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ECONOMIC REFORMS ORDER, 1972

 

Sections

Contents

 

1

Short title, extent and commencement

 

2

Definitions

 

3

Order to override other tows

 

4

Power to appoint Managing Director

 

5

No compensation for termination of office

 

6

Employees to continue in service

 

7

Prohibition to obstruct

 

7A

Power to prohibit dealings in shares, etc

 

7B

Power to acquire share or business of an establishment

 

7C

Acquisition of shares

 

7D

Re-organization of establishment

 

7E

Vesting of management etc., acquired by Federal Government in a corporation

 

7F

Constitution of Board of Directors, etc

 

8

Bar of jurisdiction

 

9

Indmenity

 

10

Delegation of powers

 

11

Savings

 

12

Power to make rules

 

13

Removal of difficulties

 

 

THE FIRST SCHEDULE

 

 

SECOND SCHEDULE

 

 

 

THE

ECONOMIC REFORMS ORDER, 1972

PRESIDENT'S ORDER 1 OF 1972

 

Gazette of Pakistan. Extraordinary, 3rd January, 1972

 

Whereas the benefits of economic development and industrialization have remained confined to the privileged few to the detriment of the common man ;

 

And whereas Islam enjoins equitable distribution of wealth and economic power and abhors their concentration in a few hands ;

 

And whereas it is the duty of Government to ensure that the wealth and economic resources of the country are exploited to the maximum advantage of the common man ;

 

And whereas those who control the means of production are accountable to the people through their chosen representatives ; And whereas it is necessary to safeguard the interest of the small investor;

 

And whereas it is necessary for that purpose to provide for redeeming the promises made to the people in that behalf from time to time since the creation of Pakistan ;

 

Now, therefore, in pursuance of the Proclamation of the 25th day of March, 1969, read with the Proclamation of the 20th day of December, 1971, and the Provisional Constitution Order, and in exercise of all powers enabling him in that behalf, the President and Chief Martial Law Administrator is pleased to make the following Order :

        1. Short title, extent and commencement.- (1) This order may be called the Economic Reforms Order, 1972.

(2) It extends to the whole of Pakistan.

(3) It shall come into force at once.

 

2. Definitions.- In this Order, unless there is anything repugnant to the subject or context,'

(a) 'Establishment' means any '[company, firm, concern, institution or enterprise the whole or any part of the undertaking of which pertains] to any of the categories set out in the [First Schedule] ; and includes any related office, shop, factory, godown, yard stocks and stores wherever they may be ;

(aa) [Managed establishment’ means an establishment in respect of which a Managing Director has been appointed].

(b) 'Managing Director' in relation to an establishment means a Managing Director, appointed under Article 4 in respect of such establishment; and

(bb) ['Share-holder' means a share-holder in the share capital of an establishment, and includes a stock-holder ;

(bbb) 'Person' includes an individual, a Hindu undivided family, a partnership firm, an association of persons or a body of individuals, the Government of a Province and a local authority].

(c) Words and expressions used but not defined in this Order shall have the same meaning as in the Companies Act, 1913 (VII of 1913).

 

3. Order to override other tows.-This Order shall have effect notwithstanding anything contained in the Provisional Constitution Order or any other law for the time being in force or in any agreement, contract, memorandum or articles.

[(2) It is hereby declared that development under Federal control of the industries pertaining to any of the categories set out in the First Schedule is expedient in the public interest].

 

4. Power to appoint Managing Director.-(1) The [Federal Government] may, if it considers necessary in the public interest so to do. by order appoint a Managing Director in respect of an establishment , [****]

 

(2) On the appointment of a Managing Director in respect of an establishment, the administration of the affairs of the establishment shall vest in him and any person or authority exercising or having the right to exercise immediately before such appointment, any power or function in relation to the [*****] establishment shall cease to exercise or to have the right to exercise such power or function, [and, on and from such date as the Federal Government may by notification in the official Gazette, specify, the establishment shall be known by such new name as may be so specified].

(3) The Managing Director shall hold office during the pleasure of the [Federal Government], and shall, in the discharge of his functions, be subject to such orders and directions as the [Federal Government] may from time to time give in writing.

(4> Where a Managing Director is appointed in respect of an establishment, the [Federal Government] may, by order, remove from office the Board of Directors, the Managing Agent, any Director or any other [person] howsoever designated performing or having the right to perform any function in relation to that establishment:

Provided that the Managing Director may require any Director or other officer in respect of whom an order is made under this clause, to perform any function in relation to the establishment as the Managing Director may direct on such terms and conditions as may appear reasonable.

(5) The Managing Director appointed under clause (1) in respect of an establishment shall exercise—

(a) If such establishment is owned or controlled by a company, all the powers and functions of the Board of Directors ;

(b) If such establishment is owned or controlled by an individual or a firm, all the powers and functions of that individual or a firm ; and

(c) if such establishment had a Managing Agent to manage its affairs, all the powers and functions of the Board of Directors.

 

5. No compensation for termination of office.–No compensation shall be payable for the termination of any office or of an agreement under or by virtue of the operation of the provisions of this Order :

Provided that this Article shall not be construed as preventing the [Federal Government] from authorizing any payment to reimburse a person for any expenses bona fide incurred by him in connection with the management of the establishment before the appointment of a Managing Director.

 

6. Employees to continue in service.- Unless in any particular case the Managing Director otherwise directs, all persons employed in, by or for the purpose of the business of the establishment by whomsoever appointed or engaged, shall continue in their respective employments on the same remuneration and other conditions of service as were applicable to them immediately before the appointment of the Managing Director of that establishment.

 

7. Prohibition to obstruct.–No person shall, except under the authority of the [Federal Government], give any instructions to the Managing Director, nor shall any person in any manner obstruct him in the discharge of his functions.

 

7-A. Power to prohibit dealings in shares, etc.-(1) The Federal Government may, by notification in the official Gazette, direct that–

(a) No dealings or business relating to the shares of the managed establishment specified in the notification shall be transacted on any stock exchange ; and

(b) No transfer of the shares of the managed establishment specified in the notification shall be registered in the share register of the establishment except to the extent and in the manner so specified.

(2) A notification issued under paragraph (a) of clause (i) shall remain in force for a period of ninety days unless it is earlier rescined or modified.

 

7-B. Power to acquire share or business of an establishment.-(1) The Federal Government may, if it considers necessary in the public interest so to do, by an order,'

(a) In the case of an establishment which is a company or on establishment owned by a company ;

(i) Acquire the entire shares held in the company by the sponsors and directors of the previous management thereof, the family members of such sponsors and directors and the associated undertakings and managing agents which were the associated undertakings and managing agents of the company 'at the time at which a Managing Director was appointed in respect thereof and the whole or a portion of the shares from all or any of the share-holders of such company and, as from the date of such order, the shares so acquired shall vest in the Federal Government; or

(ii) Acquire the whole or a portion of the proprietary interests of such company in such establishment and, as from the date of such order, the' interests so acquired shall vest in the Federal Government; and

(b) In the case. of an establishment owned by a person acquire the whole or a portion of the proprietary interests of such person and, as from the date of such order, the interests so acquired shall vest in the Federal Government:

Provided that no order shall be made under this Article for the acquisition for the shares held in an establishment by a foreign investor or an institution owned, managed or controlled by the Federal Government:

Provided further that in the case of an establishment which is a company or an establishment owned by a company, the Federal Government may, by notification in the official Gazette, exempt from acquisition shareholdings of any share-holder up to such maximum amount as may be specified in the notification.

Explanation.-In this clause,

(a) 'Associated undertakings' has the same meaning as in the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 (V of 1970) ;

(b) 'Family members' in relation to a sponsor or director, means the spouse, lineal ascendants and descendants and brothers and sisters of the sponsor or director ; and

(c) 'Previous management', in relation to a company, means a person, body or managing agency in whom the management of the company vested immediately before the appointment of a Managing Director in respect of such company or of the establishment owned by it.

(2) Where the Federal Government makes an order under clause (1) in respect of the shares of any company, no dealings or business relating to such shares shall be transacted on any stock exchange for a period of ninety days from the date of such order.

 

7-C. Acquisition of shares.- Where, under Article 7-B, the Federal Government acquires the whole or a portion of the shares of the shareholders of any company or of the proprietary interest of a company or other person in an establishment, the Federal Government shall [ **** ] pay such compensation as may be determined by it on the basis of the principles set' out in the Second Schedule.

 

7-D. Re-organization of establishment.-(1) Where, in respect of any managed establishment which is a company or an establishment owned by a company, the Federal Government holds or has acquired the whole or a majority portion of the shares in the company carrying the controlling voting rights, or where the Federal Government has acquired the whole or a controlling portion of the proprietary interests it may at any time re-organize such establishment with a view to increasing its efficiency and rationalizing its operation.

(2) The re-organization may include provision for amalgamation of a managed establishment with other such establishments or within undertakings owned or managed by the Federal Government or by a corporation set up under the authority of the Government and, in the case of establishments which are companies or establishments owned by companies, may provide for the reconstruction of any such company or companies, or amalgamation of any such two or more companies and for all or any of the matters contained in section 153 or section 153-B of the Companies Act, 1913 (VII of 1913), or for alteration of share capital or loan structure and alternation of existing, or adoption of fresh, articles of association of such companies.

(3) The re-organization shall be implemented and take effect in such manner and at such time as the Federal Government may, by notification in the official Gazette, specify. 

Explanation.-'For the purposes of this Article [Article 7-E and Article F] the Federal Government shall be deemed to have a majority portion of the shares in a company carrying controlling voting rights or the controlling proprietary interests in an establishment if the aggregate face value of the shares or proprietary interests in such establishment owned by the Federal Government and by an institution owned or controlled by the Federal Government exceeds 50% of the total voting rights in the issued and paid-up share capital of the company or 50% of the proprietary interests of that establishment.

 

7-E. Vesting of management etc., acquired by Federal Government in a corporation.— (1) Where the Federal Government acquires the whole or a majority portion of the shares or proprietary interests of a company or other person under Article 7-B. the Federal Government may transfer the management of. and such shares or proprietary interests in such establishment to any corporation wholly owned or controlled by the Federal Government or a corporation to be set up for the purpose.

(2) A corporation to which the management of, or shares or proprietary interest in, an establishment is or are transferred under clause (1) shall in the exercise of its powers and performance of its functions, be subject to the general supervision and control of such 'Board or other authority the Federal Government may set up for the purpose.

 

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