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CORPORATE &
INDUSTRIAL RESTRUCTURING CORPORATION ORDINANCE, 2000

 

L OF 2000 

22nd September, 2000

An Ordinance to make provisions
for the acquisition,

restructuring, rehabilitation,
management, disposition and realization of non-performing

loans and other assets of
various banks and financial institutions

 


WHEREAS it is expedient, in the public
interest, to deal with financial institutions and their assets, to assist the
business sector by dealing with distressed enterprises and to promote the
rehabilitation of the national economy by making provisions for the
acquisition, restructuring, rehabilitation, management disposition and
realization of non-performing loans and other assets of various banks and
financial institutions and for matters ancillary or incidental thereto;


AND WHEREAS the National Assembly and the Senate stand suspended in
pursuance of the Proclamation of the Fourteenth day of October, 1999 and the
Provisional Constitution Order No. 1 of 1999;


AND WHEREAS the President is satisfied that circumstances exist which
render it necessary to take immediate action;


NOW, THEREFORE, in pursuance of the Proclamation of Emergency of the
fourteenth day of October, 1999, and Provisional Constitution Order No. 1 of
1999, as well as Order No. 9 of 1999, and in exercise of all powers enabling
him in that behalf, the President of the Islamic Republic of Pakistan is
pleased to make and promulgate the following Ordinance:-

CHAPTER I

PRELIMINARY

 


1. Short title, extent and commencement.-(1) This Ordinance
may be called the Corporate and Industrial Restructuring Corporation Ordinance,
2000.
(2) It extends to the whole of

Pakistan,

(3) It shall come into force at once.

 2. Definitions.- In this Ordinance, unless there is anything
repugnant in the subject or context:–
(a) 'Administration Committee' means the administration committee established
under section 12;
(b) 'Board' means the Board of Directors constituted under section 6;

(c) 'Bonds' means bonds, debentures, participation term certificates, term
finance certificates, redeemable capital certificates or similar instruments
providing for scheduled or contingent payment of debt obligations;
(d) 'Book value' means the rupee amount, inclusive of principal and accrued
profit, owed by any obligor in connection with any financial asset as reflected
on the books and records of the financial institution, as of the transfer date.

(e) 'Chairman' means the Chairman of the Board;
(f) 'Chief Executive' means the Chief Executive Officer of the Corporation;

(g) 'Collateral' means any asset, property, right, claim, entitlement, share,
undertaking, guarantee, agreement, document or instrument, security interest,
charge, mortgage, lien, hypothecation pledge or assignment in respect of or as
security for any financial asset;
(h) 'Commission' means the Securities and Exchange Commission of Pakistan
established under section 3 of the Securities and Exchange Commission of
Pakistan Act, 1997 (XLII of 1997);
(i) 'Corporation' means the Corporate and Industrial
Restructuring Corporation established under section 4;
(j) 'Director' means a director of the Board;

(k) 'Financial asset' means any short, medium or long term interest and
non-interest bearing loan, finance, advance, lease, instalment,
term finance certificate, participation term certificate, musharaka,
modaraba, profit and loss sharing agreement,
redeemable capital, guarantee or contractual right to receive payment of money
in respect of sums advanced or committed to an obligor by a financial institution
including collateral pertaining thereto;
(l) 'Financial institution' means any bank or other financial institution
operating in Pakistan wherein the Federal Government holds overwhelming equity
in excess of eighty-five per cent as specified in the Schedule;
(m) 'Government entity' means any Ministry, Division, Department or office of
the Federal Government or any corporation, company, trust, statutory body or
other entity of which more than fifty per cent of the equity or beneficial
interest is directly or indirectly owned or controlled by the Federal
Government;
(n) 'Non-performing asset' means any financial asset;
(a) Which is held as an asset on the books of a financial institution;

(b) With respect to which the obligor has been in arrears on any payment
obligation for a period of more than three hundred and six-five days,
including:-
(i) Collateral with respect to any financial asset;
and
(ii) A whole or partial right or interest of a financial institution in any
financial asset, that otherwise constitutes a non-performing asset including a
financial asset with respect to which the financial institution has an ongoing
funding obligation; and
[(c) With respect to which the obligor's outstanding payment obligation to any
financial institution exceeds thirty million rupees: –
Provided that the Federal Government may, by notification in the official
Gazette, alter, reduce or increase the said amounts and when it deems fit.]
(o) 'Obligor' means any individual, proprietorship concern, company or other
body corporate, trust, partnership or other entity that has, with respect to a
non-performing asset, a contractual or legal obligation or duty to make
payment, effect performance, provide security, or collateral with respect to
any financial asset whether as principal, surety, guarantor or otherwise and
whether such obligation is primary, secondary, matured or contingent;
(p) 'Outstanding amount' means the book value of a non-performing asset of the
financial institution less,-
(a) Any amount on the books of the financial institution appearing as a
specific reserve applicable to that non-performing asset;
(b) Any amount on the books of the financial institution appearing in a general
loan loss and/or other reserve applicable to that non-performing asset; and
if, in the opinion of the Board, the book value of the non-performing asset, as
adjusted in sub-clauses (a) and (b), is higher than the estimated market price
of the non-performing asset, the Board shall commission an independent
evaluator to determine such market price and in the event that the market price
as determined by the independent evaluator is lower than the book value as
adjusted in sub-clauses (a) and (b), such market price shall be deemed to be
the outstanding amount;
(q) 'Regulations' means regulations made under this Ordinance;

(r) 'Rules' means rules made under this Ordinance;
(s) 'Schedule' means the Schedule to this Ordinance; and

(t) 'State Bank' means the State Bank of Pakistan.

3. Ordinance not to derogate from other laws.-The provisions of this
Ordinance shall be in addition to and save as hereinafter provided, not in
derogation of any other law for the time being in force.

 

CHAPTER II

ESTABLISHMENT OF THE
CORPORATION AND THE BOARD

 


4. Establishment of the Corporation.-(1)
A corporation called the Corporate and Industrial
Restructuring Corporation is hereby established for carrying out the purposes
of this Ordinance.
(2) The Corporation shall be a body corporate having a common seal, with
powers, subject to the provisions of the Ordinance, to hold and dispose of
property and shall by its name sue and be sued.
(3) The headquarters of the Corporation shall be at

Islamabad or such other place as may be
determined by the Board.

 
5. Board and its powers.-(1) The overall direction, management, control
and superintendence of the affairs of the Corporation shall vest in the Board
which may exercise all such powers and do all such acts and things as may be
exercised and done by the Corporation as set out in section 18.
(2) In discharging its functions, the Board shall act with prudence and sound
business and financial considerations for and on behalf of all persons who have
beneficial interest as creditors or otherwise are beneficiaries, including the
financial institutions and Government entity.

 
6. Composition of the Board.-(1) The Board shall consist of the following
directors, namely:–
(a) The Minister for Finance, Government of Pakistan;

(b) The Minister of Commerce and Industry,
Government of

Pakistan;

(c) The Governor, State Bank of

Pakistan.

(d) The Chairman, Privatization Commission
of

Pakistan;

(e) The Secretary General, Ministry of
Finance;

(f) The Chief Executive as defined in
clause ,(f) of section 2; and

(g) A minimum of four and a maximum of eight
persons of repute from the private sector and as far as possible from each
Province, one of whom shall be from the banking sector.

(2) The directors referred to in clauses (a)
to (f) of sub-section (1) shall be ex officio directors.

(3) The directors under clause (g) of
sub-section (1) shall be appointed by the Federal Government, who shall hold
office for a term of two years and shall be eligible for re-appointment for
additional terms of two years each.


(4) No act or proceedings 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.


(5) No director shall have any direct or indirect financial interest in, or
have business connection with any obligor or financial institution whose
non-performing assets are the subject of this Ordinance.
Explanation.-For the purposes of this sub-section, any involvement of the
spouse or any lineal ascendant or descendant of any director with any obligor
or financial institution shall be considered as a direct financial interest or
connection of the director with such obligor or financial institution.

(6) The directors shall not, for two years
after the expiry of their term of office, enter into the employment of or
accept any advisory or consultancy relationship with any obligor or financial
institution whose non-performing assets are the subject of
this Ordinance.

7. Chairman of the Board.-The Minister for Finance shall be the Chairman
of the Board.

 
8. Chief Executive of the Corporation.-(1) The Chief Executive shall be
appointed by the Federal Government who shall be the whole-time chief executive
officer of the Corporation.

(2) The Chief Executive shall hold office
for a term of two years and shall be eligible for re-appointment for additional
terms of two years each.

(3) Subject to its superintendence,
direction and control, the Board may authorize in writing the Chief Executive
to exercise and perform any or all of the following powers and functions as the
Board deems fit, namely:-

(a) To deal with, negotiate, enter into and
sign agreements and contracts with any obligor or financial institution in
respect of the non-performing assets or related collateral and to take any and
all actions, in any manner, to advance the business of the Corporation as specified
in section 18;

(b) To institute, finance, manage, oversee
and terminate rehabilitation plans and schemes, for the non-performing assets
or the obligor, as the case may be;

(c) To pay the cost, charges and expenses
for the day to day business of the Corporation;
(d) To receive money or goods on behalf of the
Corporation;

(e) To sell, deal in and dispose of all
articles and goods of the Corporation;

(f) To engage, employ, fix and pay the
remuneration and dismiss or discharge all managers, agents, secretaries,
clerks, servants, workmen and other persons employed in, or in connection with,
the Corporation's business;

(g) To appoint any person or persons to be
attorney or attorneys of the Corporation for such purposes and with such power,
authorities and discretions and for such period and subject to such conditions
as he may from time to time think fit;

(h) To make and give receipt, release and
discharge, all moneys payable to the Corporation or for the claims and demands
of the Corporation;

(i) To draw,
accept, endorse and negotiate all such cheques, bills
of exchange, promissory notes and Government and other securities as shall be
necessary in or for carrying on the affairs of the Corporation whether the
account may be overdrawn or not;

(j) To institute, compromise, withdraw or
abandon any legal proceedings by or against the Corporation or its officers or
otherwise concerning the affairs of the Corporation;

(k) To provide for the welfare of employees
or ex-employee of the Corporation and the wives, widows or families or the
dependents of such persons in such manner as he may think fit;

(l) To open, maintain and operate accounts
or letters of credit for any amount with any bank or banks and to give
instructions for operation of such accounts;

(m) To appear before any Court of law, civil
criminal, revenue, excise, income-tax including Banking Courts and Tribunals
established for recovery of bank dues and loans, whether original or appellate.
High Courts and Supreme Court of Pakistan and other authorities for and on
behalf of the Corporation and to institute, apply for transfer of suits and
other proceedings, conduct, prosecute and defend suits and legal proceedings
whatsoever including original, appellate or any other jurisdiction, sign power-of-attorney
or other authorization, statements, pleadings and petitions on behalf of the
Corporation and to represent, defend and safeguard the interest of the
Corporation.

(n) To enter into all such negotiations and
contracts and rescind or vary all such contracts and do all acts, deeds and
things, in the name and on behalf of the Corporation as he may consider
necessary, expedient or proper, or in relation to any of the matters aforesaid
or otherwise, for the purposes of the Corporation;

(o) To give effectual discharge for moneys
payable to the Corporation and for its claims and demands;

(p) To purchase or take on lease or
otherwise acquire for the Corporation, land, buildings, rights and privileges
for the purpose of officers or premises of the Corporation at such prices and
generally on such terms as he may think necessary and expedient, to build,
alter and furnish offices, houses or premises and let or sub-let any such
houses or premises in portion or otherwise;

(q) To demand and enforce payment, delivery,
transfer of any dues for recovery and receive from all and every persons, body
corporate or corporations, firm or companies whatsoever, all money, securities
for money, debts and claims of all kinds and demand, enforce, deliver and
receive and take possession of money, securities, shares, and goods produced
and property of all kinds whether belonging to the Corporation as security or
in trust or held by any person or company in trust or by way of security for
the Corporation;

(r) To deal with, make arrangements, sign
contracts with Government, semi-Government, autonomous bodies, corporations,
local Government and other institutions; and

(s) To appoint attorney, agents,
managers and authorize them to exercise any or all such
powers and functions as are mentioned in clauses (a) to (r) above.


(4) The Federal Government may, by notification in the official Gazette, remove
the Chief Executive if:-
(a) He refuses or fails to discharge or becomes in the opinion of the Federal
Government, incapable of discharging his responsibilities under this Ordinance;
or

(b) He has been declared insolvent; or

(c) He has been declared to be disqualified
for employment in, or has been dismissed from the service of Pakistan, or has
been convicted of an offence involving moral turpitude; or
(d) He has knowingly acquired or continued to hold without the permission in
writing of the Federal Government, directly or indirectly or through a partner,
any share or interest in any obligor or financial institution.

 
9. Committees.-The Board may, for the purposes of obtaining advice and
assistance in carrying out the purposes of this Ordinance, constitute one or
more committees consisting of members of the Board and any other suitable
persons as it may deem fit. Any committee so formed shall, in exercise of the
powers delegated to it or conferred on it, conform to any restrictions that may
be imposed on it by the Board.

 
10. Verification Committees.-(1) For the purpose of this Ordinance and
before taking any action thereunder, the Corporation
shall, having regard to the facts and circumstances of a case, refer a question
of bona fide dispute relating to liability of the obligor in respect of the
non-performing assets or cases relating thereto, including the cases of fraud,
misrepresentation, and breach of any provision of law, rule, regulation and
circulars of the State Bank, regarding the calculation, existence and repayment
of a financial obligation or outstanding loan, mark-up or interest claimed
against an obligor, to the Governor State Bank for verification and correct
determination and calculation by the Verification Committee as hereafter
provided:
Provided that the Corporation may in appropriate cases and having regard to the
facts and circumstances of a case require the Governor State Bank to include
one or more suitable persons including an expert or consultant to be member of
the Verification Committee.


(2) The verification, determination and calculation of matters referred to in
sub-section (1) shall be made in accordance with the existing law, rules,
regulations and circulars of the State Bank in the manner provided herein
regard to the principal amount of loan, mark up, interest and ancillary
financial matters relating to the financial institutions as claimed by or against
the financial institution or the Corporation, as the case may be, in respect of
the non-performing assets and the liability of the obligor.


(3) Save as provided in this Ordinance, the provisions of sub-sections (1) and
(2) shall not affect the validity, continuance and enforcement of an order of
winding up of a company under the Companies Ordinance, 1984, which has been
made before the commencement of this Ordinance except for the purpose of
calculating the payment of any financial obligation or verified claim to the
creditor or contributory or liability of the guarantor or any other person.


(4) Where a matter is referred to the Governor State Bank under sub-sections
(1) and (2), he may constitute one or more Verification Committees for the
purposes of this Ordinance.


(5) The Verification Committee shall consist of a nominee of the Governor State
Bank being a senior officer of the State Bank who shall be the Chairman of the
Committee, two Chartered Accountants, to be nominated by the Governor State
Bank and one Chartered Accountant to be nominated by the Council of the
Institute of Chartered Accountants of Pakistan, Karachi, such nomination to be
obtained by the Governor State Bank and such other person as the Corporation
may require.


(6) The Chairman of the Verification Committee shall convene the meetings,
conduct proceedings of the Committee, maintain record including the evidence
submitted before him by the parties and their statements, and on their request
supply authenticated copies of the record to them.


(7) The Verification Committee after examination of the record of the concerned
lending financial institution and the obligor and after due notice by courier
service, fax, U.M.S. or any other effective mode to both parties and affording
them reasonable opportunity to explain their position and hearing them in
person and through their chartered accountants shall make correct
determination, verification and calculation of liability and matters referred
to in sub-sections (1), (2) and (3) in accordance with the law, rules,
regulations and circulars of the State Bank.


(8) Where a party after due notice under sub-section (7) does not appear in
person or through chartered accountant before the Verification Committee, it
may proceed ex-parte:
Provided that nothing contained herein shall prevent such party from appearance
before the Verification Committee before the conclusion of the proceedings.


(9) The Verification Committee shall submit its finding and report with
recommendations to the Governor State Bank within thirty days of the
commencement of the proceedings or such extended period as the Governor State
Bank may allow for reasons to be recorded in writing.


(10) The Governor State Bank shall consider the findings and report and
recommendations submitted to him by the Verification Committee under
sub-section (9) and may accept or modify the same or may, for reasons to be
recorded, make such other appropriate recommendations and findings in respect
thereof as he may deem fit.


(11) The Governor State Bank shall forward his recommendations and findings
made under sub-section (10) alongwith the finding,
report, recommendations and record of the Verification Committee to the
Corporation and the parties will be entitled to obtain copies thereof from the
Corporation.


(12) The recommendations and findings of the Governor State Bank made on the
basis of finding, report and recommendations of the Verification Committee in
regard to calculation of liability of obligor shall be final and have
presumption of truth unless found to contain manifest error or contrary to law,
but the same shall be subject to orders of the High Court.


(13) The Corporation after considering the recommendations and findings of the
Governor State Bank forwarded to it under sub-section (11) will take
appropriate action under this Ordinance having regard to the facts of each
case.


(14) In the event of failure either of the Verification' Committee to conclude
the reference within thirty days of the commencement of the proceedings or such
extended period referred to in sub-section (9) or the failure of the obligor or
the financial institution to accept the recommendations and findings of the
Governor State Bank, the Corporation may proceed in respect of the
non-performing asset under this Ordinance.


(15) Notwithstanding any thing contained in any other law for the time being in
force, the final recommendations and findings by the Governor State Bank and
the finding, report and the recommendations of the Verification Committee under
sub-section (11) shall constitute admissible evidence for any legal
proceedings.

 
Explanation.-For the purpose of this Ordinance any instructions given by the
State Bank to any bank or financial institution for writing off any debt for
the purpose of accounting of any such bank or financial institution shall not
be construed as satisfaction of any debt payable by the obligor.

 
 11. Guidelines for Corporation and the Governor State Bank.-The
Corporation, and where a matter is referred by it to Governor State Bank under
sub-section (1) of Section 10, the Governor State Bank, shall take into
consideration inter-alia the following factors as the
Corporation, or as the case may be, the Governor State Bank, may deem fit
having regard to the facts of each case, namely:–
(a) The practical possibilities of the non-performing asset;

(b) The possibility of re-scheduling of
financial assistance;

(c) The adequacy of the subsisting
securities and the willingness of the obligor to provide sufficient additional
security;

(d) Such other preventive, ameliorative and
remedial measures including amalgamation or merger, change in management
whether partial or whole or such incidental, consequential or supplemental,
measures as may be necessary;

(e) Examine the possibility of keeping alive
a running project by providing reasonable financial assistance through
financial institutions keeping in view the interest of both borrower and lender
and avoiding unemployment;

(f) Where the obligor can make financial
arrangement on a joint venture basis with a third person on mutually agreed
terms so as to provide sufficient security to the satisfaction of the Governor
State Bank or the Board for repayment of the outstanding amount or liability of
the non-performing asset to be determined in accordance with the State Bank's
circulars, instructions, rules, regulations and the law; and

(g) Any other facts and circumstances having
regard to public interest and the objectives of the Ordinance.

 


12. Administration Committee.-(1) The
Administration Committee shall consist of the Chief Executive and four other
members of the Corporation to be appointed from the fields of banking, law,
finance, engineering, management or accountancy.

(2) The minutes of every meeting of the
Administration Committee shall be laid before the Board at its meeting next
following the meeting of the Administration Committee.

(3) Subject to the superintendence,
direction and control of the Board, the Administration Committee may deal with
any matter within the competence of the Board and may exercise such powers and
perform such functions as may be assigned to it by the Board.

 
13. Members, officers and servants of the Corporation.-(1) The Board
shall appoint four members of the Corporation in the fields of banking, law,
finance, engineering, management or accountancy to assist the Corporation in
the discharge of its functions under this Ordinance. Each member shall receive
such salary and allowances, be subject to such conditions of service and
removal, as may be prescribed by the rules.

(2) The Corporation may appoint such
officers and servants as it considers necessary for the efficient discharge of
its functions on such terms and conditions as the Board may decide.

 14. Meeting of the Board and the Administration Committee.-(1) No
business of the Board or of the Administration Committee shall be transacted
except at a meeting at which a quorum of a majority of the directors then
appointed in the case of the Board, and three members in the case of the
Administration Committee, are present.

(2) The meetings of the Board and of the
Administration Committee shall be held at such times and at such places as the
Federal Government may, by rules, prescribe.

(3) All meetings of the Board shall be
presided over by the Chairman of the Board and of the
Administration Committee by the Chief Executive. In the absence of the Chairman
of the Board at a Board meeting, the Chief Executive shall preside. In the
absence of the Chief Executive at a meeting of the Administration Committee,
the meeting shall be presided over by a member authorized in writing by the
Chief Executive.

(4) The decisions at the Board and the
Administration Committee shall be taken by a majority provided that such
majority includes the presiding officer as mentioned in sub-section (3). At a
meeting of the Board or of the Administration Committee, each director or
member, as the case may be, shall have one vote, and in the case of equality of
votes, the presiding officer shall have a second or casting vote.

(5) A resolution in writing signed by the
majority of the Board and the Chairman of the Board or the Administration
Committee and the Chief executive or affirmed by them through facsimile, telex
or telegram shall be as valid and effectual as it has been passed at a meeting
of the Board or the Administration Committee, as the case may be, duly convened
land held.

 
15. 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
as insolvent;

(b) Is found to be a lunatic or becomes o
unsound mind;

(c) Is or has at any time been convicted of
any office which, in the opinion of the Federal Government, is an offence
involving moral turpitude;

(d) Absents himself from all the meetings of
the Board, without leave of absence from the Board, for a continuous period of
six months or, if less than three meetings are held with in such period, from
three consecutive meetings of the Board; and

(e) Is a salaried official of the
Corporation other than the Chief Executive.

 
16. Employees of the Corporation to be public servants.-Every person in
the service of the Corporation shall, when acting or purporting to act in
pursuance of any of the provisions of this Ordinance, be deemed to be a public
servant within the meaning of section 21 of the Pakistan Penal Code, 1860 (Act
XLV of 1860).

 
17. Indemnity of members, directors, officers or servants.-(1) A
director shall not be personally responsible for the acts of any other director
or of any member or officer or servant of the Corporation or for any loss or
expenditure of 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.

(2) No suit, prosecution or legal
proceedings shall lie against the Corporation, the
Chairman of the Board, the Chief Executive, or directors, members or officers
and servants of the Corporation, in respect of anything done or intended to be
done in good faith under this Ordinance.

CHAPTER III

POWERS AND FUNCTIONS
OF THE CORPORATION

 


18. Business which the Corporation can
transact
.-Without prejudice to the provisions of any other law for the
time being in force and subject to the provisions of this Ordinance, the
Corporation may exercise powers and functions as under:-

(a) To acquire, purchase, hold, manage,
restructure, rehabilitate, sell and dispose of non-performing assets;
(b) To acquire, purchase, manage, restructure, rehabilitate, sell and dispose
of any obligor being a corporation or a company;

(c) To purchase, take over, own, hold, sell,
lease, arrange finance for, manage, dispose of, re-organize, restructure,
rehabilitate and otherwise, enter into any settlement or contract, realize,
mortgage, hypothecate, control, manage any loan, finance, advance, commitment,
lease instalment, sale contract or other activity
relating to a non-performing asset;

(d) To purchase, take over, own, hold, sell,
lease and otherwise dispose of, re-organize, restructure, rehabilitate and
otherwise enter into any settlement or contract, realize, pledge, mortgage,
hypothecate, control, manage and arrange finance for any asset, property,
undertaking, collateral or security underlying or relating to or securing any
financial asset or instrument, including any intellectual property, trade mark,
equity, financial interest, legal and contractual right, asset, guarantee and
other undertaking;

(e) To initiate, take, continue, resist
implement and perform any and all activities for the recovery of non-performing
assets including filing suits and appeals and to enter into settlements,
through the Courts or outside, in respect thereof;

(f) To engage and enter into agreements with
financial and other institutions, and financial, legal, accounting, valuation
and other specialists, for the purposes of the business of the Corporation;

(g) To purchase, amalgamate, enter into
partnerships, form joint ventures, make profit sharing arrangements or
co-operate or participate with any company or other entity for the business
purposes of the Corporation;

(h) To borrow money and secure or discharge
any debt or obligation binding on the Corporation in such manner as may be
thought fit, and in particular by mortgages of or charges upon all or any of
the real and personal property, present and future, of the Corporation or by
the creation and issue, on such terms as may be deemed expedient, of
debentures, term finance certificates, participation term certificates, or
other redeemable capital as defined in the Companies Ordinance, 1984 (Ordinance
XLVII of 1984) or other securities of any description;

(i) To sell,
improve, manage, develop, exchange, mortgage, let or rent (for profit or
royalty or otherwise), grant licences, easements,
options, servitudes and other rights over and in any other manner deal with or
dispose the real and personal property, assets, rights and effects of the Corporation;

(j) To open and maintain the Corporation's accounts with banks and financial
institutions and to draw, make, endorse, accept, discount, execute and issue
promissory notes, bills of exchange, bills of lading, warrants, participation
term certificates and other negotiable or transferable instruments;
(k) To establish or promote, or concur or participate in establishing, any
corporation or other entity whose objects shall include the acquisition of all
or any of the property or liabilities of the Corporation, or the promotion of
which may seem, directly or indirectly, calculated to benefit the Corporation;

(l) To enter into any agreement with any authorities, Federal, Provincial,
autonomous, semi-autonomous, municipal, local or otherwise that may seem
conducive to the Corporation's objects or any of them, and to obtain from any
such authority, rights, privileges and concessions which the Corporation may
deem desirable to obtain and to carry out, exercise and comply with any such
arrangements, rights, privileges and concessions; and

(m) All powers enumerated in sub-section (3)
of section 8 entrusted to Chief Executive.

 
19. Corporation not to be a banking company.-Without prejudice to the
provisions of section 32, the Corporation shall be deemed not to be engaged in
the business of banking for purposes of the Banking Companies Ordinance, 1962
(LVII of 1962), or, as the case may be the State Bank of Pakistan Act, 1956
(Act XXXII of 1956).

 
20. Financial Institutions to which the provisions of this Ordinance shall
apply
.-The provisions of this Ordinance shall apply to financial
institutions specified in the Schedule to this Ordinance in relation to the
non-performing assets as mentioned in their audited balance sheet subject to
rights of third parties.

 
21. Consideration for transfer of non-performing assets.-The Corporation
shall pay to the concerned financial institution the outstanding amount as
consideration for the transfer of non-performing assets by mutual agreement
upon such terms and conditions and in such manner as may be prescribed by rules
to be notified in the official Gazette.

 
22. Bonds issued by the Corporation.-(1) The
payment obligations in respect of any bonds issued by the Corporation pursuant
to mutual agreement between the Corporation and the financial institution shall
bear the full faith and credit of the Islamic Republic of Pakistan. Recourse
for payment of such bonds, inaccordance with their
respective terms, may be against the Corporation or directly against the Federal
Government without the necessity of notice to or prior demand on the
Corporation. The tenure of the bonds shall not exceed five years from the date
of issuance.


(2) At the request of the Corporation, the appropriate representative of the
Federal Government shall execute and deliver, on behalf of the Federal
Government, any bonds presented to them by the Corporation to evidence the full
faith and credit obligation of the Federal Government.


(3) Any bond issued by the Corporation to a financial institution shall also
constitute an approved investment for purposes of the liquidity and reserve
requirements under the Banking Companies Ordinance, 1962 (LVII of 1962).

 
23. Certain rights and remedies.-(1) In addition to the provisions of
this Ordinance or any other law for the time being in force, the Corporation
shall, for the rehabilitation, management and restructuring of the obligor in
respect of whom any non-performing assets and collateral are held by it or on
its behalf, have the following powers, rights and remedies, each of which shall
be independent and in addition to the others namely:-


(a) The Corporation may request the Commission as provided in section 295 of
the Companies Ordinance, 1984 (XLVII of 1984) to take action under section 295
of the said Ordinance if it is of the opinion that the condition of the obligor
warrants such action. The Commission may in pursuance of the said section and
after complying with its requirements and giving the obligor an opportunity to
be heard, appoint the Chief executive or his nominee as an Administrator,
hereinafter referred to as the Administrator, to manage, the affairs of the
obligor;

 
(b) All the provisions of section 295 of the Companies Ordinance, 1984 (XLVII
of 1984) shall apply, as far as possible, to the functioning of the
Administrator as stated herein; and

 
(c) The Corporation shall be entitled to apply to the Commission to avail the
benefits of section 296 of the Companies Ordinance, 1984 (XLVII of 1984).

 
24. Powers of the Corporation to seek assistance.-(1) The Corporation
shall have the power to seek assistance and information from any department of
the Federal Government or a Provincial Government, local authority, financial
institution, law enforcement agencies including the police and the Federal
Investigation Agency, Patwari, mukhtiarkar,
registrar of assurances and the Commission and it shall be the duty of such
department, local authority, financial institution, law enforcement agency,
registrar of assurances and the Commission to render such assistance or furnish
such information as it may reasonably require.


(2) Any information required under sub-section (1) shall only be used for the
purpose of the Corporation and shall not be divulged to any other person.

CHAPTER IV

FINANCE

 


25. Corporation Fund.-(1) There shall be a fund to be known as
the 'Restructuring Corporation Fund' vested in the Corporation which shall be
utilized by the Corporation to meet charges in connection with its functions
under this Ordinance including the payment of salaries and other remunerations
to the Chief Executive and members of the Corporation and to its officers and
servants.
(2) The Corporation fund shall consist of:–
(a) Funds provided by the Federal Government;

(b) Allocations made by the Federal Government from the Federal Consolidated
Fund or any other source available with the Federal Government;
(c) Loans obtained from the Federal Government;

(d) Loans obtained by the Corporation with the special or general sanction of
the Federal Government;
(e) Foreign aid and loans obtained with the sanction of, and on such terms and
conditions as may be approved by the Federal Government.
(f) Recovery fees collected by the Corporation from financial institutions; and

(g) All other sums received by the Corporation
including income from investments.

 


26. Accounts and audit.-(1) The financial year of account of the
Corporation shall be the year commencing the first day of July and ending he
last day of June.

(2) Subject to sub-section (1), the Corporation shall maintain
its accounts in such manner as the Federal Government may, in consultation with
the Auditor General of

Pakistan,
prescribe.

(3) The accounts of the Corporation shall be audited by one or
more auditors who are Chartered Accountants within the meaning of the Chartered
Accountants Ordinance, 1961 (X of 1961), appointed by the Corporation.  

 27. Reserve fund.-The Corporation shall establish a reserve fund
to which shall be credited its annual recoveries.

CHAPTER V

BUDGET STATEMENT AND
ANNUAL REPORT

 


28. Budget statement.-The Corporation
shall, in respect of respect of each financial year, prepare its own budget and
submit to the Federal Government three months before the commencement of every
financial year for allocation of funds required before the commencement of
every financial year.


(2) The budget statement shall specifically state the estimated receipts and
expenditure and the sums which are likely to be required by the Corporation
from the Federal Government for the relevant financial year.


(3) Any surplus of receipts over the actual expenditure in a year shall be
remitted to the Federal Consolidated Fund and any deficit from the actual
expenditure shall be made up by the Federal Government.


(4) Notwithstanding the provisions of sub-section (1) the Corporation may apply
to the Federal Government for a supplementary grant during the financial year
for sufficient reason.

29. Annual report to the Federal Government.-Within one hundred and
eighty days of the end of each financial year of the Corporation, the Board
shall prepare a presentation to the Federal Government with respect to the
financial performance and results of operations of the Corporation for the
preceding financial year and the overall policies and goals of the Corporation.

 

CHAPTER VI

RULES AND
REGULATIONS

 


30. Power of Federal Government to make
rules
.-The
Federal Government may, by notification in the official Gazette, make rules for
carrying out the purposes of this Ordinance.

  
31. Power of the Board to make regulations.-(1) The Board may make
regulations not inconsistent with the provisions of this Ordinance and the
rules made hereunder to provide for all matters for which provision is
necessary or expedient for carrying out the purposes of this Ordinance.


(2) In particular and without prejudice to the generality of the foregoing
power, such regulations may provide for:-

(a) The manner and terms of issue and
redemption of bonds and debentures by the Corporation;
(b) The form of returns and statements required to be
prepared under this Ordinance;

(c) The duties and conduct of officers and
servants and agents of the Corporation; the recruitment of officers and staff
of the Corporation; the terms and conditions of their service, the constitution
and management of provident or other funds for the officers and staff of the
Corporation connected with any of these things;

(d) The disclosure of interest, direct or
indirect of any director or any member of the Administration Committee in any
financial institution or obligor;

(e) The manner in which the handing over of
all original documents and files from the financial institution to the
Corporation will take place; and

(f) Generally for the efficient conduct of
the affairs of the Corporation.

CHAPTER VII

RIGHTS AND REMEDIES
OF CORPORATION

 


32. Rights and remedies available to
Corporation
.-(1) In respect of any non-performing asset held by the
Corporation and any collateral, the Corporation shall be entitled to exercise
and shall have all rights and remedies available to a banking company under the
Code of Civil Procedure (Act V of 1908), Banking Companies Ordinance, 1962
(LVII of 1962), the Offences in Respect of Banks (Special Courts) Ordinance,
1984 (LVII of 1984), and the Banking Courts (Recovery of Loans, Advances,
Credits and Finances) Act, 1997 (Act XV of 1997) and shall also have the rights
and remedies available under the Companies Ordinance, 1984 (XLVII of 1984), and
further all recoveries by the Corporation in pursuance of this Ordinance shall
be made in accordance with the aforesaid laws.

(2) It is declared that the Corporation
shall be entitled to the rights, title, interest, benefits, privileges of a
financial institution as specified in the Schedule subject to the terms of mutual
agreement between the Corporation and the Financial Institutions specified in
the Schedule, and likewise the Corporation shall be subject to the legal
liability, if any, of the Financial Institutions.


(3) All acts pursuant to and in exercise of the powers under this Ordinance and
rights and remedies thereunder shall be done
performed and pursued in accordance with the provisions of the prevailing law
inter alia as set out in sub-section (1).

 
33. Rights and remedies not exhaustive.-The rights and remedies provided
to the Corporation under this Ordinance may be exercised separately or
concurrently by the Corporation and are in addition to, and not in lieu or
derogation of, any other rights or remedies the Corporation or any other person
may legally have in respect of any non-performing assets of the obligor and any
related collateral.

 
34. Exemption from taxes.-Notwithstanding anything contained in any
other law for the time being in force, the Federal Government may exempt
Corporation from the payment of all or any other taxes, duties, levies, charges
and fees payable under or pursuant to any Federal law, on its investment,
income, assets or wealth.

 
35. Liquidation of the Corporation.-(1) The Corporation shall have a
life of six years from the date of commencement of this Ordinance which may be
extended further by the Federal Government by law. The Corporation may be wound
up by order of the Federal Government in such manner as it may direct, or under
the orders of the competent Court.


(2) Notwithstanding anything contained in sub-Section (1) or any other
provision of this Ordinance or the agreement between the Corporation and the
Financial Institutions concerned and further in case the Corporation is wound
up at any time prior to the expiry of the third year of its existence, all
non-performing assets at that time shall be deemed transferred, assigned, sold
and conveyed back hereunder to the financial institution by the Corporation
with immediate effect and without the necessity of any further action or
instrument.


(3) On the winding up of the Corporation, the bonds issued by the Corporation,
if any under section 21, shall be deemed to be bonds as if they were issued
directly by the Federal Government and the winding up of the Corporation shall
in no way affect the ability of the holder of the bond to receive full payment
in terms of the bond.

CHAPTER VIII

GENERAL

 


36. Limitation of liability.-The Corporation
shall not have any liability to any financial institution save in accordance
with law.

 
37. Right of recovery as arrears of land revenue.-The Corporation shall
be entitled to recover all outstanding amounts, subject to law, on the basis of
and under any non-performing assets held by the Corporation as if they are
arrears of land revenue under the Land Revenue Act, 1967 (West Pakistan Act
XVII of 1967).

 
38. Power to obtain information and documents etc.-The Corporation may
call upon any person, authority, agency, bank or financial institution to
furnish any information, document, papers and accounts it may require for the
purposes of this Ordinance.


(2) Any person who does not or fails to furnish the information, documents,
papers and accounts required by the Corporation under sub-section (1) shall be
punishable with imprisonment of either description for a term which may extend
to one year, or with fine, or with both.

 
39. Removal of difficulties.-If any difficulty arises in giving effect
to any provision of this Ordinance, the Federal Government may, by order
published in the official Gazette, make such provisions not inconsistent with
the provisions of this Ordinance as may appear to it to be necessary for the
purpose of removing such difficulty.


SCHEDULE(See section 2(1) and section 20)

 

Name of the Financial Institution
(1)        Extent of shares/Equity of the Federal
Government
(2)1.     Habib Bank Limited
100%
2.        
United
Bank Limited
100%
3.        
National
Bank of

Pakistan
100%
4.         National Development
Finance Corporation.
100%
5.        
Industrial
Development Bank of

Pakistan.
93%
6.        
Agriculture
Development Bank of

Pakistan.
59.7%

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