Notice offering new shares: SECP specifies circular to be sent to members by directors

The Securities and Exchange Commission of Pakistan (SECP) has issued a new circular for directors of companies, pertaining to affairs of the company to be sent to members under sub-section (3) of section 86 of the Companies Ordinance, 1984. The SECP has superseded SRO. 192(l)/86 dated February 8, 1986 through an SRO.223(1)/2015 issued here Thursday.
The SECP has specified the circular be sent to members along with the notice offering new shares.
The section 86 (Further issue of capital) of the Companies Ordinance, 1984 said that where the directors decide to increase the capital of the company by the issue of further shares, such shares shall be offered to the members in proportion to the existing shares held by each member, irrespective of class, and such offer shall be made by notice specifying the number of shares to which the member is entitled and time limit, within which the offer, if not accepted, will be deemed to be declined:
The offer of new shares shall be accompanied by a circular duly signed by the directors or an officer of the company authorised by them in this behalf on the form prescribed by the Commission containing material information about the affairs of the company, latest statement of the accounts and setting forth the necessity for issue of further capital, it added.
In exercise of the powers conferred by Sub-Section (3) of Section 86 of the Companies Ordinance, 1984 (XLVII of 1984), and in supersession of the notification no. SRO. 192(l)/86 dated February 8, 1986, the Securities and Exchange Commission of Pakistan has prescribed the following circular for the purpose of the said sub-section.
Circular to be sent to members along with the notice offering new shares
Part I Issuer:
a). Company profile and history: Name of Company; Incorporation date; Date of commencement of business; Status (public or private, if listed name of stock exchange where listed) and Registration No.
b). Profile of management & sponsors: Brief description of profile of directors and No of directorship held.
c). Address of the its issuer: Registered office and website address.
d). Name of the auditor: Existing capital indicating classes of shares, if any.
Authorised Capital (Amount, number of shares and price per share) and paid-up capital (Amount, number of shares and price per share).
f). Particulars regarding holding company, if any.
g). Particulars regarding subsidiary company, if any.
(h) Financial Highlights of the Company for preceding three year including following: Sales; Gross profit; Profit before interest, tax, Depreciation and amortisation; Profit after tax; Accumulated profit/loss; Total assets; Total Liabilities; Net equity; Earnings net share; dividend; Bonus and Right.
As per requirements of section 86 (3) of the Ordinance, the issuer is required to send the latest audited financial statements along with the offer of the proposed right issue.
i). Financial Highlights of consolidated financial statements same as h) above, if any.
j). Major related party transactions.
k). Details of issue of capital in previous five years, year wise detail of issue of capital and detail of fund utilisation.
Part-II Issue Details.
a). Description of issue, amount of the proposed issue and divided into shares.
b). Par value.
c). Basis of determination of price of right issue
d). Proportion of new issue to existing shares with any condition applicable thereto.
e). Date of meeting of board of directors (BOD) announcing right issue.
f). Names of directors attending the BOD meeting.
g). Primary purpose of issue (description & amount).
Details of the main projects/objects for which funds are raised through present right issue.
Detail of each project; total funds required for the each project; Percentage finance through right issue; Percentage finance from other sources and time of completion of each project.
Expected benefits to accrue from proposed right issue including financial projection for five year (description, & amount).
h). Has the market price remained below par during preceding six months.
i). Financial effects arising from right issue.
Changes in share capital; not asset per share before and after right issue and Gearing ratio before and after right issue.
j). Total expenses to the issue.
Bankers Commission; underwriters commission and others.
Part III - risk and risk mitigating factors.
a). Description of major risks and company's efforts to mitigate them.
Risks relating to the project for which right issue is announced; risks relating to subscription/under-subscription of right issue; material contingencies; material commitments; description of major court cases and any adverse issue reported by the auditor in their audit reports in previous five years.
b). Names of underwriters, (if required).
Part IV Eligibility criteria & associated matters.
a). Eligible shareholders/investor.
b). Bankers to be issue.
c). Date by which offer to be accepted.
d). Mode of acceptance, bank account number, date by which amount to be credited in bank account to constitute valid acceptance.
e). Any other material information having a bearing on the issue.
Part V any other material information:
Any information which has direct or indirect bearing on the investment decision.
Part VI Annexures.
a). Extract of resolution passing the right issue.
b). Certificate of chief executive and CEO that the circular constitutes full and true disclosure of all material facts relating to the right issue and that the company will provide copies of financial statements on demand.