November 08, 2007	Thursday	Shawwal 26, 1428

ISLAMABAD, Nov 7: The Securities and Exchange Commission of Pakistan (SECP) has announced that now banking and non-bank finance companies (NBFCs), holding companies and modaraba management companies can make investment in any of their associated companies.

The commission has notified seven different classes of companies that are now exempted from the requirement of Section 208 of the Companies Ordinance, 1984. Under this section a company cannot make investments in any of its associated companies and undertakings unless its shareholders approve the investment through a special resolution.

The government has already omitted the relevant provisions from Section 208 of the Companies Ordinance through Finance Act 2007 under which exemption has been granted to banking companies, any other financial institution approved by the Commission, a private company which is not a subsidiary of a public company, and a company whose principal business is the acquisition of shares stock, debentures or other securities.

The Finance Act 2007 has empowered the commission to specify, through notification, published in the official gazette, the class of companies or undertakings which have been exempted.

Now a banking company duly licenced by the State Bank of Pakistan (SBP) can make investment that is equal to the extent of investments made in the ordinary course of its business, excluding equity investments.

Similarly, a development finance institution duly licenced by the SBP can invest to the extent of investments made in the ordinary course of its business, excluding equity investments.

A NBFC duly licenced by the SECP can also make investment to the extent of investments made in the ordinary course of its business, excluding equity investments. A NBFC duly licenced by the commission can now carry out Investment Advisory Services or Asset Management Services, to the extent of investments made in a Collective Investment Scheme being managed by such NBFC.

A modaraba management company can invest to the extent of investments made in a modaraba being managed by such company.

A holding company can invest to the extent of investments made in its wholly owned subsidiary. But it can be done provided that any disinvestment by a holding company which would reduce its holding in the subsidiary, in which an investment was made pursuant to this exemption, to less than 75 per cent shall be made under the authority of a special resolution.

A company whose principal business is the acquisition of shares, stock, debentures or other securities, can make investment to the extent of acquisition of such securities on behalf of its clients in the ordinary course of its business.