BALLOTERS AND TRANSFER AGENTS
[Gazette of Pakistan, Extraordinary, Part-II, 3rd April, 2015]
S.R.O. 272(I)/2015, dated 2.4.2015.–In exercise of the powers conferred by Section 33 of the Securities and Exchange Ordinance, 1969 (XVII of 1969), read with Section 32-C thereof and clause (b) of Section 43 of the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997), the Securities and Exchange Commission of Pakistan, with the approval of the Federal Government, is pleased to make the following rules, the same have been previously published vide Notification No. S.R.O. 273(I)/2013, dated the 1st April, 2013, as required by sub-section (2) of Section 39 of the said Act, namely:–
1. Short title and commencement.–(1) These rules may be called the Balloters and Transfer Agents Rules, 2015.
(2) They shall come into force at once.
2. Definitions.–(1) In these rules, unless there is anything repugnant in the subject or context,–
(i) “Act” means the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997);
(ii) “Annexure” means an annexure to these rules;
(iii) “Form” means a form appended to these rules;
(iv) “issue” includes issue of securities through.
(a) initial public offering by an issuer;
(b) an offer for sale of securities to the public by an offeror;
(c) an offer of securities to the existing shareholders by a company or a body corporate; and
(d) an offer of securities by a company or body corporate to persons other than the existing shareholders.
(v) “offeror” means a person who directly or indirectly holds ten percent or more securities of a public limited company or a body corporate and offers for sale such securities, in full or in part, to the general public;
(vi) “Ordinance” means the Securities and Exchange Ordinance, 1969 (XVII of 1969); and
(vii) “Schedule” means a schedule to these rules;
(2) Words and expressions used but not defined in these rules shall, unless there is anything repugnant in the subject or context, have the same meaning as assigned to them in the Companies Ordinance, 1984 (XLVII of 1984), the Ordinance or the Act.
3. Prohibition.–(1) No person shall act or perform the functions of a balloter and transfer agent unless such person is registered as a balloter and transfer agent with the Commission in accordance with these rules.
(2) On commencement of these rules any person providing services as balloter and transfer agent shall seek registration in accordance with these rules within six months of such commencement.
4. Eligibility requirements for registration.–Any person may apply to the Commission for registration as a balloter and transfer agent in accordance with these rules if such person is authorized by its memorandum of association to act as balloter and transfer agent and–
(a) it is a company;
(b) it has a minimum paid-up capital of three million rupees provided that the persons who are providing share registrar services shall enhance their paid-up capital up to three million rupees within a period of three years from the notification of these rules; and
(c) its chief executive or any of its full time working directors:–
(i) possesses membership of any recognized professional accounting body; the Institute of Corporate Secretaries of Pakistan or holds bachelor degree in law, business administration, public administration, commerce, economics, statistics or mathematics from a university/institute recognized by the Higher Education Commission of Pakistan (HEC) or a foreign degree recognized by HEC in any of the above-mentioned fields determined by HEC as equivalent to bachelor; and
(ii) has at least three years' experience of providing services as a balloter and transfer agent or has at least three years' experience of working at the management level in any regulated financial services sector.
5. Application and procedure for registration.–(1) An application for registration as a balloter and transfer agent shall be made to the Commission in Form 'A' alongwith all the documents specified in Annexure 'A' and receipt evidencing payment of non-refundable fee of such amount as set out in Schedule 1.
(2) The Commission, while considering the application for registration, may require the applicant to furnish such further information or clarification regarding its activities and businesses as it deems appropriate.
(3) Any subsequent change in the information provided to the Commission at the time of filing of application under sub-rule (1) shall be intimated to the Commission within five working days from the date of such change.
(4) The applicant shall, if so required, appear before the Commission for a representation through an officer duly authorized for this purpose in writing by the board of directors of the applicant.
6. Grant of registration.–(1) The Commission, while considering the application for granting a certificate of registration made under sub-rule (1) of Rule 5, shall inter alia take into account the following matters, namely:–
(a) ability of the applicant to efficiently handle its functions under these rules;
(b) the necessary infrastructure including but not limited to adequate office space, equipments, experienced manpower and technical aspects to effectively and efficiently discharge its responsibilities as a balloter and transfer agent;
(c) earlier refusal, if any, by the Commission for registration of the applicant as a balloter and transfer agent;
(d) conviction or involvement of its sponsors, directors or employees in the senior management level in an offence involving, fraud or breach of trust;
(e) penal action against the applicant or its directors for an offence under the Ordinance, Act and Companies Ordinance, 1984(XLVII of 1984); and
(f) any other matter as deemed necessary by the Commission.
(2) The Commission on being satisfied that the applicant is eligible for registration may grant a certificate of registration to the applicant in Form 'B'.
(3) The certificate of registration shall remain valid for a period of three years from the date of registration unless it is restricted, suspended or cancelled earlier by the Commission.
7. Renewal of registration.–(1) For renewal of its registration a balloter and transfer agent shall, three months prior to the date of expiry of its registration, apply to the Commission in Form ‘C’ providing therewith a receipt evidencing payment of a non-refundable renewal fee of such amount as prescribed in Schedule I and submit such documents as specified in Annexure ‘C’.
(2) The Commission if satisfied that the applicant continues to meet the requirements for registration and is eligible for renewal of registration shall renew the registration of the balloter and transfer agent and issue a certificate of renewal of registration to the applicant in Form 'D'.
(3) Where the application for renewal of registration is made within such time as specified in sub-rule (1) but has not been decided by the Commission, the registration shall continue to be valid until the application for renewal is decided by the Commission.
(4) While granting renewal of registration to a balloter and transfer agent the Commission may, in addition to the criterion laid down for grant of registration, also take into account the past performance of the balloter and transfer agent.
8. Procedure where registration is not granted or renewed.–(1) The Commission, after giving a reasonable opportunity of being heard to the applicant, may refuse to grant or renew a certificate of registration if in the opinion of the Commission such applicant does not fulfill the requirements prescribed in these rules or where the Commission, after taking into account the facts, is of the view that it is not in the public interest or in the interest of the capital market to grant or renew such certificate of registration.
(2) The applicant, if aggrieved by the decision of the Commission under sub-rule (1) may, prefer an appeal to the Appellate Bench of the Commission under Section 33 of the Act within such time period as provided therein.
(3) The applicant, if aggrieved by the decision of the Appellant Bench of the Commission under sub-rule (2), may prefer appeal to the Court under Section 34 of the Act within such time period as provided therein.
(4) A balloter and transfer agent whose application for renewal of certificate of registration is refused under sub-rule (1) shall, from the date of receipt of the decision of the Commission, cease to act as balloter and transfer agent in any new issue.
(5) A balloter and transfer agent whose application for renewal of certificate of registration is refused by the Commission shall continue to act as such in all previous issues in which it is acting as balloter and transfer agent till the appointment of other balloter and transfer agent by its clients.
(6) A balloter and transfer agent whose application for renewal of registration is refused shall intimate all its existing clients of this fact within a period of fourteen days from the date of receipt of such decision of the Commission or, as the case may be, decision of the Appellate Bench of the Commission referred to in sub-rule (2) and decision of the Court referred to in sub-rule (3).
DUTIES AND RESPONSIBILITIES OF THE BALLOTERS AND TRANSFER AGENTS
9. Obligations of balloters and transfer agents.–(1) A balloter and transfer agent shall–
(a) while appointing Chief Executive Officer (CEO) and Chief Operating Officer (COO) ensure that both CEO and COO fulfill such fit and proper criteria as may be specified by the Commission.
(b) maintain the eligibility criteria provided in Rule 4 and notify to the Commission immediately if it ceases to fulfill any of the conditions prescribed in the said rule;
(c) maintain high standard of integrity and fairness in discharging its functions and its dealing with the security subscribers, the security holders and other balioters and transfer agents and its clients i.e. the issuers and the offerors with whom they have agreed in writing to render services as a balloter and transfer agent;
(d) fulfill its obligations in a fair, efficient, transparent and ethical manner;
(e) act with due skill, care and diligence in performing all its functions and discharging all its obligations and responsibilities;
(f) prepare and provide lists of the successful, unsuccessful and rejected/unaccepted applications to the issuer for allotment, issue, credit or dispatch, as the case may be, of securities and refund of subscription money, where required, according to the provisions of the applicable laws;
(g) render only such services as agreed in writing with its clients and which are not prohibited under these rules and any other applicable law;
(h) follow the criteria and procedure as provided in the respective prospectus for the scrutiny of applications, balloting, if required, and allotment of securities;
(i) handle the complaints, inquiries of the investors and security holders received directly by them or through the issuer, offerer, stock exchanges or the Commission in a timely and appropriate manner;
(j) put in place a mechanism to resolve any conflict of interest that may arise in the conduct of its business as balloter and transfer agent and take reasonable steps to resolve the same in an equitable manner;
(k) maintain its own website and upload on it among other things a list of its clients, form for online submission of complaints, and any other document or information as the Commission deemed appropriate; and
(l) maintain proper record of the complaints received and file a report on annual basis on the number and nature of complaints received and their redressal status with the Commission and in case of listed securities, also with the concerned stock exchange(s).
(2) A balloter and transfer agent shall not–
(a) provide services as a balloter and transfer agent to any of its listed associated company or associated undertaking;
(b) change its CEO and COO without prior approval, in writing, of the Commission;
(c) make any false statement, whether oral or written, either about its qualifications or capability to render services or its achievements with regard to services rendered to its potential clients; and
(d) disclose information to any person for any purpose other than in the performance of its obligations as a balloter and transfer agent unless such disclosure is expressly or impliedly authorized by its clients or registered owner of the security or is required or permitted by any applicable law, rule, regulation, direction or order of the Commission.
Explanation.–For the purposes of this rule the term “conflict of interest” includes situations in which a ballotter and transfer agent has competing interests which make it difficult for the ballotter and transfer agent to fulfill its duties impartially.
10. Functions of the balloter and transfer agent.–A balloter and transfer agent shall be responsible for the following functions, namely:–
(a) to collect applications for subscription of securities from the bankers to the issue or offer or any other intermediary, conduct scrutiny of the applications and prepare list of all applications that have been rejected in the scrutiny alongwith reasons of such rejection;
(b) to conduct ballot if required and prepare separate lists of applications declared successful and unsuccessful in the ballot;
(c) to prepare and maintain allotment register and keep proper record thereof;
(d) to ensure that allotment is made in the mode and manner as disclosed in the prospectus or any other offering document;
(e) to prepare and submit a report in respect of each issue, including initial public offering, right issue, bonus issue, etc., in which it has acted as a balloter and transfer agent, to the Commission within thirty days of the closure of the issue and such report should contain all the relevant information including but not limited to the following, namely:–
(A) in case of initial public offering (IPO),–
(i) name of the issuer, and offerer, where applicable;
(ii) date of publication of the prospectus;
(iii) dates of subscription;
(iv) amount of capital allocated to various types of investors including sponsors, directors, pre-IPO investors, institutional investors, high net worth individual investors and general public i.e. retail investors;
(v) size-wise breakup of applications and amount thereof received for subscription of securities;
(vi) number of successful, un-successful and rejected applications and reasons of rejection thereof;
(vii) mechanism adopted for the allotment of securities; and
(viii) status of refund of the subscription money to unsuccessful applicants,
(B) in case of right issue,
(i) date of approval by the board of directors of the issuer and other approvals, if applicable;
(ii) basis of allotment;
(iii) date of dispatch of the right allotment letters or credit of unpaid right entitlement in book entry form;
(iv) date for payment and renunciation of right allotment letters;
(v) number of securities subscribed, renounced, declined and unsubscribed;
(vi) date of dispatch or credit of right shares;
(vii) number of securities remained as unclaimed; and
(C) in case of bonus issue,
(i) date of approval by the board of directors of the issuer and other approvals, if applicable;
(ii) basis of allotment;
(iii) date of dispatch or credit of the bonus shares; and
(iv) number of securities remained as undelivered;
(f) to maintain record of the allotment, transfer and redemption of securities of companies;
(g) to maintain record of the disposal of the queries and complaints by the investors or security holders with regard to issue and transfer of securities, refund of subscription money, payment of dividend and other related matters;
(h) to maintain list of members in such form and manner as required under the Companies Ordinance, 1984 (XLVII of 1984);
(i) to maintain record of payment of dividend to shareholders as and when declared by its clients;
(j) to maintain record of the decisions taken by its clients relating to issue of securities and payment of profit thereon, if any;
(k) to submit report to the Commission on semi-annual basis about the status of the settlement of the unclaimed dividend and undelivered shares, if any;
(l) to maintain record of the proxies of the members of its clients for the general meetings; and
(m) any other function and activity arising as its obligation under any other provision of these rules or pursuant to the agreement executed with its clients.
11. Maintenance of books of accounts and record by the balloter and transfer agent.–(1) Every balloter and transfer agent shall properly maintain the following records, namely:–
(a) list of all the applications received from investors for subscription of securities;
(b) list of all the rejected applications and reasons of rejection thereof;
(c) criteria, procedure and basis of allotment of securities;
(d) allotment register;
(e) report on the issue or offer of securities prepared by it as required under these rules;
(f) all the record relating to the investors and shareholders' complaints;
(g) members' register i.e. proper list of holders of the securities of its clients;
(h) the dates of transfer of securities and the names, Computerized National Identify Card numbers /NICOP numbers and Passport number in case of foreigners and addresses of the transferors and the transferees;
(i) copy of agreements executed with its clients;
(j) list of members and the shareholding pattern;
(k) documents relating to initial and further issues of shares;
(l) detail of unclaimed dividend and undelivered shares;
(m) record with regard to proxies of members for general meetings; and
(n) such other record as may be specified by the Commission.
(2) Every balloter and transfer agent shall ensure that the record referred to in sub-rule (1) is maintained and preserved in good order for a period of at least five years from the date of closing of the respective issue.
(3) Every balloter and transfer agent shall–
(a) ensure that the record is kept at such a place and maintained in such a manner that it is easily accessible; and
(b) establish a record-retention-policy which shall ensure that all relevant legal and regulatory requirements are complied with.
12. Designating compliance officer.–Every balloter and transfer agent shall designate any of its suitable officer as compliance officer who shall be responsible for–
(a) monitoring the compliance of the laws including the rules, regulations, guidelines and directives etc., issued by the Federal Government or the Commission;
(b) redressal of the investor’s grievances, complaints; and
(c) informing the Commission on annual basis on status of compliance with the provisions of these rules by the balloter and transfer agent:
Provided that designating a compliance officer shall not absolve the balloter and transfer agent from its obligations under these rules.
13. Restriction or suspension of registration.–(1) Where a balloter and transfer agent contravenes or fails to comply with any provision of these rules or is not in compliance with the conditions of registration or any directive issued or order passed by the Commission, the Commission may, after providing a reasonable opportunity of representation to the balloter and transfer agent, impose–
(a) a restriction on its activities as balloter and transfer agent or suspend its registration; and
(b) a penalty provided under sub-section (1) of Section 22 of the Ordinance.
(2) A balloter and transfer agent whose registration has been suspended shall not act as, or perform the functions of, balloter and transfer agent for any new issue during the period of suspension and remove the cause of suspension within a period of one hundred and twenty days from the receipt of the suspension order or such earlier period as specified in the order of suspension.
(3) The Commission while restricting or suspending the registration of a balloter and transfer agent may impose such conditions, as it deems appropriate.
14. Cancellation of registration.–(1) The Commission, after providing to the balloter and transfer agent a reasonable opportunity of being heard, may cancel the registration of a balloter and transfer agent, if–
(a) in the opinion of the Commission the balloter and transfer agent has been in violation of any provision of these rules or restriction imposed under sub-rule (1) of Rule 13;
(b) it is found guilty of fraud or any criminal offence of moral turpitude; or
(c) its registration has been suspended and the causes of suspension have not been removed within one hundred and twenty days from the receipt of suspension order or such earlier period as specified in the order of suspension.
(2) The Commission while cancelling the registration of a balloter and transfer agent may take such measures and issue such directions as it deems appropriate as are not inconsistent with the Act, Ordinance and the Companies Ordinance, 1984 (XLVII of 1984).
(3) The registration of a balloter and transfer agent shall stand automatically cancelled if such balloter and transfer agent–
(a) voluntarily surrenders its certificate of registration to the Commission; or
(b) is wound up by an order passed by a Court of competent jurisdiction.
(4) Notwithstanding anything contained in sub-rule (1), where the Commission is satisfied that a delay in the cancellation of registration of the balloter and transfer agent will be detrimental to the interest of investors or the public in general, the Commission may immediately cancel the registration of the balloter and transfer agent till the time an opportunity of being heard is provided to the balloter and transfer agent and final order is passed:
Provided that where the Commission cancels the registration under sub-rule (4), the opportunity of being heard and final order must be passed within sixty days of such cancellation.
(5) Upon cancellation of the registration, the balloter and transfer agent shall with immediate effect cease its business as a balloter and transfer agent and transfer all the necessary record to other balloter and transfer agent appointed by its clients for the purpose.
15. Dissemination of information of cancellation of registration.–In the event of cancellation of registration of a balloter and transfer agent, the Commission may, for the information of the stakeholders, publish press release of its order of cancellation in newspaper of wide circulation in Pakistan and where necessary, direct the issuers to appoint any other company as a balloter and transfer agent.
16. Power of the Commission to issue directives, circulars etc.–The Commission may, if it is satisfied that it is necessary or expedient so to do in the public interest or in the interest of the capital market, by order in writing, give such directions or issue circulars, not inconsistent with the Ordinance and these rules, to balloter and transfer agent as it may deem fit.
17. Rescission.–The Balloters, Transfer Agents and Underwriters Rules, 2001, in their application to balloters and transfer agents, are hereby rescinded.