Updated: Thursday May 05, 2016/AlKhamis
Rajab 28, 1437/Bruhaspathivara
Vaisakha 15, 1938, at 12:27:17 AM
The National Development Finance Corporation
Act, 1973
1Act No. XIII of
1973
[5th February, 1973]
An Act to provide for the establishment of
the National Development Finance Corporation.
WHEREAS it is expedient to
provide for the establishment of the National Development Finance Corporation,
and for matters ancillary thereto;
It is hereby enacted as
follows:---
1. Short title, extent
and commencement.—(1)
This Act may be called the National Development Finance Corporation Act, 1973.
(2) It extends to the whole
of
It shall come into force at
once, and shall be deemed to have taken effect on the 23rd day of December,
1972.
2. Definitions. In this 3[Act]
unless there is anything repugnant in the subject or context,---
(a) ”Board” means the Board of Directors constituted under
section 7;
(b) ”Chairman” means the Chairman of the Board;
(c) ”Corporation” means the National Development Finance
Corporation established under section 3;
(d) ”Director” means a director of the Corporation;
(e) ”eligible enterprise” means an undertaking referred to in
section 17;
(f) ”financial institutions” means the' State Bank of Pakistan,
the Pakistan Industrial Credit and Investment Corporation, the Investment
Corporation of Pakistan, the National Investment Trust, a company carrying on
the business of insurance and a banking company as defined in the Banking Companies
Ordinance, 1962 (LVII of 1962) 4[,
and includes any other company or other body corporate sponsored, owned or
controlled by the Federal Government or a Provincial Government, whether
directly or through a company or corporation set up or, controlled by such
Government, which the Federal Government may, by notification in the official
Gazette, declare to be a financial institution for the purposes of this Act].
1For Statement of Objects and Reasons,see
Gaz. of P., 1973, Ext.,
2 Added by the National Development
Finance Corporation (Amdt.) Ordinance 1978 (14 of 1978), s. 2. ,
3Subs. ibid.; s. 3, for “Ordinance”.
4Added by the National Development
Finance Corporation (Amdt.) Ordinance, 1983 (16 of 1983), s. 2.
(g) ”prescribed” means prescribed by rules;
(h) ”regulation” means a regulation made under this Act;
and
(i) ”rule” means a rule made under this Act.
3. Establishment of the
Corporation.—(1) The
Federal Government may, in accordance with the provisions of this Act,
establish a Corporation to be called the National Development Finance
Corporation.
(2) The Corporation shall
be a body corporate having perpetual succession and a common seal, with powers,
subject to the provisions of this Act, to hold and dispose of property and
shall by its name sue and be sued.
4. Share Capital.—(1) The authorised share capital of the
Corporation shall be ten crores of rupees, divided into ten lakh ordinary
shares of one hundred rupees each.
(2) The paid-up capital of
the Corporation shall, in the first instance, be three crores of rupees to be
contributed by the Federal Government.
(3) The Federal Government
may, by notification in the official Gazette, increase the 1[authorised
share Capital and] paid-up capital of the Corporation to such extent and in such
manner as may be specified in the notification.
5. Offices and
branches.-(1) Unless the
Federal Government by notification in the official Gazette, otherwise directs,
the head-office of the Corporation shall be at
(2) The Corporation may
establish regional and other offices at such places as the Board may think fit.
6. Direction and
superintendence.—(1) The
over all direction and superintendence of the affairs of the Corporation shall
vest in a Board of Directors constituted in accordance with section 7, which
may exercise all such powers and 2[do]
all such acts and things as may be exercised and done by the Corporation.
(2) In discharging its functions,
the Board shall act on business considerations.
(3) In discharging its
functions, the Board shall be guided on questions of policy by the
instructions, if any, given to it by the Federal Government which shall be the
sole judge as to whether a question is a question of policy.
(4) If the Board fails to
carry out the instructions given to it under sub-section (3), the Federal
Government may supersede the Board and appoint any person or body to function
in place of the Board until a new Board is constituted in accordance with the
provisions of this Act; and no such supersession or appointment shall be
questioned in any court.
7. Board.—(1) The Board shall consist of six
persons to be appointed by the Federal Government, of whom two shall be from
the financial institutions.
1Ins. by the National Development Finance
Corporation (Amdt.) Ordinance, 1978 (14 of 1978),. s. 4.
2Subs. ibid., s. 5, for “to”.
(2) The Directors shall
hold office during the pleasure of the Federal Government.
(3) One of the Directors
shall be nominated by the Federal Government to be the Chairman of the Board of
Directors.
(4) No act or proceeding of
the Board shall be invalid merely on the ground of the existence of any vacancy
in, or defect in the constitution of, the Board.
8. Chairman.—(1) The Chairman shall be appointed by
the Federal Government on such terms and conditions as the Federal Government
may determine.
(2) The Chairman shall,
unless the Federal Government otherwise directs, hold office for a term of
three years which the Federal Government may, from time to time, extend.
(3) The Chairman shall be
the whole time chief executive of the Corporation and shall perform such
functions as are assigned by this Act or may be assigned by the Board:
Provided that the Federal
Government may utilise the services of the Chairman for any other work.
9. Qualifications and
disqualifications of Directors. No person shall be, or shall continue to be, a Director who,---
(a) is or at any time has been adjudicated an insolvent or has
suspended payment or has compounded with his creditors; .
(b) is found to be a lunatic or becomes of unsound mind;
(c) is or has at any time been convicted for any offence which,
in the opinion of the Federal Government, is an offence involving moral
turpitude;
(d) without leave of absence from the Board, absents himself
from all the meetings of the Board for a continuous period of six months or, if
less than three meetings are held within such period, from three consecutive
meetings of the Board;
(e) is a salaried official of the Corporation, other than the
Chairman.
10. Executive Committee.—(1) The Board may constitute an Executive
Committee consisting of the Chairman and two other Directors to assist it in
the discharge of its functions under this Act.
(2) The members of the
Executive Committee shall hold office for such period as may be provided by the
regulations.
(3) The minutes of every
meeting of the Executive Committee shall be laid before the Board for approval
at its next meeting following the meeting of the Committee.
(4) Subject to the general
or special directions of the Board, the Executive Committee may deal with any
matter within the competence of the Board.
11. Meeting of the Board
and Executive Committee.—(1)
Three Directors shall form the quorum for a meeting of the Board.
(2) Subject to sub-section
(1) the meetings of the Board and the Executive Committee shall be held in such
manner as may be prescribed:---
Provided that, until rules
are made in this behalf, such meetings shall be called by the Chairman.
12. 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.
13. Secrecy and
fidelity. No
Director shall assume his office until he has made such declaration of secrecy
and fidelity as may be prescribed.
14. Indemnity of
Directors. A
Director shall not be personally responsible for the acts of any other Director
or of any officer or servant of the Corporation or for any loss or expenditure
resulting to the Corporation by reason of the insufficiency or deficiency in
value of or title to any property or security acquired or taken on behalf of
the Corporation, or for anything done by him in good faith in the discharge of
his duties.
15. Business which the
Corporation can transact. Subject to the rules and regulations, if any, the Corporation may
carry on, transact or do the several kinds of business and acts hereinafter
specified namely:---
(a) to appraise the economic, financial and technical
feasibility of eligible enterprises which make a request for assistance;
(b) to subscribe to the equity capital of eligible enterprises;
1[(bb) to promote, sponsor, from and get incorporated one or
more companies having amongst its or their objects the furtherance of the
business and object of the Corporation;]
2[(c) to make loans and advances, and provide lease financing,
to eligible enterprises and to financial institutions on short, medium and
long-term basis, and to provide assistance for working capital requirements ;]
(d) notwithstanding the provision of any other law to the
contrary, to appoint a director on the Board of Directors of a company to which
it has rendered financial assistance;
(e) to guarantee loans and advances granted to the eligible
enterprises;
1Ins. by the National Development Finance
Corporation.(Amdt.) Ordinance, 1983 (16 of 1983). s. 3.
2Subs, by the National Development
Finance Corporation (Amdt.) Ordinance, 1983 (16 of 1983), s. 3.
(f) to participate with other financial institutions 1[or
with the approval of the Federal Government with banks or lending agencies
outside
(g) to purchase or otherwise acquire, own, sell, transfer and
exchange any tangible and intangible, movable or immovable property or assets
in the discharge of its business;
(h) to accept and Furnish any lien, charge, hypothecation, or
mortgage or any tangible or intangible, movable or immovable property or assets
in the discharge of its business;
(i) to enter into agreements and contracts and execute such
documents as may be considered necessary for the discharge of its functions;
(j) to receive and pay commissions, fees and brokerage in
connection with its business;
(k) to invest its surplus funds in securities in the manner
prescribed;
(l) to acquire, retain, or dispose of assets of any type which
may in any way come into the possession of the Corporation in satisfaction or
part satisfaction of any of its claims;
(m) to borrow money for the purpose of its business and to give
security for money so borrowed by pledging assets or otherwise;
(n) to accept deposits of fixed maturities;
(o) to acquire, maintain and transfer its residential and
business premises; and
(p) generally to do all such matters and things as may be
incidental or subsidiary to the undertaking of any of the aforesaid business.
16. Business which the
Corporation cannot transact. The Corporation shall not invest in any shares, stocks or
debentures of, or make loans or advances to, any undertaking which is not an
eligible enterprise:---
Provided that the
Corporation may deposit its funds with a banking company in current or
short-term deposit accounts.
1Ins. by the National Development Finance
Corporation (Amdt.) Ordinance, 1978 (14 of 1978), s. 6.
17. Eligible
enterprises. The
following shall be eligible to receive assistance from the Corporation,
namely:---
1(a) undertakings which are wholly or partly owned by the Federal
Government, a Provincial Government or a local authority;]
2[(b) undertakings which are wholly or partly owned by any
of the undertakings referred to in clause (a); and]
3[(bb) undertakings in the private sector, in particular
those set up and established in the less developed areas of Pakistan;
(c) any other undertaking declared by the Federal Government to
be an eligible enterprise for the purposes of this Act.
18. Borrowing power.—4[(1)
The Corporation may borrow from the Federal Government and, with the prior
approval of the Federal Government, also from State Bank of Pakistan or any
other lending agencies or institutions.]
(2) The Corporation may
issue and sell bonds and debentures both in rupees and foreign currencies.
(3) The Federal Government
may, at the request of the Corporation, guarantee as to the repayment of
principal and payment of interest any sums borrowed by the Corporation under
sub-section (1) or any bonds or debentures issued by the Corporation with the
prior approval of the Federal Government.
(4) Notwithstanding
anything contained in the Trusts Act, 1882 (II of 1882), the Insurance Act, 1938 (IV of 1938) and the
Banking Companies Ordinance, 1962 (LVII of 1962), such of the bonds and debentures of the Corporation
as have been guaranteed by the Federal Government under sub-section (3) 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 purposes
of the Insurance Act, 1938 (IV of 1938) and the Banking Companies Ordinance,
1962 (LVII of 1962).
(5) The aggregate of the
sums borrowed under sub-section (1) and the sums due on the bonds and
debentures issued under sub-section (2) and the contingent liabilities of the 5[Corporation]
in respect of guarantee or underwriting agreements shall not at any time exceed
twenty times the aggregate of the amount of paid-up share capital and reserves
of the Corporation.
1Subs, by the National Development
Finance Corporation (Amdt.) Ordinance. 1983 (16 of 1983); s. 4.:
2Subs, by the National Development
Finance Corporation (Amdt.) Ordinance 1978, (14 of 1978), s. 7, “for clause (b)”.
3Ins. by Ord. 16 of 1983, s, 4.
4Subs, by Ord. 14 of 1978, s. 8, for “sub-section
(1)”:
5Subs, by the National Development
Finance Corporation (Amdt.) Ordinance, 1978 (14 of 1978). s. 8, for “Bank”.
19. Power to call for
payment before agreed period. Notwithstanding any agreement to the contrary, the Corporation
may, by notice require any eligible enterprise to which it has granted any loan
forthwith to repay the loan in full, if,---
(a) it appears to the Board that in the application for the loan
information false and misleading in any material particular has been given; or
(b) the eligible enterprise has failed to comply with the terms
of any agreement with the Corporation in the matter of the loan; or
(c) for any other reason, it is necessary, in the opinion of the
Board, to protect the interest of the Corporation.
20. Delegation of
powers. The Board
may, for the purpose of ensuring efficient functioning of the Corporation and
facilitating transaction of its daily business, by a resolution published in
the official Gazette, delegate to the Chairman or any other officer of the
Corporation, subject to such conditions and limitations, if any, as may be
specified therein, such of its powers and duties under this Act as it may deem
necessary.
21. Officers and
servants. The
Corporation may appoint or employ such officers and servants as it considers
necessary for the efficient performance of its functions, on such terms and
conditions as may be laid down by regulations.
22. Disposal of Profits.—(1) The Corporation shall establish a
Reserve Fund to which shall be credited such amount out of its annual net
profit, not being less than fifty per cent of its annual net profit, as may be
determined by the Board.
(2) The minimum
appropriation of profits to Reserve Fund fixed under sub-section (1) shall
apply till such time as the amount in the Reserve Fund equals the paid-up
capital of the Corporation.
23. Accounts and audit.—(1) The year of account of the
Corporation shall be the year commencing the first day of January and ending
the thirty-first day of December.
(2) Subject to sub-section
(1), the Corporation shall maintain its accounts in such manner as may be
prescribed.
(3) The accounts of the
Corporation shall be audited by two auditors who are chartered accountants
within the meaning of the Chartered Accountants Ordinance, 1961 (X of 1961), appointed by the Corporation.
(4) The Corporation shall
submit to the Federal Government a copy of its audited annual accounts and the
report of the Board on the operations of the Corporation for the preceding year
including a report on the performance of the undertakings to which it has
subscribed capital or advanced loans or on whose behalf it has undertaken any
guarantee.
(5) The Federal Government
shall cause the audited accounts of the Corporation to be laid before the
National Assembly.
24. Exemption from
taxes. Notwithstanding
anything contained in the 1[Income
tax Ordinance, 1979 (XXXI of 1979)] the Wealth-tax Act, 1963 (XV of 1963),2*
* * or any other law for the time being in force relating to income-tax,
super-tax, wealth-tax gift-tax or business profits tax, the Corporation shall
not be liable to pay any such tax on its income, profits or gains[:]3
3[Provided that this section shall not
apply to any income, profits or gains in respect of any assessment year, as
defined in clause (8) of section 2 of the Income Tax Ordinance, 1979 (XXXI of 1979), commencing on or after the first day of
July, 1986.]
25. Corporation not to
be banking company. The
Corporation shall not be deemed to be a banking company for the purposes of the
Banking Companies Ordinance, 1962 (LVII of 1962), or any other Law for the time being in force
relating to banking companies.
26. Liquidation of the
Corporation. The
Corporation shall not be wound up save by order of the Federal Government in
such manner as it may direct.
27. Power to make rules.—(1) The Federal Government or, subject to
the approval of the Federal Government, the Board may, by notification in the
official Gazette, make rules4for
carrying out the purposes of this Act.
(2) All such rules shall be
laid before the National Assembly.
28. Power to make
regulations.—(1) The
Board may make regulations to provide for all matters not required to be
provided for by rules and provision for which is necessary or expedient for
carrying out the purposes of this Act.
(2) Where any provision of
the regulations is inconsistent with any provision of the rules the provision
of the rules shall prevail.
29. [Repeal] Omitted by the Federal
Laws (Revision and Declaration) Ordinance, 1981 (XXVII of 1981), s.3 and Sch.,
II.
1Subs, by me Federal Laws (Revision and
Declaration) Ordinance. 1981 (27 of 1981), s.3 and Sch., II.
2Omitted ibid.,
3Subs, and added by the Finance Act, 1986
(1 of 1986), s. 7.
4For the National Development Finance
Corporation Rules, see S.R.O: No, 3(IE)/75, dated 22-1-75, Gaz. of P., 1975,
Ext., (Karachi), Pt. II, pp. 5—15.
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