PART V - PROSPECTUS, ALLOTMENT, ISSUE AND TRANSFER OF SHARES AND DEBENTURES, DEPOSITS, ETC. PROSPECTUS

PART V - PROSPECTUS, ALLOTMENT, ISSUE AND TRANSFER OF

SHARES AND DEBENTURES, DEPOSITS, ETC.

PROSPECTUS

52. Prospectus to be dated.- A prospectus issued by or on behalf of a

company shall be dated, and that date shall, unless the contrary is proved, be taken as the

date of publication of the prospectus.

Companies Ordinance, 1984

53. Matters to be stated and reports to be set out in prospectus.-(1)

Every prospectus issued—

(a) by or on behalf of a company, or

(b) by or on behalf of any person who has been engaged or interested in the

formation of a company;

shall state the matters specified in section 1 of Part I of the Second Schedule and set out

the reports specified in section 2 of that Part and the said sections 1 and 2 shall have

effect subject to the provisions contained in section 3 of that part.

1[(1A) A sufficient number of copies of the prospectus issued under sub-section

(1) shall be made available at the registered office of the company, with the stock

exchange at which the company is listed or proposes to be listed and with the bankers to

the issue, and the prospectus in its full text or in such abridged form as may be prescribed,

shall be published at least in one Urdu and one English daily newspaper].

(2) No prospectus shall be issued or an advertisement of a prospectus

published in a newspaper less than seven days or more than thirty days before the

subscription list, as specified in the prospectus, is due to open:

Provided that the Commission may for special reasons allow a prospectus to be

issued or an advertisement of a prospectus to be published more than thirty days before

the subscription list is due to open.

(3) If a prospectus is issued which does not comply with the provisions of

sub-section (1) or sub-section (2), every person who is knowingly responsible for the issue

of such prospectus shall be liable to a fine not exceeding ten thousand rupees and in the

case of a containing default to a further fine not exceeding two hundred rupees for every

day from the day of the issue of the prospectus until a prospectus complying with the

requirements aforesaid is issued and a copy thereof is filed with the registrar.

(4) A condition requiring or binding an applicant for shares in or debentures

of a company to waive compliance with any of the requirements of this section, or

purporting to effect him with notice of any contract, document or matter not specifically

referred to in the prospectus, shall be void.

1 Inserted through Companies (Amendment) Act, 1999

Companies Ordinance, 1984

(5) No one shall issue any form of application for shares in or debentures of

a company, unless the form is accompanied by a prospectus which complies with the

requirements of this section:

Provided that this sub-section shall not apply if it is shown that the form of

application was issued either--

(i) in connection with a bona fide invitation to a person to enter into an

underwriting agreement with respect to the shares or debentures; or

(ii) in relation to shares or debentures which were not offered to the public.

(6) If any person acts in contravention of the provisions of sub-section (5) he

shall be liable to a fine not exceeding two thousand rupees.

(7) A director or other person responsible for the prospectus shall not incur

liability by reason of any non-compliance with, or contravention of, any of the

requirements of this section, if--

(a) as regards any matter not disclosed, he proves that he had no knowledge

thereof; or

(b) he proves that the non-compliance or contravention arose from an honest

mistake of fact on his part; or

the opinion of the registrar or officer dealing with the case, were

immaterial, or was otherwise such as ought, in the opinion of that registrar

or officer, as the case may be, having regard to all the circumstances of

the case, reasonably to be excused:

Provided that no director or other person shall incur any liability in

respect of the failure to include in a prospectus a statement with respect

to the matters specified in clause 18 of Part I of the Second Schedule,

unless it is proved that he had knowledge of the matters not disclosed.

(8) This section shall not apply--

Companies Ordinance, 1984

(a) to issue to the existing members or debenture-holders of a company of a

prospectus or form of application relating to shares in or debentures of

the company, whether an applicant for shares or debentures will or will

not have the right to renounce in favour of other persons; or

(b) to the issue of a prospectus or form of application relating to shares or

debenture which are, or are to be, in all respects uniform with shares or

debentures previously issued and for the time being dealt in or quoted on

a stock exchange;

but, subject as aforesaid, this section shall apply to a prospectus or a form

of application, whether issued on or with reference to the formation of a

company or subsequently.

(9) Nothing in this section shall limit or diminish any liability which any person

may incur under the general law or under any other provision of this Ordinance.

54. Expert to be unconnected with formation or management of

company.- A prospectus inviting persons to subscribe for shares in or debentures of a

company shall not include a statement purporting to be made by an expert, unless the

expert is a person who is not, and has not been, engaged or interested in the formation or

promotion, or in the management, of the company.

55. Expert's consent to issue of prospectus containing statement by

him.- A prospectus inviting persons to subscribe for shares in or debentures of a company

and including a statement purporting to be made by an expert shall not be issued, unless--

(a) he has given his written consent to the issue thereof with the statement

included in the form and context in which it is included and has not

withdrawn such consent before the delivery of a copy of the prospectus

for registration; and

(b) a statement that he has given and has not withdrawn his consent as

aforesaid appears in the prospectus.

56. Penalty and interpretation.- (1) If any prospectus is issued in

contravention of section 54 or 55, the company, and every person who is knowingly a

Companies Ordinance, 1984

party to the issue thereof, shall be punishable with fine not exceeding five thousand

rupees.

(2) In section 54 and 55, the expression "expert" includes an engineer, a

valuer, an accountant and every other person whose profession gives authority to a

statement made by him.

57. Approval, issue and registration of prospectus.- (1) No listed

company, and no company which proposes to make an application to a stock exchange for

listing of its 211[securities, and no other person] shall issue, circulate or publish any

prospectus or other document offering for subscription or publicly offering for sale any

security unless approval of the Commission to its issue, circulation or publication has been

obtained within the period of sixty days preceding the date of its issue.

(2) 2[The Commission may, while according approval under sub-section (1),

impose such condition as it may deem necessary];

(3) No prospectus shall be issued by or on behalf of a company unless on or

before the date of its publication, there has been delivered to the registrar a copy thereof

signed by every person who is named therein as a director or proposed director of the

company or by his agent authorised in writing, and having endorsed thereon or attached

thereto—

(a) any consent to the issue of the prospectus required by section 55 from

any person as an expert; and

(b) in the case of a prospectus issued generally, also

(i) a copy of every contract required by clause 16 of Part I of the

Second Schedule to be specified in the prospectus, or, in the case

of a contract not reduced into writing, a memorandum giving full

particulars thereof; and

(ii) where the persons making any report required by Part II of that

Schedule have made therein, or have without giving the reasons,

indicated therein, any such adjustments as are mentioned in

clause 36 of Part I of that Schedule, a written statement signed

1 Substituted by Finance Act, 1995.

2 Substituted by Finance Act, 1995.

Companies Ordinance, 1984

by those persons setting out the adjustments and giving the

reasons therefor.

(4) Every prospectus to which this section applies shall, on the face of it,—

(a) state that a copy has been delivered to the registrar as required by subsection

(3);

(b) specify any documents required by this section to be endorsed on or

attached to the copy so delivered, or refer to statements included in the

prospectus which specify those documents; and

exchange for the listing of the security, state that such an application has

been made or is proposed to be made.

(5) The registrar shall not register a prospectus unless the requirements of

sections 52, 53, 54 and 55 and this section have been complied with and the prospectus is

accompanied by the consent in writing of the person, if any, named therein as the auditor,

legal adviser, attorney, solicitor, banker or broker, being a member of a stock exchange, of

the company, to act in that capacity.

(6) If a prospectus is issued, published or circulated without complying with,

or in contravention of any provision of this section, the company, and every person who is

knowingly a party to the issue, publication or circulation of the prospectus, shall be liable to

a fine not exceeding ten thousand rupees and in the case of a continuing default to a

further fine not exceeding two hundred rupees for every day from the date of issue,

publication or circulation, as the case may be, of the prospectus, until a copy thereof

complying with all the requirements of this section has been delivered to the registrar.

58. Terms of contract mentioned in prospectus or statement in lieu of

prospectus not to be varied.- A company shall not, at any time, vary the terms of

contract referred to in the prospectus or a statement in lieu of prospectus except subject

to the approval of, or except on authority given by, the company in general meeting.

59. Civil liability for mis-statements in prospectus.- (1) Subject to the

provisions of this section, where a prospectus invites persons to subscribe for shares in or

debentures of a company, the following persons shall be liable to pay compensation to

every person who subscribes for or purchases any share or debentures on the faith of the

Companies Ordinance, 1984

prospectus for any loss or damage he may have sustained by reason of any untrue

statement included therein namely,—

(a) every person who is a director of the company at the time of the issue of

the prospectus;

(b) every person who has authorised himself to be named and is named in the

prospectus either as a director, or as having agreed to become a director,

either immediately or after an interval of time;

(d) every person who has given consent to the issue of the prospectus under

section 55 or sub-section (5) of section 57:

Provided that where, under section 55, the consent of a person is

required to the issue of a prospectus and he has given that consent, or

where, under sub-section (5) of section 57, the consent of a person

named in a prospectus is required and he has given that consent, he shall

not, by reason of having given such consent, be liable under this subsection

as a person who has authorised the issue of the prospectus except

in respect of an untrue statement, if any, purporting to be made by him as

an expert.

(2) No person shall be liable under sub-section (1), if he proves—

(a) that, having consented to become a director of the company, he withdrew

his consent before the issue of the prospectus, and that it was issued

without his authority or consent;

(b) that the prospectus was issued without his knowledge or consent, and that

on becoming aware of its issue, he forthwith gave reasonable public

notice that it was issued without his knowledge or consent;

on becoming aware of any untrue statement therein, withdrew his

consent to the prospectus and gave reasonable public notice of the

withdrawal and of the reason therefor; or

Companies Ordinance, 1984

(d) that—

(i) as regards every untrue statement not purporting to be made on

the authority of an expert or of a public official document or

statement, he had reasonable ground to believe, and did up to the

time of the allotment of the shares or debentures, as the case

may be, believe, that the statement was true; and

(ii) as regards every untrue statement purporting to be a statement

by an expert or contained in what purports to be a copy of or an

extract from a report or valuation of an expert, it was a correct

and fair representation of the statement, or a correct copy of, or

a correct and fair extract from, the report or valuation; and he

had reasonable ground to believe, and did up to the time of the

issue of the prospectus believe, that the person making the

statement was competent to make it and that that person had

given the consent required by section 55 to the issue of the

prospectus and had not withdrawn that consent before delivery of

a copy of the prospectus for registration or, to the defendant's

knowledge, before allotment thereunder; and

(iii) as regard every untrue statement purporting to be a statement

made by an official person or contained in what purports to be a

copy of or extract from a public official document, it was a

correct and fair representation of the statement, or a correct

copy of, or a correct and fair extract from, the document:

Provided that this sub-section shall not apply in the case

of a person liable, by reason of his having given consent required

of him by section 55, as a person who has authorised the issue of

the prospectus in respect of an untrue statement purporting to be

made by him as an expert.

(3) A person who, apart from this sub-section would, under sub-section (1),

be liable by reason of his having given a consent required of him by section 55, as a

person who has authorised the issue of the prospectus in respect of an untrue statement

purporting to be made by him as an expert, shall not be so liable, if he proves—

Companies Ordinance, 1984

(a) that, having given his consent under section 55 to the issue of the

prospectus, he withdrew it in writing before delivery of a copy of the

prospectus for registration;

(b) that, after delivery of a copy of the prospectus for registration and before

allotment thereunder, he, on becoming aware of the untrue statement

withdrew his consent in writing and gave reasonable public notice of the

withdrawal and of the reason therefor; or

ground to believe, and did up to the time of the allotment of shares or

debentures believe, that the statement was true.

(4) Where—

(a) the prospectus specifies the name of a person as a director of the

company, or as having agreed to become a director thereof, and he has

not consented to become a director, or has withdrawn his consent before

the issue of the prospectus, and has not authorised or consented to the

issue thereof; or

(b) the consent of a person is required under section 55 to the issue of the

prospectus and he either has not given that consent or has withdrawn it

before the issue of the prospectus:

the directors of the company, excluding those without whose knowledge or consent the

prospectus was issued, and every other person who authorised the issue thereof, shall be

liable to indemnify the person referred to in clause (a) or cla use (b), as the case may be,

against all damages, costs and expenses to which he may be made liable by reason of his

name having been inserted in the prospectus or of the inclusion therein of a statement

purporting to be made by him as an expert, as the case may be, or in defending himself

against any suit or legal proceeding brought against him in respect thereof:

Provided that a person shall not be deemed for the purposes of this sub-section to

have authorised the issue of a prospectus by reason only of his having given the consent

required by section 55 to the inclusion therein of a statement purporting to be made by him

as an expert.

(5) Every person who becomes liable to make any payment by virtue of this

section may recover contribution, as in cases of contract, from any other person who, if

Companies Ordinance, 1984

sued separately, would have been liable to make the same payment, unless the former

person was, and the latter person was not, guilty of fraudulent misrepresentation.

(6) For the purposes of this section—

(a) the expression "promoter" means a promoter who was a party to the

preparation of prospectus or a portion thereof containing the untrue

statement, but does not include any person by reason of his acting in a

professional capacity for persons engaged in procuring the formation of

the company; and

(b) the expression "expert" has the same meaning as in section 55.

60. Criminal liability for mis-statements in prospectus.- (1) Where a

prospectus includes any untrue statement, every person who signed or authorised the

issue of the prospectus shall be punishable with imprisonment for a term which may

extend to two years, or with fine which may extend to ten thousand rupees, or with both,

unless he proves either that the statement was immaterial or that he had reasonable

ground to believe, and did up to the time of the issue of the prospectus believe, that the

statement was true.

(2) A person shall not be deemed for the purposes of this section to have

authorised the issue of a prospectus by reason only of his having given--

(a) the consent required by section 55 to the inclusion therein of a statement

purporting to be made by him as an expert, or

(b) the consent required by sub-section (5) of section 57.

61. Document containing offer of shares or debentures for sale to be

deemed prospectus.- (1) Where a company allots or agrees to allot any shares in or

debentures of the company with a view to all or any of those shares or debentures being

offered for sale to the public, any document by which the offer for sale to the public is

made shall, for all purposes, be deemed to be a prospectus issued by the company; and all

enactments and rules of law as to the contents, filing and registration of a prospectus and

as to liability in respect of statements in and omissions from a prospectus, or otherwise

relating to prospectus, shall apply with the modifications, specified in sub-section (3), (4)

and (5), and have effect accordingly, as if the shares or debentures had been offered to

the public for subscription and as if persons accepting the offer in respect of any shares or

Companies Ordinance, 1984

debentures, were subscribers for those shares or debentures, but without prejudice to the

liability, if any, of the person by whom the offer is made in respect of mis-statement

contained in the document or otherwise in respect thereof.

(2) For the purposes of this Ordinance, it shall, unless the contrary is proved,

be evidence that an allotment of, or an agreement to allot, shares or debentures was made

with a view to the shares or debentures being offered for sale to the public if it is shown--

(a) that an offer of the shares or debentures or of any of them for sale to the

public was made within one year after the allotment or agreement to allot;

(b) that at the date when the offer was made; the whole of the consideration

to be received by the company in respect of the shares or debentures had

not been received by it; or

public was made in pursuance of an understanding to which the company

was directly or indirectly a party or a condition imposed by any authority

in relation to the position, business or privileges of the company.

(3) For the purposes of this section, section 53 shall have effect as if it

required a prospectus to state, in addition to the matters required by that section to be

stated in a prospectus,--

(a) the net amount of the consideration received or to be received by the

company in respect of the shares or debentures to which the offer

relates; and

(b) the place and time at which the contract under which the said shares or

debentures have been or are to be allotted may be inspected.

(4) For the purposes of this section, section 57 shall have effect as if the

persons making the offer were persons named in a prospectus as directors of a company.

(5) Where a person making an offer to which this section relates is a

company or a firm, it shall be sufficient if the document referred to in sub-section (1) is

signed on behalf of the company or firm by two directors of the company or by not less

Companies Ordinance, 1984

than one-half of the partners in the firm, as the case may be; and any such director or

partner may sign by his agent authorised in writing.

62. Offer of shares or debentures for sale by certain persons.- (1) No

person who holds more than ten per cent of the shares or debentures of a company shall

offer for sale to the public any shares or debenture of the company held by him except

with the approval of the Commission.

(2) Any document by which an offer for sale to the public is made by any

such person as is referred to in sub-section (1) shall, for all purposes, be deemed to be a

prospectus issued by a company, and all enactments and rules of law as to the contents,

filing and registration of a prospectus and as to the liability in respect of statements in and

omissions from a prospectus, or otherwise relating to a prospectus, shall apply with the

modifications specified in sub-sections (3) and (4), and have effect accordingly, but

without prejudice to the liability, if any, of the persons by whom the offer is made in

respect of mis-statements contained in the document or otherwise in respect thereof.

(3) For the purposes of this section, section 57 shall have effect as if the

person making the offer were a person named in a prospectus as director of a company.

(4) Where a person making an offer to which this section relates is a

company or a firm, it shall be sufficient if the document referred to in sub-section (2) is

signed on behalf of the company or firm by two directors of the company or not less than

one-half of the partners in the firm, as the case may be and any such director or partner

may sign by his agent authorsied in writing.

1[(5) A notice, circular, advertisement or other document soliciting bids,

offers, proposals or tenders for sale of shares or other securities acquired in the course of

normal business or for negotiating sale thereof or expressing an intention to disinvest such

shares or other securities issued by a scheduled bank or a financial institution shall not be

deemed to be a prospectus or an offer for sale to the public for the purposes of sections

61 and 62.]

1 [62A. Issue of securities outside Pakistan.-- No company shall, except with

the prior approval of the Commission, issue any security outside Pakistan].

1 Sub-sec (5) added by the Banking and Financial Services (Amendment of Laws) Ordinance, LVII of 1984.

1 Sec. 62-A added by the Finance Act, 1 of 1995.

Companies Ordinance, 1984

63. Interpretation of provisions relating to prospectus.- (1) For the

purposes of the foregoing provisions relating to a prospectus, --

(a) a statement included in a prospectus shall be deemed to be untrue, if the

statement is misleading in the form and context in which it is included;

and

(b) where the omission from a prospectus of any matter is calculated to

mislead, the prospectus shall be deemed, in respect of such omission, to

be a prospectus in which an untrue statement is included.

(2) For the purposes of sections 59 and 60 and clause (a) of sub-section (1)

of this section, the expression "included", when used in reference to a prospectus, means

included in the prospectus itself or contained in any report or memorandum appearing on

the face thereof or by reference incorporated therein or issued herewith.

64. Newspaper advertisement of prospectus.- Where any prospectus is

published as a newspaper advertisement, it shall not be necessary in the advertisement to

comply with the requirements of sub-clause (1) of clause 1 of section 1 of Part I of the

Second Schedule in so far as the said provisions require the contents of the memorandum

or the signatories thereto, or the number of shares subscribed for by them, to be specified.

65. Construction of references to offering shares or debentures to the

public, etc..- (1) Any reference in this Ordinance or in the articles of a company to

offering of shares or debentures to the public, or to invitation to the public to subscribe for

shares or debentures, shall, unless otherwise expressly provided in this Ordinance, include

a reference to offering of shares or debentures to any section of the public or to invitation

to any section of public to subscribe for shares or debentures, as the case may be.

Explanation: The term "section of the public" includes existing members or

debenture-holders of the company or clients of the persons issuing the prospectus.

(2) No offer or invitation shall be treated as made to the public by virtue of

sub-section (1) if the offer or invitation can properly be regarded, in all the circumstances-

Companies Ordinance, 1984

(a) as not being calculated to result, directly or indirectly, in the shares or

debentures becoming available for subscription or purchase by persons

other than those receiving the offer or invitation; or

(b) otherwise as being a domestic concern of the persons making and

receiving the offer or invitation.

(3) Without prejudice to the generality of sub-section (2), a provision in a

company's articles prohibiting invitations to the public to subscribe for shares or

debentures shall not be taken as prohibiting the making to members or debenture-holders

of an invitation which can properly be regarded in the manner set forth in that sub-section.

(4) The provisions of this Ordinance relating to private companies shall be

construed in accordance with the provisions contained in sub-sections (1) to (3).

66. Penalty for fraudulently inducing persons to invest money.- Any

person who, either by knowingly or recklessly making any statement, promise or forecast

which is false, deceptive or misleading, or by any dishonest concealment of material facts,

induces or attempts to induce another person to enter into, or to offer to enter into,--

(a) any agreement for, or with a view to, acquiring, disposing of, subscribing

for, or underwriting shares or debentures; or

(b) any agreement the purpose or pretended purpose of which is to secure a

profit to any of the parties from the yield of shares or debentures, or by

reference to fluctuations in the value of shares or debentures;

shall be punishable with imprisonment of either description for a term which may extend

to three years, or with fine which may extend to twenty thousand rupees, or with both.

ALLOTMENT

67. Application for, and allotment of, shares and debentures.- (1) No

application for allotment of shares in and debentures of a company in pursuance of a

prospectus shall be made for shares or debentures of less than such nominal amount as

the Commission may, form time to time, specify, either generally or in a particular case.

Companies Ordinance, 1984

(2) The Commission may specify the form of an application for subscription

to shares in or debentures of a company which may, among other matters, contain such

declarations or verifications as it may, in the public interest, deem necessary; and such

form then shall form part of the prospectus.

(3) All certificates, statements and declarations made by the applicant shall

be binding on him.

(4) An application for shares in or debentures of a company which is made in

pursuance of a prospectus shall be irrevocable.

(5) Whoever contravenes the provisions of sub-section (1) or sub-section (2),

or makes an incorrect statement, declaration or verification in the application for allotment

of shares, shall be liable to a fine which may extend to ten thousand rupees.

68. Restriction as to allotment.- (1) No allotment shall be made of any

share capital of a company offered to the public for subscription unless the amount stated

in the prospectus as the minimum amount which in the opinion of the directors must be

raised by the issue of share capital in order to provide for the matters specified in clause 5

of section 1 of Part I of the Second Schedule has been subscribed, and the full amount

thereof has been paid to and received in cash by the company.

(2) The amount referred to in sub-section (1) as the amount stated in the

prospectus shall be reckoned exclusively of any amount payable otherwise than in cash

and is in this Ordinance referred to as the minimum subscription.

(3) All moneys received from applicants for shares shall be deposited and

kept in a separate bank account in a schedule bank until returned in accordance with the

provisions of sub-section (5) or until the certificate to commence business is obtained

under section 146.

(4) The amount payable on application on each share shall be the full nominal

amount of the share.

(5) If the conditions aforesaid have not been complied with on the expiration

of forty days after the first issue of the prospectus, all money received from applicants for

share shall be forthwith repaid to them without surcharge, and, if any such money is not so

Companies Ordinance, 1984

repaid within fifty days after the issue of the prospectus, the directors of the company

shall be jointly and severally liable to repay that money with surcharge at the rate of one

and-a-half per cent for every month or part thereof from the expiration of the fiftieth day:

Provided that a director shall not be liable if he proves that the default in

repayment of the money was not due to any misconduct or negligence on his part.

(6) Any condition purporting to require or bind any applicant for shares to

waive compliance with any requirement of this section shall be void.

(7) This section, except sub-section (4) thereof, shall not apply to any

allotment of shares subsequent to the first allotment of shares offered to the public for

subscription.

(8) In the case of the first allotment of shares capital payable in cash of a

company which does not issue any invitation to the public to subscribe for its shares, no

allotment shall be made unless the minimum subscription, that is to say,--

(a) the amount, if any, fixed by the memorandum or articles and specified in

the statement in lieu of prospectus as the minimum subscription referred

to in sub-section (1) upon which the directors may proceed to allotment;

(b) if no amount is so fixed and specified, the whole amount of the share

capital other than that issued or agreed to be issued as paid up otherwise

than in cash;

has been subscribed and the full nominal amount of each share payable in cash has been

paid to and received by the company.

(9) Sub-section (8) shall not apply to a private company.

(10) In the event of any contravention of any provisions of this section, every

promoter, director or other person knowingly responsible for such contravention shall be

liable to a fine not exceeding ten thousand rupees and in the case of a continuing

contravention to a further fine not exceeding two hundred rupees for every day after the

first during which the contravention continues.

Companies Ordinance, 1984

(11) For the purpose of this section, the expression "promoter" has the same

meaning as in section 59.

69. Statement in lieu of prospectus.-- (1) A company having a share

capital, which does not issue a prospectus on or with reference to its formation, or which

has issued such a prospectus but has not proceeded to allot any of the shares offered to

the public for subscription, shall not allot any of its shares or debentures unless, at least

three days before the first allotment of either share or debenture, there has been delivered

to the registrar for registration a statement in lieu of prospectus signed by every person

who is named therein as a director or proposed director of the company or by his agent

authorised in writing, in the form and containing the particulars set out in section 1 of Part

II of the Second Schedule and, in the cases mentioned in section 2 of that Part, setting out

the reports specified therein, and the said section 1 and 2 shall have effect subject to the

provisions contained in section 3 of that Part.

(2) Every statement in lieu of prospectus delivered under sub-section (1),

where the person making any such report as aforesaid have made therein, or have without

giving the reason indicated therein, made any such adjustments as are mentioned in clause

5 of Part II of the Second Schedule, shall have endorsed thereon or attached thereto a

written statement signed by those persons, setting out the adjustments and giving the

reasons thereof.

(3) This section shall not apply to a private company.

(4) If a company acts in contravention of sub-section (1) or sub-section (2),

the company, and every officer of the company who willfully authorises or permits the

contravention, shall be liable to a fine not exceeding five thousand rupees and in the case

of a continuing contravention with a further fine not exceeding one hundred rupees for

every day after the first during which the contravention continues.

(5) Where a statement in lieu of prospectus delivered to the registrar under

sub-section (1) includes any untrue statement, any person who signed or authorised the

delivery of the statement in lieu of prospectus for registration shall be punishable with

imprisonment for a term which may extend to two years, or with fine which may extend

to ten thousand rupees, or with both, unless he proves either that the statement was

immaterial or that he had reasonable ground to believe, and did up to the time of delivery

for registration of the statement in lieu of prospectus believe, that the statement was true.

(6) For the purposes of this section,--

Companies Ordinance, 1984

(a) a statement included in a statement in lieu of prospectus shall be deemed

to be untrue if it is misleading in the form and context in which it is

included; and

(b) where the omission from a statement in lieu of prospectus of any matter

is calculated to mislead, the statement in lieu of prospectus shall be

deemed, in respect of such omission, to be a statement in lieu of

prospectus in which an untrue statement is included.

(7) For the purposes of sub-section (5) and clause (a) of sub-section (6), the

expression "included", when used with reference to a statement in lieu of prospectus,

means included in the statement in lieu of prospectus itself or contained in any report or

memorandum appearing on the face thereof, or by reference incorporated therein, or

issued therewith.

70. Effect of irregular allotment.- (1) An allotment made by a company to

an applicant in contravention of the provisions of section 68 or 69 shall be voidable at the

instance of the applicant within thirty days after the holding of the statutory meeting of the

company and not later, or in any case where the company is not required to hold a

statutory meeting or where the allotment is made after the holding of the statutory meeting

within thirty days after the date of the allotment, and not later, and shall be so voidable

notwithstanding that the company is in course of being wound up.

(2) If any officer of a company knowingly contravenes or permits or

authorises the contravention of any of the provisions of section 68 or 69 with respect to

allotment, he shall, without prejudice to any other liability, be liable to compensate the

company and the allottee respectively for any loss, damages or costs which the company

or the allottee may have sustained or incurred thereby:

Provided that proceedings to recover any such loss, damages or costs shall not be

commenced after the expiration of two years from the date of the allotment.

71. Repayment of money received for shares not allotted.-- (1) Where

a company issues any invitation to the public to subscribe for its shares or other securities,

the company shall take a decision within ten days of the closure of the subscription lists as

to what applications have been accepted or are successful and refund the money in the

case of the unaccepted or unsuccessful applications within ten days of the date of such

decision.

Companies Ordinance, 1984

(2) If the refund required by sub-section (1) is not made within the time

specified therein, the directors of the company shall be jointly and severally liable to repay

that money with surcharge at the rate of one and-a-half per cent. for every month or part

thereof from the expiration of the fifteenth day and, in addition, to a fine not exceeding

five thousand rupees and in the case of a continuing offence to a further fine not

exceeding one hundred rupees for every day after the said fifteenth day on which the

default continues:

Provided that a director shall not be liable if he proves that the default in the

repayment of money was not due to any misconduct or negligence on his part.

(3) Any condition purporting to require or bind any applicant for shares or

other securities to waive any requirement of this section shall be void.

72. Allotment of shares and debentures to be dealt in on stock

exchange.-- (1) Where a prospectus, whether issued generally or not, states that

application has been or will be made for permission for the shares or debentures offered

thereby to be dealt in on any stock exchange, any allotment made on an application in

pursuance of the prospectus shall, whenever made, be void if the permission has not been

applied for before the seventh day after the first issue of the prospectus or if the

permission has not been granted before the expiration of twenty-one days from the date

of the closing of the subscription lists or such longer period not exceeding forty-two days

as may, within the said twenty-one days, be notified to the applicant for permission by or

on behalf of the stock exchange.

(2) Where the permission has not been applied for as aforesaid, or has not

been granted as aforesaid the company shall forthwith repay without surcharge all money

received from applicants in pursuance of the prospectus, and, if any such money is not

repaid within eight days after the company becomes liable to repay it, the directors of the

company shall be jointly and severally liable to repay that money from the expiration of the

eight day together with surcharge at the rate of one and-a-half per cent. for every month

or part thereof from the expiration of the eighth day and in addition, to a fine not

exceeding five thousand rupees and in the case of a continuing offence to a further fine of

one hundred rupees for every day after the said eight day on which the default continues:

Provided that a director shall not be liable if he proves that the default in the

repayment of the money was not due to any misconduct or negligence on his part.

(3) All moneys received as aforesaid shall be deposited and kept in a

separate bank account in a scheduled bank so long as the company may become liable to

Companies Ordinance, 1984

repay it under sub-section (2); and, if default is made in complying with this sub-section,

the company and every officer of the company who knowingly and willfully authorises or

permits the default shall be liable to a fine not exceeding five thousand rupees.

(4) Any condition purporting to require or bind any applicant for shares or

debentures to waive compliance with any requirement of this section shall be void.

(5) For the purposes of this section, permission shall not be deemed to be

refused if it is intimated that the application for it, though not at present granted, will be

given further consideration.

(6) This section shall have effect--

(a) in relation to any shares or debentures agreed to be taken by a person

underwriting an offer thereof by a prospectus as if he had applied

therefor in pursuance of the prospectus; and

(b) in relation to a prospectus offering shares for sale with the following

modifications, that is to say,--

(i) reference to sale shall be substituted for reference to allotment;

(ii) the person by whom the offer is made and not the company, shall be

liable under sub-section (2) to repay the money received from applicant,

and reference to the company's liability under that sub-section shall be

construed accordingly; and

(iii) for the reference in sub-section (3) to the company and every officer of

the company there shall be substituted a reference to any person by or

through whom the offer is made and who knowingly and willfully

authorises or permits the default.

73. Return as to allotments.-- (1) Whenever a company having a share

capital makes any allotment of its shares, the company shall, within thirty days thereafter,-

Companies Ordinance, 1984

(a) file with the registrar a return of the allotment, stating the number and

nominal amount of the shares comprised in the allotment 1[and such

particulars as may be prescribed] of each allottee, and the amount paid on

each share; and

(b) in the case of shares allotted as paid up otherwise than in cash, produce

for the inspection and examination of the registrar a contract in writing

constituting the title of the allottee to the allotment together with any

contract of sale, or for services or other consideration in respect of which

that allotment was made, such contracts being duly stamped, and file with

the registrar copies verified in the prescribed manner of all such contracts

and a return stating the number and nominal amount of shares so allotted,

the amount to be treated as paid-up, and the consideration for which they

have been allotted; and

(i) in the case of bonus shares, a return stating the number and

nominal amount of such shares comprised in the allotment and

2[such particulars which may be prescribed] of each allottee

together with a copy of the resolution authorising the issue of

such shares;

(ii) in the case of issue of shares at a discount, a copy of the

resolution passed by the company authorising such issue together

with a copy of the order of the Commission sanctioning the issue,

and where the maximum rate of discount exceeds ten per cent, a

copy of the order of the Commission permitting the issue at the

higher percentage.

Explanation:-- Shares shall not be deemed to have been paid for in cash except

to the extent that the company shall actually have received cash therefor at the time of, or

subsequent to, the agreement to issue the shares, and where shares are issued to a person

who has sold or agreed to sell property or rendered or agreed to render services to the

company, or to persons nominated by him, the amount of any payment made for the

property or services shall be deducted from the amount of any cash payment made for the

shares and only the balance, if any, shall be treated as having been paid in cash for such

shares, notwithstanding any bill of exchange or cheques or other securities for money.

1 Substituted " the name, father's name or in the case of a married woman, her husband's or deceased husband's

name, address and occupation" by Companies (Amendment) Ordinance, 2002.

2 Substituted " the name, father's name and in the case of a married woman, her husband's or deceased husband’s

name, address and occupation" by Companies (Amendment) Ordinance, 2002.

Companies Ordinance, 1984

(2) Where such a contract as is mentioned in clause (b) of sub-section (1) is

not reduced to writing, the company shall, within thirty days after the allotment, file with

the registrar the prescribed particula rs of the contract stamped with the same stamp duly

as would have been payable if the contract had been reduced to writing, and these

particulars shall be deemed to be an instrument within the meaning of the Stamp Act,

1899 (II of 1899), and the registrar may, as a condition of filing the particulars, require that

the duty payable thereon be adjudicated under section 31 of that Act.

(3) If the registrar is satisfied that in the circumstances of any particular case

the period of thirty days specified in sub-sections (1) and (2) for compliance with the

requirements of this section is inadequate, he may extend that period as he thinks fit, and,

if he does so, the provisions of sub-sections (1) and (2) shall have effect in that particular

case as if for the said period of thirty days the extended period allowed by the registrar

were substituted.

(4) If default is made in complying with any requirement of this section, the

company and every officer of the company who is knowingly a party to the default shall

be liable to a fine not exceeding five hundred rupees for every day during which the

default continues.

(5) This section shall apply mutatis mutandis to shares which are allotted or

issued or deemed to have been issued to a scheduled bank or a financial institution in

pursuance of any obligation of a company to issue shares to such scheduled Bank or

financial institution:

Provided that where default is made by a company in filing a return of allotment

in respect of the shares referred to in this sub-section, the scheduled bank or the financial

institution to whom shares have been allotted or issued or deemed to have been issued

may file a return of allotment in respect of such shares with the registrar together with

such documents as may be specified by the Commission in this behalf, and such return of

allotment shall be deemed to have been filed by the company itself and the scheduled

bank the financial institution shall be entitled to recover from the company the amount of

any fee properly paid by it to the registrar in respect of the return.

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PART V - PROSPECTUS, ALLOTMENT, ISSUE AND TRANSFER OF SHARES AND DEBENTURES, DEPOSITS, ETC. PROSPECTUS

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