KARACHI, March 16: During the year ended June 30, 2003, the Securities and Exchange Commission of Pakistan (SECP) issued 'no objection' to all fourteen schemes of arrangements for mergers and amalgamations (M&A) received by it.

According to the Annual Report 2003 of the SECP, the Enforcement and Monitoring Division (EMD) of the SECP received 14 schemes of arrangements, to which the Commission, issued 'no objection' after due consideration.

The report stated that the commission had been proactive in facilitating mergers and amalgamations among companies in order to strengthen their capital base and achieve economies of scale. "Consolidation within the corporate sector is expected to enhance the capacity to deal with systemic risk and to withstand exogenous shocks," the SECP report stated.

The commission claimed that it had ensured that schemes of arrangement proposed by companies were not prejudicial to the interest of minority shareholders.

The report observed that in the event of a scheme of arrangement appearing to be detrimental to the interests of minority shareholders, the registrar concerned makes a representation before the court under Section 288 of the Companies Ordinance after obtaining comments of the EMD.

During the year under review, the EMD had received 14 schemes of arrangements. The report also said that during the year, the High Courts/SBP approved the following nine schemes: i) merger of Cherat Electric Company Limited with Cherat Cement Limited; (ii) bifurcation and merger of Elahi Electric Company Limited with Ellcot Spinning Mills Limited, Prosperity Weaving Mills Limited and Nagina Cotton Mills Limited; (iii) merger of Nafees Cotton Mills Limited with Legler Nafees Denim Mills Limited; (iv) merger of Smith Kline French and Beecham Pakistan Limited with Glaxo Welcome Pakistan Limited; (v) merger of WorldCall DotCom Limited with WorldCall Multimedia Limited; (vi) merger of Pakistan operations of Emirates Bank Limited with Union Bank Limited; (vii) merger of Khadim Ali Shah Bukhari and Company Limited with KASB Bank Limited; (viii)merger of Kohinoor Raiwind Mills Limited and Kohinoor (Gujar Khan) Mills Limited with Kohinoor Textile Mills Limited; and (ix) merger of Lucky Power Limited with Lucky Cement Limited.

At the end of financial year 2003, the following five schemes were pending with the Courts: (i) merger of Pak Water Bottlers (Pvt) Limited and Northern Bottlers (Pvt) Limited with Nestle Milk Pak Limited; (ii) merger of Pak Saudi Fertilizer Limited with Fauji Fertiliser Limited; (iii) merger of PEL Appliances with Pak Elektron Limited; (iv) merger of Visionate (Pvt.) Limited with Dynea Pakistan Limited; and (v) merger of Rhone Poulenc Rorer Pakistan (Pvt.) Limited with Aventis Pharma Pakistan Limited.

During the year under review, Elahi Electric Company Limited was proposed to be divided into three parts, each part to be merged with Ellcot Spinning Mills Limited, Prosperity Weaving Mills Limited and Nagina Cotton Mills Limited, respectively.

The consideration offered by Nagina Cotton Mills Limited was in the form of redeemable preferred shares, a concept introduced in Pakistan for the first time. The EMD examined the scheme of arrangement and advised certain improvements and requisite amendments. The scheme was finally sanctioned on October 22, 2002 by the concerned High Court.