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.

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 I and 2 shall have effect subject to the provisions contained in section 3 of that Part.

(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 is proposed 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 Authority 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 subsection (I) 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 continuing 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 affect him with notice of any contract, document or matter not specifically referred to in the prospectus shall be void.

(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 requirements of this section:

Provided that this subsection 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 subsection (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 any 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
(c) that non-compliance or contravention was in respect of matters which, in the opinion of the registrar or officer dealing with the case, were immaterial or was otherwise such as ought, in the opinion of the 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--
(a) to the issue to 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 debentures 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 include 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 party to the issue thereof, shall be punishable with fine not exceeding five thousand rupees.

(2) In sections 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 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 Authority to its issue, circulation or publication has been obtained within the period of sixty days preceding date of its issue.

(2) The Authority 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 there-in, any such adjustments as are mentioned in clause 36 of Part I of that Schedule, a written statement signed 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
(c) where application has been made, or is proposed to be made, to a stock 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 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 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 comp-lying with all the requirements of this section has been delivered to the registrar.

58. Terms of contact 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 misstatements 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 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;
(c) every person who is a promoter of the company; and
(d) every person who has given consent to the issue of the prospectus under section 55 or subsection (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 sub section as a person who has authorised issue of 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 subsection (1), if he proves--
(a) that, having consented to become a director of 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;
(c) that, after the issue of the prospectus and before allotment thereunder, he, on becoming aware of any untrue statement therein, withdrew his consent to the prospectus and gave reasonable public notice of the withdrawal and of reason therefor; or--
(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 allotment of the shares or debentures, as case may be, believe, that statement was true;
(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, 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 person had given the consent required by section 55 to the issue of 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 regards 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 subsection shall not apply in the case of a person 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.

(3) A person who, apart from this subsection would, under subsection (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--
(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
(c) that he was competent to make the statement and that he had reasonable ground to believe, and did up to the time of 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 comp-any, 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 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 clause (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 subsection to have authorized 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 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 misstatement 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 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 subsection (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 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 a prospectus, shall apply with the modifications, specified in sub sections (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 debentures, were subscribers for those shares or debentures, but without prejudice to the liability, if any, of the persons by whom the offer is made in respect of misstatement contained in 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, shams 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 date when offer was made; the whole of consideration to be received by the company in respect of the shares or debentures had not been received by it; or
(c) that an offer of shares or debentures or of any of them for sale to the 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 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 57 shall have effect as if per-sons making 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 (I) is signed on behalf of the company or firm by two directors of the company or by not less than one-half of the partners in firm, as 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 public any share or debenture of the company held by him except with approval of the Authority.

(2) Any document by which an offer for sale to the public is made by any such person as is referred to in subsection (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 subsections (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 misstatements 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 subsection (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 firm, as the case may be, and any such director or partner may sign by his agent authorised in writing.

(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.

62A. Issue of securities outside Pakistan.-- No company shall, except with the prior approval of the Authority, issue any security outside Pakistan.";

63. Interpretation of provisions relating to prospectus.-- (1) For the purposes of foregoing provisions relating to a prospectus,--
(a) a statement included in a prospectus shall be deemed to be, nature, if 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 nature statement is included.

(2) For the purposes of sections 59 and 60 and clause (a) of subsection (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 (I) of section I 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 company or clients of the person issuing the prospect-us.

(2) No offer or invitation shall be treated as made to the public by virtue of subsection (I) if the offer or invitation can properly be regarded, in all the circumstances
(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 person making and receiving the offer or invitation.

(3) Without prejudice to the generality of subsection (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 subsection.

(4) The provisions of this Ordinance relating to private companies shall be construed in accordance with the provisions contained in subsections (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 fore-cast 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 fluctuation 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.

67. Application for and the 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 Authority may from time to time, specify, either generally or in a particular case.

(2) The Authority may specify the from 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 subsection (1) or subsection (2), or makes 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 subsection (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 subscript-ion.

(3) All money received for applicants for shares shall be deposited and kept in a separate bank account in a scheduled bank until returned in accordance with the provision 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 applicant for shares shall be forthwith repaid to them without surcharge and, if any such money is not so 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 share 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; or
(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) Subsection (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 free 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.

(11) For the purpose of this section the expression "promoter" has the same meaning as in section 59.

69. Statement in lieu 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 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 I of Part 11 of the Second Schedule and, in the cases mentioned in section 2 of that Part, setting out the reports specified therein, and the said sections 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 subsection (1), where the persons making any such report. as aforesaid have made therein, or have without giving the reasons indicated therein, made any such adjustments as are mentioned in clause (5) of Part 11 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 subsection (I) or subsection (2), the company, and every officer of the company who wilfully 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 subsection (I) included 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, unit he proves either that the statement was immaterial or that he had reasonable ground to believe and did up to the time of the delivery for registration of the statement in lieu of prospectus believe, that the statement was trust.

(6) For the purposes of this section,--
(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 subsection (5) and clause (a) of subsection (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.

(2) If the retired required by subsection (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 making the refund 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 eight day and, in addition to a fine not exceeding five thousand rupees and in the case of a continuing offence to 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 repay it under subsection (2); and, if default is made in complying with this subsection, the company and every officer of the company who knowingly and wilfully authorised 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 subsection (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 subsection (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 wilfully 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,
(a) file with the registrar a return of the allotment, stating the number and nominal amount of shares comprised in the allotment, ["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 inspection and examination of the registrar a contract in writing constituting the title of the allottee to 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
(c) file with the registrar,-
(i) in the case of bonus shares, a return stating the number and nominal amount of such shares comprised in the allotment and ["such particulars as 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 resolution passed by the company authorising such issue together with a copy of the order of the Authority sanctioning the issue, and where the maximum rate of discount exceeds ten per cent, a copy of the order of the Authority 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 agreements 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 service to the company, or to persons nominated by him, the amount of any payment made to 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.

(2) Where such a contract as is mentioned in clause (h) of subsection (I)is not reduced to writing, the company shall, within thirty days after the allotment. file with the registrar the prescribed particulars of the contract stamped with the same stamp duty 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 he 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 subsections (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 (I) 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 subsection, 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 Authority, 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.

76. Transfer of shares and debentures.-- (1) An application for registration of the transfer of shares and debentures in a company may be made either by the transferor or the transferee, and subject to the provisions of this section, the company shall 'enter in its register of members the name of the transferee in the same manner and subject to the same conditions as if the application was made by the transferee:

Provided that the company shall not register a transfer of shares or debentures unless proper instrument of transfer duly stamped and executed by he transferor and the transferee has been delivered to the company alongwith the scrip.

(2) Where a transfer deed is lost, destroyed or mutilated before its lodgement, the company may on an application made by the transferee and bearing the stamp required by an instrument of transfer, register the transfer of shares or debentures if the transferee proves to the instrument of the directors of the company that the transfer deed duly executed has been lost, destroyed or mutilated:

Provided that before registering the transfer of shares or debentures the company may demand such indemnity as it may think fit.

(3) All references to the shares or debentures in this section, shall in case of a company not having share capital, be deemed to be references to interest of the members in the company.

(4) Every company shall maintain at its registered office a register of transfers of shares and debentures made from time to time and such register shall be open to inspection by members and supply of copy thereof in the manner stated in section 150.

(5) Nothing in subsection (1) shall prevent a Company from registering as shareholder or debenture-holder a person to whom the right to any share or debenture of the company has been transmitted by operation of law.

(6) In the case of a public company, a financial institution duly approved by the Authority may be appointed as the transfer agent on behalf of the company.

(7) If a company makes default in complying with any of the provisions of subsections (1) to (4), it shall be liable to a fine not exceeding five thousand rupees and every officer of the company who is knowingly or wilfully a party to such default shall be liable to a like penalty.

77. Directors not to refuse transfer of shares.-- The directors of a company shall not refuse to transfer any fully paid shares or debentures unless the transfer deed is, for any reason, defective or invalid:
Provided that the company shall within thirty days or , where the transfer is a central depository , within five days from the date on which the instrument of transfer was lodged with it notify the defect or invalidity to the transferee who shall, after the removal of such defect or invalidity, be entitled to relodge the transfer deed with the company:

Provided further that the provisions of this section shall, in relation to a private company, be subject to such limitations and restrictions as may have been imposed by the articles of such company.

78. Notice of refusal to transfer.-- (1) If a company refuses to register a transfer of any shares or debentures, the company shall, within thirty days after the dale on which the instrument of transfer was lodged with the comp-any send to the transferee notice of refusal indicating reasons for such refusal.

(2) If default is made in complying with section 77 or this section, the company and every officer of the company who is a party to the default shall be liable to a fine not exceeding [twenty] thousand rupees and to a further fine not exceeding [one thousand] rupees for every day after the first during which the default continues.

"78A. Appeal against refusal for registration of transfer .- (1) The transferor or transferee, or the person who gave intimation of the transmission by operation of law, as the case may be, may appeal to the Commission against any refusal of the company to register the transfer or transmission, or against any failure on its part, within the period referred to in sub-section (1) of section 78 either to register the transfer or transmission or to send notice of its refusal to register the same.

(2) An appeal to the Commission under sub-section (1) may be preferred –
(a) in case the appeal is against the refusal to register a transfer or transmission, within two months of the receipt by him of the notice of refusal; and
(b) in case the appeal is against the failure referred to in sub-section (1) within two months from the expiry of the period referred to in subsection (1) of section 78.

(3) The Commission shall, after causing reasonable notice to be given to the company and also to, the transferor and the transferee or, as the case may require, to the person giving intimation of the transmission by operation of law and the previous owner, if any, and giving them a reasonable opportunity to make their representation, may, by an order in writing, direct either that the transfer or transmission shall be registered by the company or that it need not be registered by it and in the former case, the company shall give effect to the decision within fifteen days of the receipt of the order.

(4) Before making an order under sub-section (3) on an appeal against any refusal of the company to register any transfer or transmission the Commission may require the company to disclose to it the reasons for such refusal.

(5) The Commission may, in its aforesaid order, give such incidental and consequential directions as to the payment of costs or otherwise as it deems fit.

(6) If default is made in giving effect to the order of the Commission within the period specified in sub-section (3), every director and officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day after the first during which the default continues."

79. Transfer to successor-in-interest.-- The transfer of shares or debentures from a deceased member or holder to his lawful nominee successor-in-interest shall be made on application by such nominee successor duly supported by a document evidencing nomination or lawful award of the relevant properly to such nominee or successor and thereupon the nominee or successor shall be entered as a member:

Provided that the company may, on furnishing of a suitable indemnity by such nominee or successor, proceed to transfer the security in his name had enter him in the register of members.

80. Transfer to nominee of a deceased member.-- (1) Notwithstanding anything contained in any other law for the time being in force or in any disposition by a member of a company of his interest represented by the shares held by him as a member of the company, a person may on acquiring interest in a company as member represented by shares, at any time after acquisition of such interest deposit with the company a nomination conferring on one or more persons the right to acquire the interest in the shares therein specified in the event of his death:

Provided that, where a member nominates more than one person, he shall specify in the nomination the extent of right conferred upon each of the nominees, so however that the number of shares therein specified are possible of ascertainment in whole numbers.

(2) Where any nomination, duly made and deposited with the company as aforesaid, purports to confer upon any person the right to receive the whole or any divisible part of the interest therein mentioned, the said person shall, on the death of the member, become entitled, to the exclusion of all other persons, to become the holder of the shares or the part thereof, as the case may be, and on receipt of proof of the death of the member alongwith the relative scrips, the transmission of the said shares shall be registered in favour of the nominee to the extent of his interests unless--
(a) such nomination is at any time varied by another nomination made and deposited before the death of the member in like manner or expressly cancelled by notice in writing to the company; or
(b) such nomination at any time becomes invalid by reason of the happening of some contingency specified therein:
and if the said person predeceases the member, the nomination shall, so far is it relates to the right conferred upon the said person, become void and of no effect:

Provided that where provision has been duly made in the nomination conferring upon some other person such right in the stead of the person deceased, such right shall, upon the decease as aforesaid of the said person, pass to such other person.

(3) The person to be nominated as aforesaid shall not be a person other than the following relatives of the member, namely, a spouse, father, mother, brother, sister and son or daughter, including a step or adopted child.

(4) The nomination as aforesaid shall in no way prejudice the right of the member making the nomination to transfer, dispose of or otherwise deal in the shares owned by him during his lifetime and shall have effect in respect of the shares owned by the said member on the day of his death.

81. Transfer by nominee or legal representative.-- A transfer of the shares or debentures or other interest of a deceased member of a company made by his nominee or legal representative shall, although the nominee or legal representative is not himself a member, be valid as if he had been a member at the time of execution of the instrument of transfer.

86. Further issue of capital.-- (1) 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 limiting a time within which the offer, if not accepted, will be deemed to be declined; Provided that the Federal Government may, on an application made by any public company on the basis of a special resolution passed by it, allow such company to raise its further capital without issue of right shares.

(2) The offer of new shares shall be strictly in proportion to the number of existing shares held:
Provided that fractional shares shall not be offered and all fractions less than a share shall be consolidated and disposed of by the company and the proceeds from such disposition shall be paid to such of the entitled shareholders as may have accepted such offer.

Provided further that a public company may reserve a certain percentage of further issue of its employees under "Employees Stock Option Scheme" to be approved by the Commission in accordance with the rules made under this Ordinance.

(3) 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 in form prescribed by the Authority containing material information about the affairs of the company, latest statement of the accounts and setting forth the necessity for issue of further capital.

(4) A copy of the circular referred to in subsection (3) duly signed by the directors or an officer authorised as aforesaid shall be filed with the registrar before the circular is sent to the shareholders.

(5) The circular referred to in subsection (3) shall specify a date by which the offer, if not accepted, will be deemed to be declined.

(6) [Omitted by Finance Act. 1995.]

(7) If the whole or any part of the shares offered under sub-section (1) is declined or is not subscribed, the directors may allot and issue such shares in such manner as they may deem fit.

87. Issue of shares in lieu of outstanding balance of any loans, etc.-- Notwithstanding anything contained in section 86 or the memorandum and articles, a company may issue ordinary shares or grant option to convert into ordinary shares the outstanding balance of any loans, advances or credit, as defined in the Banking Companies Ordinance, 1962 (LVII of 1962), or other non-interest bearing securities and obligations outstanding or having a term of not less than three years in the manner provided in any contract with any scheduled bank or a financial institution to the extent of twenty per cent of such balance:

Provided that such shares shall not be issued or option to convert the outstanding balance exercised unless in any two of the preceding three years after expiry of two years from the date of commencement of commercial production, the return on such non-interest bearing securities, obligations, loans, advances or credit has fallen below the minimum rate of return laid down by the State Bank of Pakistan for the said years.

88. Deposits not to be invited without issuing an advertisement.-- (1) The Federal Government may prescribe the limits up to which; the manner in which and the conditions subject to which deposits may be invited, accepted or retained by a company.

(2) No company shall invite, or allow any other person to invite or cause to be invited on its behalf, any deposit unless--
(a) such deposit is invited or is caused to be invited in accordance with the rules;
(b) an advertisement, including therein a statement showing the financial position of the company, has been issued by the company is such form and in such manner as may be prescribed.

(3) The provisions of this Ordinance relating to a prospectus shall, so far as may be, apply
to an advertisement referred to in subsection (2).

(4) Where a company accepts or invites, or allows or causes any other person to accept or invite on its behalf, any deposit in excess of the limits prescribed under subsection (1) or in contravention of the manner or conditions prescribed under that subsection or in contravention of the provisions of subsection (2), as the case may be,
(a) the company shall be punishable--
(i) where such contravention relates to the acceptance of any deposit, with fine which shall not be less than the amount of the deposit so accepted; and
(ii) where such contravention relates to the invitation .for any deposit, with fine which may extend to twenty thousand rupees; and
(b) every officer of the company which is in default shall be punishable with imprisonment for a term which may extend to two years and shall also be liable to fine.
Explanation.-- For the purposes of this section, "deposit" means any deposit of money with, and includes any amount borrowed by, a company, but shall not include a loan raised by issue of debentures or a loan obtained from a banking company or financial institution.

(5) Nothing contained in this section shall apply to-
(i) a banking company, or
(ii) such other class of companies as the Authority may specify in this behalf.