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Capital Issue (Exemption) Order, 1967

In exercise of the powers conferred by sub-section (1) of Section 6 of the Capital Issues (Continuance of Control) Act, 1947 (XXIX of 1947), and in supersession of the Exemption Order No. F. 2(1)-CC1/51, dated the 30th October, 1951, the Federal Government is pleased to make the following Order, namely:–

1.         (1)  This Order may be called the Capital Issues (Exemption) Order, 1967.

(2)      It shall come into force at once.

2.         In this Order, unless there is anything repugnant in the subject or context,

(a)      banking company' has the same meaning as in the Banking Companies Ordinance, 1962 (LVII of 1962);

(aa)    'free reserves' includes any amount which, having been set aside out of revenue or other surpluses after adjustment of all intangible or fictitious assets, is free in that it is not retained to meet any diminution in value of assets, specific liability, contingency or commitment known to exist at the date of the balance sheet, but does not include-

(i)       reserves created as a result of revolution of fixed assets;

(ii)      goodwill reserves;

(iii)     depreciation reserve to the extent of ordinary depreciation including allowance for extra shirts admissible under the Income Tax Ordinance, 1979 (XXXI of 1979);

(iv)      development allowance reserve created under the provision of the Income-tax Ordinance, 1979 (XXXI of 1979);

(v)       Workers Welfare Fund;

(vi)      reserve for taxation to the extent of the current liability of the company; and

(vii)     capital redemption reserve'.

(b)      'insurance company' and 'provident society' have the same meanings as in the Insurance Act, 1938 (IV of 1938);

(c)      section' means a section of the Capital Issues (Continuance of Control) Act, 1947 (XXIX of 1947).

3.         The following shall be exempt from the provisions of sub-sec. (1) and clause (a) of sub-section

(2) of Section 3 and sub-section (1) of Sec. 5, namely:-

(1)      the issue and acceptance of securities (other that debentures, [or participation term certificates] stock and shares) being an issue made by a person in the ordinary course of business and solely for the, purpose of that business to another person carrying on the business of banking or to such other person's nominee in respect of advances or overdraft from time to time granted or to be granted by such other person;

(2)      charges made under mining lease by the lessee in favour of the lessor charging assets of a company for the due payment of rents and royalties reserved by the instrument of lease;

(3)      debentures [or Participation Term Certificates] taken up by the Pakistan Industrial Credit and Investment Corporation and the Industrial Development Bank of Pakistan against loans;

(4)      debentures [or Participation Term Certificates] issued by companies in favour of Collectors of Custom against payment of custom duties on imported machinery;

(5)       debentures [or Participation Term Certificates] issued by the companies to the Investment Corporation of Pakistan or to any member of the consortium led by the Investment Corporation of Pakistan, against the commitment made by the consortium;

(6)      issue of bonus shares by companies whose securities are listed on any of the Stock Exchanges subject to the fulfillment of the following conditions, namely:–

(i)       the free reserves of the company are sufficient to permit issue of the bonus shares after retaining in the reserves 25 per cent. of the capital as it will be increased by the proposed bonus shares;

(ii)      a certificate from the auditors is obtained before the issue of the bonus shares to the effect that the free reserves and surpluses retained after the issue of the bonus shares will not be less than 25 per cent. of the increased capital;

(iii)     all contingent liabilities disclosed in the audited accounts shall be taken into account in the calculation of minimum residual reserves of 25 per cent;

(iv)     all the existing shares are fully paid up;

(v)      observance of such other guidelines as may, from time to time, be issued by the Controller of Capital Issues;

(vi)     simultaneously, with the issue of the bonus shares, a return shall be filed with the Controller of Capital Issues together with a copy of the auditors certificate and relevant Balance Sheet'.

4.       (1)  Issue of securities at par and all transactions relating to securities so issued, by a company, not being-

(a)      a banking company,

(b)      an insurance company,

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