(c)     issue any right or bonus voting shares during the offer period; or

(d)     enter into any material contract.

 

(2) The target company shall furnish to the acquirer, within seven days of the request of the acquirer or within seven days from the specified date mentioned in the public announcement, whichever is later, a list of convertible security holders as are eligible for participation under clause (b) of sub‑section (3) of section 13 containing name, address, shareholding and folio number, and of those persons whose applications for registration of transfer of the securities are pending with the company.

 

(3) Once the public announcement has been made, the board of directors of the target company shall not appoint an additional director or fill in any casual vacancy on the board of directors, by any person representing or having interest in the acquirer till the date of certification by the manager to the offer as provided under sub‑section (6).

 

(4) The board of directors of the target company may, if it so desires, send its unbiased comments and recommendations on the public offer to the shareholders:

 

Provided that for any misstatement, or for concealment of material information, the directors shall be liable to penalty as provided in this Ordinance.

 

(5) The board of directors of the target company shall facilitate the acquirer in verification of securities tendered for acceptance.

 

(6) Upon fulfilment of all obligations by the acquirer under this Ordinance as certified by the manager to the offer, the board of directors of the target company shall transfer the securities acquired by the acquirer, whether under an agreement or from open market purchases, in the name of the acquirer.

 

(7) The target company shall allow such changes in the board of directors as would give the acquirer proportionate representation on the board or control of the company notwithstanding anything contained in the Companies Ordinance, 1984 (XLVII of 1984).

 

(8) Where an acquirer, in compliance with the provisions of this Ordinance, has acquired at least thirty per cent of the voting shares of the target company, he shall be entitled to a proportionate representation on the board of directors of the target company as hereinafter provided.

 

(9) The acquirer shall serve a notice on the target company together with evidence of his voting power so acquired and a copy of such notice shall also be submitted to the Commission.

 

(10) On receipt of notice as specified in sub‑section (9), the board of directors of the target company shall cause a meeting of the board to be held within ten days from the receipt of the notice under sub‑section (9).

 

(11) The board of directors of the target company may fill any casual vacancy so created by the resignation of one or more directors with mutual consent to accommodate the acquirer on the board in accordance with his entitlement.

 

(12) In case the acquirer does not get a proportionate representation on the board of directors of the target company or the number of casual vacancies so created to complete the board on the basis of proportional representation are not sufficient, the acquirer may serve a notice on the target company for holding of fresh elections and shall submit a copy of such notice to the Commission forthwith.

 

(13) The board of directors of the target company shall cause the election of directors to be held within thirty days from the receipt of the notice under sub‑section (12).

 

(14) The election of directors of the target company shall be held in accordance with the provisions of sub-­sections (2) to (5) of section 178 of the Companies Ordinance, 1984 (XLVII of 1984).

 

(15) The board of directors so elected shall hold office during the remainder of the term of the outgoing directors of the target company.

 

(16) Any irregularity in the election of directors so held may be brought to the notice of the Commission either by the management of the target company or by the acquirer within seven days of the date of such election.

 

(17) The Commission may declare the election, so held, null and void if it is satisfied that certain irregularities did exist in the holding of the election and may order the holding of fresh election under the supervision of an independent person to be appointed by the Commission for such purpose.

 

(18) In case fresh elections are held as specified in sub‑section (17), the Commission may impose such penalty on the outgoing directors in their individual capacity as it may deem fit and such penalty shall in no case be debited to the company’s account.

 

  1. General obligations of the manager to the offer. — (1) Before the public announcement is made, the manager to the offer shall—

 

(a)           ensure that the acquirer is able to implement the public offer;

 

(b)           ensure that the provision relating to security referred to in section 19 has been made;

 

(c)            ensure that firm arrangements for funds and money for payment through verifiable means to fulfil the obligations under the public offer have been made;

 

(d)           ensure that the public announcement is made in accordance with section 9;

 

(e)            furnish to the Commission a due diligence certificate which shall accompany a copy of the proposed offer letter;

 

(f)             ensure that the proposed public announcement and offer letter are filed with the Commission, target company and also sent to the stock exchange on which the voting shares of the target company are listed in accordance with this Ordinance;

 

(g)            ensure that the contents of the public announcement and offer letter are true, fair and adequate and based on reliable sources, quoting the source wherever necessary;

 

(h)            ensure compliance of the provisions of the Ordinance and any other laws or rules as may be applicable in this regard;

 

(i)             upon fulfilment of the necessary obligations by the acquirer under this Ordinance, cause the bank with whom the security has been deposited to release the balance amount to the acquirer; and

 

(j)             send a report to the Commission within forty‑five days from the date of closure of public offer or earlier withdrawal thereof.

 

  1. Procedure for making competitive bid. — (1) Any person, other than the acquirer who has made the first public announcement, who is desirous of making a competitive bid, shall, within twenty-one days of the public announcement of the first offer, make a public announcement of his offer for acquisition of the same voting shares of the target company.

 

(2) No public announcement of a competitive bid shall be made after twenty‑one days from the date of public announcement of the first offer.

 

Explanation. – For the purpose of this section a bid shall be deemed as competitive only if it offers a higher purchase price.

 

(3) A competitive bid shall not be for less than the number of voting shares for which the earlier public offer has been made.

 

(4) Upon the public announcement of a competitive bid the acquirer, who has made a public announcement of the earlier offer, shall have the option to make another announcement—

 

(a)        revising the public offer; or

 

(b)       withdrawing the public offer with the prior approval of the Commission:

 

Provided that if no such announcement is made within ten days of the public announcement of the competitive bid, the earlier offer on the original terms shall continue to be valid and binding on the acquirer who has made the earlier public offer, except that the date of closing of such public offer shall stand extended to the date of closure of public offer under the last subsisting competitive bid.

 

(5) The provisions of this Ordinance shall, mutatis‑mutandis, apply to the competitive bid made under sub‑section (1).

 

(6) An acquirer who has made a public announcement, and has not withdrawn his public offer in terms of sub­section (4), shall have the option to make an upward revision of his offer in respect of the price and the number of voting shares to be acquired at any time within seven working days prior to the date of closure of the last subsisting public offer without changing any other terms and conditions of the said public offer.

 

(7) Any upward revision made in terms of sub‑section (6), shall be made only on the following conditions, namely: —

 

(a)     the making of a public announcement in respect of such changes or amendments in all the newspapers in which the earlier public announcement was made;

 

(b)     the informing of the Commission, the stock exchange on which the voting shares of the target company are listed, and the target company at its registered office, simultaneous with the issue of public announcement referred in clause (a); and

 

(c)     the increase in the value of the security as provided under sub‑section (3) of section 19.

 

(8) Where there is a competitive bid, the date of closure of the earlier bid, as also the date of closure of all the subsequent competitive bids, shall be the date of closure of public offer under the last subsisting competitive bid and the public offers under all the subsisting competitive bids shall close on the same date.

 

  1.       Upward revision of Offer. — Irrespective of whether or not there is a competitive bid the acquirer, who has made the public announcement, may make upward revision in his offer in respect to the price and the number of voting shares to be acquired, at any time up to seven working days prior to the date of the closure of public offer:

 

Provided that any such upward revision of the public offer shall be made only on the following conditions, namely: —

 

(a)     the making of a public announcement in respect of such changes or amendments in all the newspapers in which the earlier public announcement was made;

 

(b)     the informing of the Commission, the stock exchange on which the voting shares of the target company are listed, and the target company at its registered office, simultaneous with the issue of public announcement referred in clause (a); and

 

(c)     the increase in the value of the security as provided under sub‑section (3) of section 19.

 

  1. Withdrawal of public offer. — (1) A public offer, once made, may be withdrawn—

 

(a)        if the withdrawal is consequent upon any competitive bid;

 

(b)        if the sole acquirer, being a natural person, has died; or

 

(c)        in such circumstances as may be prescribed.

 

(2) In the event of withdrawal of the public offer under any of the circumstances specified under sub‑section (1), the acquirer, or the manager to the offer, shall—

 

(a)          make a public announcement in all the newspapers in which the public announcement was made indicating reasons for withdrawal of the public offer; and

 

(b)          inform the Commission, the stock exchange on which the voting shares of the target company are listed, and the target company at its registered office, simultaneous with the issue of such public announcement.

 

  1. Security to be furnished by the acquirer. — (1) The acquirer shall furnish a security for performance of his obligations on such terms and conditions as may be prescribed.

 

(2) The total consideration payable under the public offer shall be calculated assuming full acceptances irrespective of whether the consideration for the public offer is payable in cash or otherwise.

 

(3) In case there is any upward revision of offer, consequent upon a competitive bid or otherwise, the value of the security shall be increased as may be prescribed under sub­section (1).

 

(4) The security furnished shall be released in such manner as may be prescribed.

 

  1. Procedure for payment and delivery of voting shares. — (1) For the amount of consideration payable in cash, the acquirer shall, within a period of twenty‑one days from the date of closure of the public offer, open a special account with a scheduled bank and deposit therein such sum as would, together with ninety per cent of the security furnished under section 19, make up the entire sum due and payable to the shareholders as consideration for acceptances received and accepted in terms of the public offer.

 

(2) The unclaimed balance in the account referred to in sub‑section (1) shall, at the end of six months from the date of deposit thereof, be refunded to the acquirer in such manner as may be prescribed.

 

(3) In respect of consideration payable by way of exchange of securities, the acquirer shall ensure that the securities are actually issued and dispatched to the shareholders.

 

 

 

CHAPTER IV

ENQUIRY AND RELATED MATTERS

 

  1. Enquiry. — The Commission may appoint one or more persons as enquiry officer or officers to undertake an enquiry for any of the following purposes, namely: —

 

(a)          to enquire into the complaints received from the investors holding not less than one‑tenth of the total voting powers in a target company, on any matter having a bearing on the allegations of substantial acquisition of voting shares and take-overs;

 

(b)          to enquire suo motu upon its own knowledge or information, in the interest of securities market or the investors, for any breach of the provisions of this Ordinance;

 

(c)          to ascertain whether the provisions of this Ordinance are being complied with:

 

  1. Notice before enquiry. — (1) Before ordering an enquiry under section 21, the Commission shall give not less than seven days’ notice to the acquirer, the seller, the target company, the manager to the offer as the case may be.

 

(2) During the course of an investigation, the acquirer, the seller, the target company, the manager to the offer, against whom the investigation is being carried out shall be bound to discharge his obligation as provided in this Ordinance and the rules made thereunder.

 

  1.       Obligations on enquiry by the Commission. — (1) It shall be the duty of the acquirer, the seller, the target company or the manager to the offer, whose affairs are being enquired into and of every director, officer and employee thereof, to produce to the enquiry officer such books, accounts, securities records and other documents in its custody or control and furnish to the enquiry officer such statements and information as he may, within such reasonable period as he may specify, require.

 

(2) The acquirer, the seller, the target company, the manager to the offer and the persons being enquired into shall allow the enquiry officer to have reasonable access to the premises occupied by such a person or by any other person on behalf of such a person and also extend reasonable facility for examining any books, records, documents and computer data in the possession of such a person and also provide copies of documents or other materials which, in the opinion of the enquiry officer, are relevant for the purposes of the enquiry.

 

(3) The enquiry officer, in the course of enquiry, may examine or record the statements of any director, officer or employee of the acquirer, the seller, the target company and the manager to the offer.

 

(4) It shall be the duty of every director, officer or employee of the acquirer, the seller, the target company and the manager to the offer to give to the enquiry officer all assistance in connection with the enquiry which he may require.

 

  1. Submission of report and communication of findings. — (1) The enquiry officer shall, as soon as possible, on completion of the enquiry, submit report to the Commission.

 

(2) The Commission shall, after consideration of the enquiry report, communicate the findings of the enquiry officer to the acquirer, the seller, the target company, the manager to the offer as the case may be.

 

(3) On receipt of the reply from the acquirer, the seller, the target company or, as the case may be, the manager to the offer, the Commission may direct them to take such measures as it may deem fit in the interest of the securities market and for due compliance with the provisions of this Ordinance and rules made thereunder.

 

  1. Directions by the Commission. — The Commission may, in the interests of the securities market, give such directions as it deems fit including—

(a)         directing the person concerned not to further deal in securities;

 

(b)         prohibiting the person concerned from disposing of any of the securities acquired in violation of provisions of this Ordinance;

 

(c)          directing the person concerned to sell the voting shares acquired in violation of the provisions of this Ordinance; and

 

(d)        taking such action against the person concerned as may be necessary.

 

  1. Penalties for non‑compliance. — (1) In the event of withdrawal of public offer, except as provided in section 18, or contravention of any provision of this Ordinance, the acquirer and any person acting in concert shall stand debarred as acquirers for the next three years.

 

(2) In case the board of directors or management of the target company contravenes any provision of this Ordinance, the directors, the chief executive and the company and secretary, on a finding by the Commission, shall stand disqualified to hold any such office in a listed company for the next two years.

 

(3) If any person—

 

(a)         refuses or fails to furnish any document, paper or information which he is required to furnish by, or under, this Ordinance;

 

(b)         refuses or fails to comply with any order or direction of the Commission made or issued under this Ordinance; or

 

(c)         contravenes or otherwise fails to comply with the provisions of this Ordinance,

the Commission may, if satisfied, after giving the person an opportunity of being heard, that the refusal, failure or contravention was wilful, impose penalty which may extend to one million rupees as may be specified in the order and, in the case of a continuing default, a further sum calculated at the rate of ten thousand rupees for every day after the issue of such order during which the refusal, failure or contravention continues.

 

(4) Any sum directed to be paid under sub‑section (3) shall be recoverable as an arrear of land revenue.

 

  1. Delegation of powers. — The Commission may, subject to such conditions and limitations, as it may deems fit to impose, delegate all or any of its powers and functions under this Ordinance to a Commissioner appointed under section 5 of the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997).

 

  1.     Relaxation of provisions of the rules. — Where the Commission is satisfied that it is not practicable or expedient to comply with any requirement of the rules made hereunder in a particular case, the Commission may, in consultation with the Federal Government and for reasons to be recorded, relax such requirement subject to such conditions as it may deem fit.

 

  1. Power of the Commission to make rules.— The Commission may, in consultation with the Federal Government and by notification in the official Gazette, make rules for carrying out the purposes of this Ordinance.

 

  1.     Ordinance to override other laws etc.— The provisions of this Ordinance shall have effect notwithstanding anything contained in the Companies Ordinance, 1984 (XLVII of 1984), or any other law for the time being in force or in any charter, statute or memorandum or articles of association or in any applicable document or resolution.

 

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

 

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