Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • Companies listing simplified to promote capital formation: SECP

    Companies listing simplified to promote capital formation: SECP

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has said amendments have been made to regulations related to Initial Public Offering (IPO) to make listing simplified for promoting capital formation through securities market.

    In a statement on Friday, the SECP said that it revamped initial public offering (IPO) regime to make the IPO process simple, cost effective and more efficient.

    The amendments in IPO Regulations 2017, have been made after thorough consultation with market participants with an objective to promote capital formation by facilitating issuers and safeguarding the interest of general public by enhancing disclosures.

    In the new set of regulations, the objective eligibility criteria for listing of companies have been simplified to promote capital formation through securities market.

    Moreover, the issuers that have a track-record of less than three years and were not making profit from last two years are allowed to raise capital from securities market.

    However, such Issuers are required to submit a business plan and provide enhanced risk disclosures in the offering document for prospective investors.

    Further, with perspective of providing ease and reducing cost of IPOs, the requirement of submitting audited accounts has been reduced from 5 to 2 years.

    In addition, the time frame relating to submission of progress report by the Issuer has been increased from quarterly to half yearly basis.

    To safeguard the interest of the general public, certain parameters for green field projects (GFPs) have been introduced.

    The said parameters include: (i) At least 51% equity contribution by the sponsors; (ii) successful business track record of the sponsors; (iii) experience and skills of the management to run GFP; (iv) mandatory financial close; (v)risk-based disclosure in the offering document etc.

    Further, an exit offer mechanism has been introduced to protect the investors in case of change in the principal purpose of the issue.

    In order to encourage foreign investment in the country, the Book Runner has been allowed to waive the margin requirement of the institutional investors including foreign investors.

    Moreover, related parties have been allowed to perform different roles in the same IPO Transaction. The new IPO regime is a shift towards disclosure-based regime.

    Disclosures pertaining to principal purpose of the issue, risk factors, share capital, financial information, management of the issuer, legal proceedings and overdue loans are made part of the prospectus.

    A new section titled summary of the Prospectus has been introduced to help investors better understand the offering document.

    Moreover, to facilitate small enterprises, startups and Greenfield companies that aspire to raise funds through capital markets, the SECP has already introduced an alternate board namely Growth Enterprise Market (GEM) at PSX.

    The GEM is in addition to PSX’s main board for listing and trading of equity securities.

  • Banks sign pact for setting up restructure company

    Banks sign pact for setting up restructure company

    KARACHI: About 10 banks have signed an agreement on Friday to establish Pakistan Corporate Restructuring Company Limited (PCRCL).

    The Presidents and representatives of Habib Bank, National Bank of Pakistan, United Bank, MCB Bank, Allied Bank, Meezan Bank, Bank Al-falah, Bank Al-Habib, Habib Metropolitan Bank and Faysal Bank signed today the shareholders’ agreement for the establishment of Pakistan Corporate Restructuring Company Limited (PCRCL) at State Bank of Pakistan (SBP), Karachi in the presence of Governor, SBP.

    Under the provisions of Corporate Restructuring Companies Act 2016 and with an initial Paid-up Capital of Rs500 million, the above banks have decided to establish the Corporate Restructuring Company (CRC), which is first such type of company in Pakistan.

    The objectives of the CRC are aligned with the initiatives of the Government of Pakistan to revive the sick industrial units.

    It would be pertinent to mention here that the CRCs, under CRC Act 2016, are empowered to acquire, restructure and resolve the Non-Performing Assets (NPAs) of financial institutions and thereby reorganize and revive the commercially or financially distressed companies.

    The CRCs are specialized institutions with skillset in NPL resolution and corporate restructuring.

    These companies through aggregation of NPLs, will be well positioned to negotiate with the sick units and finalize the restructuring of loans vis-à-vis multiple lenders negotiating simultaneously with the borrower.

    It is expected that CRCs will evolve as vibrant economic agent, contributing towards the revival of sick industrial units and generating employment opportunities.

    Total Non-Performing Loans of the banking industry stand at Rs758 billion as of September 30, 2019. Total NPL amount includes the loans against such sick industrial units, which can be revived and rehabilitated, provided the NPLs are restructured promptly and the sponsors of the sick units also inject the fresh equity to demonstrate their willingness and commitment in the rehabilitation of sick units.

    The Securities and Exchange Commission of Pakistan (SECP) has granted the license to PCRCL on December 31, 2019. State Bank of Pakistan appreciates the initiative of above banks and the supportive role of the SECP in incorporation and licensing of PCRCL.

    SBP is also engaged with the Federal Government to introduce amendments in the relevant laws and to strengthen the Banking Courts in order to take forward Government’s agenda of institutional reforms.

  • Stock market crosses 43,000-level after 17 months on buying activities

    Stock market crosses 43,000-level after 17 months on buying activities

    KARACHI: The stock market crossed 43,000 level after 17 months on Friday following across the board buying activities.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 43,207 points as against 42,523 points showing an increase of 684 points.

    Analysts at Arif Habib Limited said that the market continued the upward momentum and crossed 43,000 level after 17 months.

    Buying activity was observed almost across the board, however, blue chip stocks that were recently ascending and kept the market elevated took a breather.

    LUCK, POL, DAWH and PSO remained on the negative side. Banking sector led the volumes table with 90.1 million shares, followed by Technology (49.4 million) and Cement (28.4 million). Among scrips, BOP topped the charts with 53.1 million shares followed by KEL (33.4 million) and UNITY (24.3 million).

    Sectors contributing to the performance include Banks (+196 points), E&P (+195 points), Power (+87 points), Fertilizer (+63 points) and Textile (-30 points).

    Volumes increased from 362.5 million shares to 400.1 million shares (+10 percent DoD). Average traded value also increased by 12 percent to reach US$ 100.0 million as against US$ 88.9 million.

    Stocks that contributed significantly to the volumes include BOP, KEL, UNITY, WTL and STPL, which formed 36 percent of total volumes.

    Stocks that contributed positively include PPL (+105 points), HUBC (+98 points), OGDC (+81 points), ENGRO (+40 points) and MCB (+32 points). Stocks that contributed negatively include LUCK (-14 points), PSO (-10 points), DAWH (-9 points), KEL (-7 points), and KAPCO (-4 points).

  • No advance tax on domestic electricity consumers on billed amount below Rs75,000

    No advance tax on domestic electricity consumers on billed amount below Rs75,000

    KARACHI: The domestic consumers of electricity whose monthly billed amount is below Rs75,000 are not liable to pay advance income tax.

    According to Section 235A of Income Tax Ordinance, 2001, the domestic electricity consumers are subject to payment of advance income tax, officials of Federal Board of Revenue (FBR) said.

    As per tax rate, a domestic consumer is liable to pay 7.5 percent advance income tax in case of above monthly bill is Rs75,000 or above.

    However, there is zero percent advance income tax in case the monthly billed amount is below Rs75,000.

    Section 235A. Domestic electricity consumption.-

    (1) There shall be collected advance tax at the rates specified in Division XIX of Part IV of the First Schedule on the amount of electricity bill of a domestic consumer.

    Explanation.— For removal of doubt, it is clarified that for the purposes of this section, electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.

    (2) The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged.

    (3) Tax collected under this section shall be adjustable against tax liability.

  • Rupee gains six paisas on improved economic indicators

    Rupee gains six paisas on improved economic indicators

    KARACHI: The Pak Rupee made gain six paisas against dollar on Friday owing to improved economic indicators.

    The rupee ended Rs154.83 to the dollar from previous day’s closing of Rs154.89 in interbank foreign exchange.

    Currency dealers said that inflows of export and remittances helped the rupee to make gain.

    They said that improved economic indicators and declining import bill also helped the rupee to make gain.

    The foreign currency market was initiated at Rs14.85 and Rs154.90. The market recorded day high of Rs154.87 and low of Rs154.82 and closed at Rs154.83.

    The exchange rate in open market witnessed gain in rupee value. The buying and selling of dollar was recorded at Rs155.00/Rs155.40 from previous day’s closing of Rs155.30/Rs155.70 in cash ready market.

  • Exchange rate determines by market forces: SBP

    Exchange rate determines by market forces: SBP

    KARACHI: State Bank of Pakistan (SBP) on Friday said that exchange rate has been determined by market forces on the basis of demand and supply.

    In a tweet message the central bank said that exchange rate is determined by market forces of demand and supply and is a reflection of existing BOP position. Forward exchange rates are determined by the existing spot rates and #Interest rate differentials of the relevant period i.e. time value of money.

    “Forward exchange rates (ER) are not a forecast of future exchange rates.”

    IMF Report on Pakistan includes ER assumptions which are not predictions. Under the IMF-supported program there is no agreed target level for exchange rate. The exchange rate is market determined, the SBP said.

    The IMF had earlier tweeted about the inclusion of exchange rate assumption in its published Staff Report on #Pakistan.

  • FBR extends date for filing sales tax, federal excise return

    FBR extends date for filing sales tax, federal excise return

    The Federal Board of Revenue (FBR) announced on Friday an extension for filing sales tax and federal excise returns for November 2019. Taxpayers now have until January 13, 2020, to submit their returns.

    (more…)
  • Bank deposits increase to record high of Rs14.63 trillion

    Bank deposits increase to record high of Rs14.63 trillion

    KARACHI: The deposits of banking system have increased to all time high of Rs14.63 trillion by December 2019, according to data released by State Bank of Pakistan (SBP).

    The deposits have increased by 9.58 percent to Rs14.63 trillion by December 2019 as compared with Rs13.35 trillion in the same month of the last year.

    Analysts at Topline Securities on Friday said that the deposit growth came in better than last year’s growth of 8 percent, however remained lower than the 5-year average growth of 12 percent.

    Banks’ focus for deposit mobilization remained more towards investments compared to advances during the year given the high yields on government papers. As a result, investments grew by 16 percent to Rs8.8 trillion in 2019, with IDR increasing to 60 percent in 2019 from 57 percent in 2018.

    On the other hand, advances grew by just 3 percent in 2019 hindered by high interest rates and slowdown in overall economic activity. Over the past 3-years, advances have grown at an average of 19 percent.

    Interestingly to note, advances growth remained more subdued in 9M2019 with growth of just 1 percent YTD, however somewhat picked up in the last quarter to close at Rs8.80 trillion, they said.

    As a result, ADR dropped to 56 percent in 2019 from 59 percent in 2018.

    Sector-wise, Textiles (12.5 percent), Energy (17 percent), Individuals (8.8 percent) and Agribusiness (8.1 percent) accounted for 46 percent of total advances.

    As per the available 9M2019 numbers, advances to textile sector declined the most by 6.5 percent (Rs75 billion), while advances to the energy, individuals and agribusiness sectors increased by Rs34 billion, Rs19 billion and Rs4 billion, respectively.

    The Currency in Circulation (CIC) in 2019 registered an increase of 19 percent to Rs5.39 trillion. Additionally, CIC as a percentage of M2 clocked in at 29 percent above the historic 5-year average of 27 percent.

    Going forward, we see deposit growth in the range of 10-12 percent and advances growth of 11-13 percent in 2020 at the behest of economic recovery and an expected decline in interest rates.

    We are presently Market-Weight on the banking sector with Meezan Bank (MEBL) our top pick. We also like Habib Bank (HBL) and Bank Al Falah (BAFL).

  • FBR may fix Rs20,000 per year as income tax for shopkeepers

    FBR may fix Rs20,000 per year as income tax for shopkeepers

    ISLAMABAD: Federal Board of Revenue (FBR) likely to fix an amount of Rs20,000 per year as income tax for shopkeepers operating business in a covered area up to 150 square feet.

    This fixed rate shall be for shopkeepers not in categorized areas.

    Sources in FBR said that the fixed tax rates likely to be for area up t 150 square feet and for area above 150 square feet and less than 300 square feet. The rate of tax will be different for category A shopkeepers and other than this category shopkeepers.

    A person having shop with area of up to 150 square feet in category A area than the tax rate shall be Rs35,000.

    A person having shop with covered area above 150 square feet and not exceeding 300 square feet and located in other than category A the fixed tax likely be Rs25,000.

    Meanwhile, a person having shop with covered area above 150 square feet and not exceeding 300 square feet and located in a category area A the fixed tax shall be Rs40,000 per year.

    The sources said that there shall be an option to small shopkeepers to pay two percent as income tax of the turnover.

    The sources said that the FBR has finalized income tax return form tax year 2019 for small shopkeepers. This form shall be simple and one-page as committed by the FBR.

    Following is the draft income tax return form for retailers. The draft from has not been issued officially. The sources said that there may be changes in the final format to be issued by the FBR.

  • FBR to update major initiatives under agreement with traders associations

    FBR to update major initiatives under agreement with traders associations

    ISLAMABAD: Federal Board of Revenue (FBR) to update major initiatives regarding small shopkeepers and traders on January 22, 2020.

    A meeting of traders associations with FBR officials was held on Thursday at FBR House, Islamabad. Both the sides agreed on completing formation market committees within next two days.

    It is also decided to hold a joint meeting on January 22, 2020 in which the FBR will announce major initiatives taken as per agreement signed on October 30, 2019.

    Following is the 11-point agreement between the tax authorities and traders associations signed on October 30, 2019:

    01. The tax rate shall be lowered to 0.5 percent from 1.5 percent for traders having turnover up to Rs100 million.

    02. No liability on a trader having up to Rs100 million to collect / deposit withholding tax on transactions.

    03. Threshold of annual electricity bill of Rs600,000 for mandatory sales tax registration has been increased to Rs1.2 million.

    04. Turnover tax for sectors having lower returns will be revisted with consultation with traders associations.

    05. Tax issues of jewelers will be resolved in consultation with jewelers associations.

    06. The renewal license fees on middlemen will be revisited.

    07. To resolve traders taxation issues a desk at FBR headquarters will be set up with immediate effect. A BS-20/21 officer will be designated to resolve the traders’ problems.

    08. For new registration of traders a simple income tax return form in Urdu Language will be introduced. Trade associations will cooperation in FBR’s registration drive.

    09. Which trader will be exempted from registration having 1000 square feet shop will be decided by traders committees.

    10. The registration of those retailers engaged in wholesale business will be decided in consultation with traders community.

    11. The FBR will take no action on sales transactions without CNIC information till January 31, 2020.