
receiving evidence on affidavit; and
(d)
issuing commissions for the examination of witnesses and documents.
(2)
Any proceeding before the Federal Government or the
Authority or a member of the Authority under this Act shall be deemed to be a
judicial proceeding within the meaning of section 193 and section 228 of the
Pakistan Penal Code, 1860 (Act XLV of 1860), and such Government or Authority
or a member of the Authority shall be deemed to be a Civil Court for the
purposes of section 195 and Chapter XXXV of the Code of Criminal Procedure,
1898 Act V of 1898).
34.
Amendment of Ordinance XLVII of 1984.- As from the date
of commencement of this Act, sections 2, 3, 74, 77 and 209 of the Companies
Ordinance, 1984 (XLVII of 1984), shall have effect subject to the amendments
specified in the Schedule to this Act.
35.
Central depository to have power to make own
regulations.- (1) Subject to prior approval of the regulations by the
Authority, a central depository shall have the power to make regulations from
time to time to carry out its functions in accordance with the provisions of
this Act.
(2) In particular,
and without prejudice to the generality of the foregoing power, such
regulations may provide for all or any of the following matters, namely:---
(a)
manner of opening and maintaining accounts and sub-accounts with the central
depository;
(b)
criteria for recognition of persons as eligible pledgees;
(c)
qualifications of account holders for the purposes of becoming participants;
(d)
manner and procedure of effecting transfers of book-entry securities;
(e)
manner and timing of entering book-entry securities in
accounts and sub-accounts;
(f)
types of accounts and sub-accounts which may be established with the central
depository for different classes of persons;
(g)
manner of withdrawing securities from the central depository system of the
central depository;
(h)
criteria for determining close of business hours of the central depository on
each day;
(i)
manner of making entries in accounts and sub-accounts maintained with the
central depository;
(j)
manner of provision of information to a central depository by a participant
under sub-section (2) of section 9;
(k)
manner and timing of provision of information by the central depository to
issuers under sub-section (3) of section 9;
(l)
details of information to be given by the
central depository to issuers under sub-section (5) of section 9;
(m)
procedure for consolidation and sub-division of book-entry securities
representing securities which have been consolidated or sub-divided by an
issuer;
(n)
new issues or offer for sale of securities;
(o)
manner of conversion of debt-based book-entry securities into equity-based
book-entry securities;
(p)
borrowing and lending of book-entry securities;
(q)
regulating access to the computer system of the central depository and the
limits of such access;
(r)
direct statements sent by a central depository to
sub-account holders;
(s)
any other matter for which a regulation is required to
be or may be made to carry out the purposes of this Act.
(3)
All regulations made under this section shall be published in the official
gazette and shall take effect upon such publication.
(4)
Where the Authority considers it expedient so to do, it may, by order in
writing, direct a central depository to make any regulation, or to amend or
rescind any regulation already made, within such period as it may specify in
this behalf.
(5)
If a central depository fails or neglects to comply with any direction under
sub-section (4) within the specified period, the Authority may make or amend,
with or without modifications, or rescind, any regulation directed to be made,
amended or rescinded, and a regulation so made, amended or rescinded by the
Authority shall be deemed to have been made, amended or rescinded by the
central depository in accordance with the provisions of this section and shall
have effect accordingly.
36.
Removal of difficulties.- If any difficulty arises in giving effect to any
provisions of this Act, the Authority may, by notification in the official
gazette, make such provisions as may appear to it to be necessary for the
purpose of removing such difficulty.
SCHEDULE
(See
section 34)
AMENDMENT OF
ORDINANCE XLVII OF 1984
As
from the commencement of this Act, the following amendments shall be made in
the Companies Ordinance, 1984 (XLVII of 1984), namely:---
(a)
in section 2, in sub-section (1).---
(i)
in clause (2), in the second proviso, in item (ii), after the words “Provincial
Government” occurring at the end, the words and comma or shares registered in
the name of a central depository” shall be inserted; and
(ii)
after clause (5), the following new clause shall be inserted namely,---
“(5A) “central
depository” means a central depository as defined in clause (cc) of section 2
of the Securities and Exchange Ordinance, 1969 (XVII of 1969), and registered
with the Authority under section 32A of that Ordinance :”;
(b)
in section 3, in sub-section (1), in clause (b), for the full stop at the end a
colon shall be substituted and thereafter the following proviso shall be added,
namely:---
“Provided that, where a central
depository holds more than fifty percent of the voting securities of a company,
such company shall not be deemed to be a subsidiary of the central depository
save where such voting securities are held beneficially by the central
depository in its own behalf.”;
(c)
in section 74, in sub-section (1), for the full stop at the end a colon shall
be substituted and thereafter the following proviso shall be added, namely:---
“Provided that, the company shall,
within five days after an application is made for the registration of the
transfer of any shares, debentures or debenture stock to a central depository,
register such transfer in the name of the central depository.”;
(d)
in section 77, in the first proviso, after the words “thirty days”, the words
and comma’ or, where the transferee is a central depository, within five days”
shall be inserted; and
(e)
in section 209, in sub-section (5),---
(i)
in clause (b), in the proviso, the word “or” occurring at the end shall be
omitted; and
(ii)
in clause (c), for the full stop at the end the semi-colon and word ”; or”
shall be substituted and thereafter the following new clause shall be added,
namely:---
“(d) from depositing with, or transferring to, or holding, or registering in the name of a central depository any shares of securities.”
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