Laws Administered by Commission Central Depositories Act 1997

CDC provides depositary services to a wide range of capital market participants which includes brokers, Asset management companies, Banks and general retail investors. It also serves to link up the issuer and registrar of securities and the market for the purpose of executing corporate actions like disbursements of corporate benefits. The aim of CDC is to operate as a central securities depository on behalf of the financial services industry. CDC is regulated by the SECP. CDC has branches in Karachi, Lahore and Islamabad. Central Depositories Act 1997 made it possible to recognize beneficial owner of security on the basis of holding in depository account. In the current depositary structure all securities in the name of central depository company Pakistan limited in the capacity of a nominee, the accountns holder are considered o be the beneficial owner of security on the basis of their holdings in cds account. If you have account in CDC and broker also has account in CDC, you trust CDC and your transaction completed through it.

Companies Ordinance 1984

The Companies Ordinance was promulgated in 1984 with the objective of achieving healthy growth of corporate enterprises, providing protection to investors and creditors, promoting investment and the development of the economy. The Companies Ordinance has been amended from time to time to cater to the needs of an ever expanding sector. It is a book which incorporates all rules e.g MOA & AOA and rules relating to responsibilities of directors, in case of ceasing director and also includes clauses, articles and amendments.

Modaraba Companies and Modaraba Ordinance 1980

Modarba is a form of partnership which has two distinct parties: (i) the financier and (ii) the manager. The financer takes no part in the management of the business. The profits are distributed among the subscriber while the manager is paid the usual salary. Modarba is one the modes of Islamic finance. It is like mutual fund . Not only in Pakistan, but we can see phenomenal growth all over the Islamic world. In particular, the Modaraba Sector has been able to create a market niche for itself in the corporate sector. This model is enjoying a unique recognition due to its well designed structure with proper rules and regulations defined by the regulators. Modarba is different from venture. 10% investment must be contributed by management to show their interest and work with honesty. Some modarbas are leasing modarbas and some are general purpose modarbas. SECP make regulations to issue directives, codes and guidelines for Modarba companies for Floatation and Control. The strengthening of the regulatory powers of the commission and the directive authority of the registrar would safeguard the interest of modarba investors, bring efficiency in the modarba management and strengthen the non-banking finance companies sector.

The Ordinance and Rules provides matters relating to the registration of Modaraba companies and the floatation, management and regulation of Modarabas.

Substantial Acquisition of Voting Shares and Takeovers

When an acquirer takes over the control of the target company, it is termed as takeover. When an acquirer acquires substantial quantity of shares or voting rights of the Target Company, it results into substantial acquisition of shares

Rules and regulations

NBFC Regulations
Non-banking financial companies, or NBFCs, are financial institutions that provide banking services, but do not hold a banking license. These institutions are not allowed to take deposits from the public. Nonetheless, all operations of these institutions are still covered under banking regulations. NBFC includes asset management company, discount house, housing finance company, investment adviser, investment finance company, leasing company, venture capital company and such other company or body corporate as the Federal Government may, by notification in the Official Gazette, specify for the purpose. NBFCs do offer all sorts of banking services, such as loans and credit facilities, retirement planning, money markets, underwriting, and merger activities.

Private Equity and Venture Capital Fund Regulations 2008

PE is a number of different types of investments that can be made with private money. These investments may be made to purchase a company, provide funding for a project, or simply make a private investment because you arent interested in stocks. Private Equity deals are simply deals that arent available for public participation. This includes VC, angel investing, hedge funds, buy out funds, etc. VC is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology, IT, software, etc. Venture capital is a subset of private equity. Therefore, all venture capital is private equity, but not all private equity is venture capital. . Its highly risky, but can be quite lucrative.

Takaful Rules 2005

Takaful is perceived as cooperative or mutual insurance, where members contribute a certain sum of money to a common pool. The purpose of this system is not profits, but to uphold the principle of "bear ye one another's burden". Commercial insurance is strictly disallowed for Muslims because it contains the following elements: Al-Gharar (uncertainty), Al-Maisir (gambling), Riba (usury)

The principles of takaful are as follows:

Policyholders cooperate among themselves for their common good. Every policyholder pays his subscription to help those who need assistance. Losses are divided and liabilities spread according to the community pooling system. Uncertainty is eliminated concerning subscription and compensation. It does not derive advantage at the cost of others.

Commodity Exchange and Futures Contracts Rules 2005

A futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today (the futures price or the strike price) with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange. The party agreeing to buy the underlying asset in the future, the "buyer" of the contract, is said to be "long", and the party agreeing to sell the asset in the future, the "seller" of the contract, is said to be "short". The terminology reflects the expectations of the parties -- the buyer hopes or expects that the asset price is going to increase, while the seller hopes or expects that it will decrease. For financial futures the underlying asset or item can be currencies, securities or financial instruments and intangible assets or referenced items such as stock indexes and rates. While the futures contract specifies a trade taking place in the future, the purpose of the futures exchange institution is to act as intermediary and minimize the risk of default by either party Pakistan Mercantile Exchange is the first Exchange in Pakistan to employ modern risk management techniques based on Value-at-Risk with a pre-trade risk check in real time. PMEX is committed to provide a world-class commodity futures trading platform for market participants to trade in a wide spectrum of commodity derivatives, driven by best global practices, professionalism and transparency. Pakistan Mercantile is licensed and regulated by the Securities and Exchange Commission of Pakistan and has a 100 % Institutional shareholding.

Prudential Regulations for NBFC

The SECP has issued 'prudential regulations' for NBFCs. The regulations concern to consumer finance and are applicable on NBFCs. The objective behind the issuance of these regulations is to provide new avenues to investment banks, leasing companies, housing finance companies and discount houses in order to enhance diversification and broaden their product range. The regulations include comprehensive operational guidelines and various risk management measures which are adopted by NBFCs initiating consumer financing. The objective behind the issuance of these Regulations is to introduce a uniform set of Regulations for all NBFCs in order to improve their effective risk management capabilities and to promote corporate governance in the non-bank financial sectorThe NFBC sector as a whole has grown over the last few years. This

change is largely attributed to introduction of regulatory reforms aimed at development of nonbanking finance companies and enhanced supervision by the SECP. With the introduction of consumer financing, not only will the financial health of the NBFC sector improve, owing to product diversification, but the end consumer will also benefit in terms of increased product choice and outreach. This measure will particularly improve the financial and competitive standing of NBFCs engaged in investment finance and leasing, which had been facing severe competition from the banking sector.

Single Member (Private Limited Companies) Rules

Any person may form a single member company in Pakistan. Single Member Company is private company which has only one member/director and will avail rights of limiting the liability. Subject to certain modifications, all the provisions of the Companies Ordinance, 1984 which apply to private companies limited by shares will apply to single member companies. The introduction of the concept of a single member company has facilitated sole proprietorships to obtain corporate status, giving them the benefit to limit the liability of their proprietor. A single member company can be converted into a private company on increase of the number of its members/directors to more than one. The single member shall nominate two individuals, one of whom shall become nominee director in case of death of single member and the other shall become alternate nominee director to work as nominee director in case of non-availability of the nominee director. Single-Member Company is required to appoint a company secretary. Single member companies must keep proper accounting records according to law and to file the audited accounts with Securities & Exchange Commission of Pakistan if the paid-up capital is 7.5 million or more.

Guidelines for Issue of Commercial Paper

The SECP has developed and issued guidelines for the issue of Commercial Paper to further develop and broaden the money market and provide an additional financial instrument to investors. Commercial paper is a short-term promissory note issued by corporations with a minimum credit rating of A in long-term and A2 in short-term. Commercial Papers are typically used for financing working capital requirements. Through these guidelines, the SECP has notified the eligibility, the period and size, the mode of issue, the expense and the investors in Commercial Papers. Furthermore, the roles and responsibilities of the issue, the Issuing and Paying Agent (IPA) and the procedure for issue and standby facility with financial institutions have also been notified. According to these guidelines, the maturity of a Commercial Paper is to be between 30 days and one year while the equity of the issuing company should not be less than Rs 100 million as per its latest audited balance sheet. The guidelines have also set out the minimum size of the issue of a Commercial Paper to be not less than Rs 10 million and that it is to be issued at a discount set by the issuer, keeping in view the prevailing t-bill rates and the credit rating.

Code of Corporate Governance Companies Rules 1999

Corporate governance is the system by which companies are directed and controlled It involves a set of relationships between a companys management, its board, its shareholders and other stakeholders; it deals with prevention or mitigation of the conflict of interests of stakeholders. An important theme of corporate governance is the nature and extent of accountability of people in the business, and mechanisms that try to decrease the principalagent problem. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. the main external stakeholder groups are shareholders, debt holders, trade creditors, suppliers, customers and communities affected by the corporation's activities. Internal stakeholders are the board of directors, executives, and other employees. It guarantees that an enterprise is directed and controlled in a responsible, professional, and transparent manner with the purpose of safeguarding its long-term success. It is intended to increase the confidence of shareholders and capital-market investors.

Credit Rating Companies Rules

A credit rating agency is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves. In some cases, the servicers of the underlying debt are also given ratings.In most cases, the issuers of securities are companies, special purpose entities, state and local governments, non-profit organizations, or national governments issuing debt-like securities (i.e., bonds) that can be traded on a secondary market. The primary function of PACRA is to evaluate the capacity and willingness of a corporate entity to honor its debt obligations. PACRA ratings reflect an independent, professional and impartial assessment of the credit risk associated with a particular debt instrument or a corporate entity. By providing a measurement of risk, PACRA's ratings facilitate investors in making prudent investment decisions after determining the acceptable rate of return at the given risk level. However, regardless of the type of rating, it is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.