Updated: Wednesday April 06, 2016/AlArbia'a
Jamada El Thaniah 28, 1437/Budhavara
Chaitra 17, 1938, at 04:45:52 AM
The Equity Participation Fund Ordinance,
1970
1ORDINANCE NO. I
OF 1970
[6th January, 1970]
An Ordinance to
provide for the establishment of an Equity Participation Fund.
WHEREAS it is expedient to
establish an Equity Participation Fund to promote and generate investment in
the private sector 2[in the less developed areas of Pakistan
and certain other areas] by providing equity support to the entrepreneurs of
moderate means who are unable to raise funds for industrial activity from the
capital market;
AND WHEREAS the national interest
of
NOW, THEREFORE, in
pursuance of the Proclamation of the 25th day of March, 1969, read with the
Provisional Constitution Order, and in exercise of all powers enabling him in
that behalf, the President is pleased to make and promulgate the following
Ordinance:---
1.
Short title, extent and commencement. ___(1) This Ordinance may be called the
Equity Participation Fund Ordinance, 1970.
(2) It extends to the whole
of
(3) It shall come into
force at once.
2.
Definitions. In this
Ordinance, unless there is anything repugnant in the subject or context,---_
(a) ”Bank” means the Industrial Development Bank of Pakistan
established under the Industrial Development Bank of Pakistan Ordinance, 1961
(XXXI of 1961).
(b) “Board” means the Board of Directors of the Fund;
(c) “company” means a company as defined in the Companies Act,
1913 (VII of 1913), and includes a corporation established by or under any
other law for the time being in force;
(d) “Director” means a member of the Board;
(e) “Equity Security” means,---
(i) any stock or transferable share, preferred
or common, or similar security representing ownership,
1The Ordinance has been declared to be
validly made by the competent authority see the Validation of Laws Act, 1975
(63 of 1975).
2Subs. by the Equity Participation Fund
(Amdt.) Ordinance, 1978 (5 of 1978), s. 2. for “the less developed areas of
Pakistan”
which was previously subs. by Act 7 of 1973, s. 3, for certain words .
3Added ibid., s. 3.
(ii) any
security carrying any warrant or right to purchase or subscribe for such a
security and any such warrant or right itself, and
(iii) such
other security representing ownership as may be prescribed;
(f) “Fund” means the Equity Participation Fund established
under this Ordinance;
(g) “institutional investor” means any company;
1[(gg) “less developed areas” means such areas as
may be prescribed;]
(h) “medium-sized enterprise” means any such enterprise as is
prescribed to be a medium-sized enterprise;
(i) “prescribed” means prescribed by rules;
(j) “regulation” means a regulation made under
this Ordinance;
(k) “rule” means a rule made under this Ordinance;
(l) “scheduled bank” has the same meaning as in the State Bank
of Pakistan Act, 1956 (XXXIII of 1956);
(m) “small-sized enterprise” means any such
enterprise as is prescribed to be a small-sized enterprise;
(n) “underwriting” means enterning into contract,
with or without conditions, to purchase or subscribe for stocks or shares or
other securities issued by any company or institution with a view to holding,
selling or distributing the whole or part thereof.
3.
Establishment of the Fund. ___(1) As soon as may be after the coming
into force of this Ordinance, the2[Federal Government]
shall establish a financial institution to be called the Equity Participation
Fund to carry out the purposes of this Ordinance.
(2) The Fund shall be a
body corporate by the name of Equity Participation Fund having perpetual
succession and a common seal, and shall, by the said name, sue and be sued.
(3) The Head Office of the
Fund shall be located at 3[
4.
Share capital.____(1) The authorised share capital of the
Fund shall, in the first instance, be 4[two hundred million] of rupees divided
into 5[two million] ordinary shares of one
hundred rupees each.
1Ins. by the Equity Participation Fund
(Amdt.) Act, 1973 (7 of 1973), s. 4.
2 Subs. ibid., s. 2. for “Centrat
Government”.
3 Subs. ibid.,s. 5, for “
4 Subs. by the Federal Laws
(Revision and Declaration) Ordinance, 1981 (27 of 1981), s. 3 and Sch., II, for
“twenty crores”.
5 Subs. ibid., for “twenty lakh”.
(2) The paid-up share
capital of the Fund shall, in the first instance, be five crores of rupees
fully paid up to be contributed as follows:___
Government of
Government of
Government of
State Bank of
Institutional Investors .. .. .. Rs. 1
crore.
Total .. .. Rs. 5 Crores.
(3) The authorised capital
and the paid up capital of the Fund may, by notification in the official
Gazette, be increased by the 1[Federal Government] in such manner as may
be specified therein.
2[(4) The shares and debentures of the Fund
shall be deemed to be included among the securities enumerated in section 20 of
the Trusts Act, 1882 (II of 1882), and to be approved securities for the
purpose of the Insurance Act, 1938 (IV of 1938), and the Banking Companies
Ordinance, 1962 (LVII of 1962).]
5.
Direction and superintendence. The overall direction an superintendence of the affairs of the
Fund shall vest in the Board; and the Board shall, in giving any direction, act
on business considerations having regard to the objectives of the Fund.
6.
Management and administration. ___(1) Subject to the general directions of
the Board, the affairs and business of the Fund shall be managed and
administered by the Bank in accordance with the terms of the agreement entered
into under sub-section (2).
(2) The Fund and the Bank
shall, with the prior approval of the 1[Federal Government], enter into an
agreement specifying the terms in accordance with which the Bank shall manage
and administer the affairs and business of the Fund:
Provided that if the Fund
and the Bank do not agree on the terms, the terms of the agreement shall be as
settled by the 1[Federal Government].
7.
Board.___3[(1) The Board shall consist of the
following members, namely:___
(a) two Directors to be nominated by the Federal Government one
of whom shall be a non-official and the other an official;
1Subs. by the Equity Participation Fund
(Amdt.) Act, 1973 (7 of 1973), s. 2 for “Central Government”.
2Added by the Equity Participation Fund
(Amdt.) Ordinance 1971 (16 of 1971), s. 2.
3Subs. by Act 7 of 1973, 6, for
sub-section (1).
(b) one Director to be nominated by each of the Provincial
Governments;
(c) one Director to be nominated by the Bank who shall be the
Executive Director;
(d) one Director to be nominated by the State Bank of
(e) two Directors to be elected by the
institutional investors, being share-holders of the Fund, in such manner as may
be prescribed.]
(2) The Director nominated
by the 1[Federal Government] who is a non-official
shall be the Chairman of the Board.
(3) Unless the 1[Federal Government] by notification in the
official Gazette otherwise directs, a Director, other than an ex-officio Director, shall hold office for a period
of three years from the date on which he assumes office.
(4) No act or proceedings
of the Board shall be invalid merely on the ground of existence of any vacancy
in, or any defects in the constitution of, the Board.
8. Qualification of Directors. No person shall be qualified to be elected
or nominated as, and to be, a Director of the Fund if he___
(a) is a member of the 2[Federal] or a Provincial Legislature;
(b) is an undischarged insolvent;
(c) stands declared by a competent court to be of unsound mind;
(d) has, at any time, been convicted of an offence which the 1[Federal Government] declares to be an
offence involving moral turpitude;
(e) without leave of the Board, absents himself from three
consecutive meetings of the Board;
(f) has any such financial or other interest in any company
financed by the Fund as is likely to affect prejudicially his functions as a
Director;
(g) is or becomes a salaried employee of any
company financed by the Fund.
9. Executive Committee.-3[(1) The Board shall
constitute an Executive Committee consisting of not more than six Directors to
assist it in the discharge of its functions.]
1Subs. by the Equity Participation Fund
(Amdt.) Act, 1973 (7 of 1973), s. 2 for “Central Government”.
2Subs. by the F.A.O. 1975, Art. 2 and
Table, for “Central”.
3Subs. by Act 7 of 1973 s. 7, for
sub-section (I)
(2) When the Board is not
in session, the Executive Committee shall perform the functions of the Board.
10.
Meetings of the Board and the Executive Committee. The meetings of the Board and the
Executive Committee shall be conducted in such manner as may be prescribed.
11.
Fees for attending meetings. The Directors shall be paid such fees for attending the meetings
of the Board and the Executive Committee as may be prescribed.
12.
Secrecy and fidelity. No
Director shall assume his office until he has made such declaration affirming
secrecy fidelity as may be prescribed.
13.
Indemnity of Directors. A Director shall not be personally liable for acts of any other
Director or of any officer or servant employed by the Fund or the Bank or for
any loss or expenditure resulting to the Fund by reasons of the insufficiency
or deficiency in value of or title to any property or security acquired or
taken on behalf of the Fund or by reason of anything done by him in good faith
in the discharge of his duties.
14.
Business which the Fund can transact. ___(1) The Fund may carry on, transact or do
several kinds of business and acts hereinafter specified namely:___
(a) extending of equity support for
supplementing the capital resources of small-sized enterprises and medium sized
enterprises in the private sector in 1[or in areas outside
(b) underwriting, managing, and distributing the issue of
stocks and shares of such enterprises either singly of in conjunction with
other financial institutions;
(c) facilitating investment by selling new share floatations of
companies without underwriting obligations;
(d) purchasing or otherwise acquiring, owning, selling,
transferring and exchanging any tangible and intangible movable or immovable
property or any rights, title or interest in such property acquired for the
conduct of its business;
(e) accepting and furnishing any lien, charge, hypothecation or
mortgage of any tangible or intangible movable or immovable property or assets
in the conduct of its business;
(f) selling of shares acquired or held by it through stock
exchanges in
1Sub s. by the Equity Particiption Fund
(Amdt.) Ordinace, 1978 (5 of 1978), s. 4, for “the less developed areas of
(g) entering into agreements and contracts and executing such
documents as may be considered necessary for the discharge of its functions;
(h) receiving and paying commissions, fees and brokerage in
connection with its business;
(i) investing its surplus funds in securities in the manner
specified for this purpose by the Board from time to time;
(j) acquiring or retaining as part of its
assets any stocks or shares which it may have to take up in the discharge of
any liability incurred through underwriting commitments;
(k) appointing attorneys and agents;
(l) acquiring, retaining and disposing of assets of any type in
satisfaction of its claims;
(m) doing of all such acts and things as may
be incidental or subsidiary to transacting any of the aforesaid businesses;
(n) doing of such other acts and things in furtherance of
purposes of this Ordinance as the 1[Federal Government] may from time to time
direct.
(2) The Fund shall perform
its functions in accordance with the rules and regulations.
15.
Borrowing powers. The
Fund may, with the prior approval of the 1[Federal Government], borrow funds from
any source with or without security.
16.
Accounts. The Fund
shall maintain its accounts in such manner as may be prescribed.
17.
Auditors. ___(1) The accounts of the Fund shall be
audited and certified each year by not less than two chartered accountants as
defined in the Chartered Accountants Ordinance, 1961 (X of 1961).
(2) The Fund shall furnish
every year each shareholder with a copy of its audited accounts including the
profits and loss accounts and a report on the working of the Fund.
(3) The audited accounts
including the profit and loss account shall be published in the official
Gazette by the Fund.
18.
Annual general meeting. ___(1) The annual general meeting of the
shareholders of the Fund shall be held on such date and at such time and place
as may be fixed by the Board but in any case not later than six months from the
date of closing of accounts.
1Subs. by the Equity Participation Fund
(Amdt.) Act, 1973 (7 of 1973), s. 2 for “Central Government”.
(2) The Bank shall submit
at the annual general meeting for the consideration of shareholders a statement
of accounts and a report on the operation of the Fund for the proceeding
financial years.
(3) Copies of annual
statement of accounts and report shall be submitted to the 1[Federal Government] immediately after the
holding of the annual general meeting.
19.
Winding up of the Fund. The Fund shall not be wound up save by order of the 1[Federal Government] and in such manner as
it may direct.
20.
Exemption from taxes and duties.___(1) Notwithstanding anything contained in
the Income tax Act, 1922 (XI of 1922), or any other law for the time being in
force in Pakistan relating to income-tax, super-tax or business profits tax,
the Fund shall not be liable to pay any such tax on its income, profits or
gains.
(2) All transactions entered into by the
Fund in respect of purchases and sales of equity security shall not be liable
to the payment of any stamp duty under the Stamp Act, 1899 (II of 1899).
21. Power to
make rules. The
Board may, with the previous approval of the 1[Federal Government], make rules for
carrying out the purposes of this Ordinance, and any rules so made shall be
published in the official Gazette.
22.
Power to make regulations.___(1) The Board may make regulations to
provide for all matter not required to be provided for by rules and provision
for which is necessary or expedient for carrying out the purposes of this
Ordinance.
(2) Where any provision of
any regulation is inconsistent with any provision of the rules, the provision
of the rules shall prevail.
1Subs. by the Equity Participation Fund
(Amdt.) Act, 1973 (7 of 1973), s. 2 for “Central Government”.
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