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010215
The Gazette of Pakistan
ISLAMABAD, THURSDAY, FEBRUARY 15, 2001
PART II
Statutory Notifications (S.R.O.)
GOVERNMENT OF PAKISTAN
SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN
NOTIFICATION
Islamabad, the 15th February, 2001
S.R.O. 101(I)/2001.--In exercise of the
powers conferred by sub-section (5) of section 34 of the Securities and Exchange
Ordinance, 1969, the Securities and Exchange Commission of Pakistan (the Commission)
hereby makes the following regulations for the Karachi Stock Exchange (Guarantee) Ltd.,
(the Exchange) namely:-
1) There shall be seven outside directors to be appointed by the Commission in
consultation with the Exchange from amongst non-member securities market experts, lawyers,
chartered accountants, investment bankers, etc.
2) The Chairman shall be elected by the Board of Directors, from amongst the elected
directors.
3) The position of Vice Chairman shall be abolished.
4) The directors shall not delegate their authority relating to operational matters to any
directors except the managing director.
5) The managing director shall be appointed, removed and terminated with the prior
approval of the Commission.
Consequent upon the effect of aforesaid regulations, revised article clauses of the
Exchange shall stand amended as under, namely:-
Article 1(b)(iii)
"The Chairman" means "Chairman of the Board of the Exchange."
Article 12(i)
Where a member resigns from his individual membership in favour of and for nominating a
Corporate Body of which he simultaneously becomes a nominee to represent such Corporate
Body as a member of the Exchange, his resignation and his consequent nomination by the
Corporate Body shall not affect his office of the Chairman and/or Director which he may be
holding at the time of his resignation in favour of such Corporate Body. Additionally, the
tenure of such individual’s membership will be taken into account for determining the
security of such Corporate Member for the purpose of election or co-option to the office
of the Chairman and/or the Board under Article 33 hereinbelow.
Article 14(b)
A Corporate Body which becomes a Member of the Exchange may nominate one of its Directors
as a Nominee Director to represent its Membership on the Exchange and such nominee shall
become eligible for being elected as the Chairman and/or a member of the Governing Board
of Directors under Article22(b) hereinbelow.
Article 22(a)(i)
Ten(10) directors to be elected from amongst the members by the General Body;
Article 22(a)(ii)
Deleted.
Article 2(a)(iii)
Seven outside directors to be appointed by the Commission in consultation with the
Exchange from among non-member securities market experts, lawyers, chartered accountants,
investment bankers, etc.
Article 22(a)(iv)
Deleted.
Article 22(b)
The Chairman shall be elected by the Board of Directors from amongst the elected member
directors after the Board has been fully constituted including the nomination of
non-member directors.
Article 22(d)
All the elected, nominated, appointed and co-opted Directors including the Chairman shall
retire on 31st December every year.
Article 22(e)
A Member who has been elected for a consecutive period of two years as Director shall not
be eligible to contest elections for a third consecutive term to the same office. However
he shall be eligible to contest election for another office for a period of one year.
Article 28
The Exchange from 1951 onward, shall in the month of December every year in the manner
hereinafter provided elect by ballot 10 (ten) directors of the Governing Board.
Article 29
Twenty-one days (21) previous notice of the ballot for election of the Directors shall be
given by the Board.
Article 32
At least fourteen (14) days’ previous notice of the intention to propose any person
eligible for election to the board must be given to the Secretary in writing signed by 2
members of the Exchange.
Article 34(a)
No member shall be elected or co-opted to the Office of the Chairman and the Board who has
not been an individual Member or a Nominee Director of a Corporate Member of the Exchange
for one year or more immediately preceding the date of his election or co-option.
Article 34(b)
Deleted.
Article 34(c)
Deleted.
Article 35
No member shall be entitled to give more than one vote to any particular candidate, nor
shall be entitled to give more than ten (10) votes for the election for the Directors. A
member shall, however, be entitled to give a smaller number of votes than the prescribed
maximum. In case of an equality of votes, the election shall be decided by drawing lots.
Article 42
The Chairman shall preside at all meetings of the Board. If the Chairman is not present
within fifteen minutes of the time appointed for holding a meeting or if he decline to
preside, the Directors present shall elect any one of themselves to be Chairman of such
meeting.
Article 50
A previous shall be added at the end to the following effect, namely:-
Provided that the Board shall not delegate its authority relating to operational matters
to any director except the Managing Director.
Article 54(a)
The Board shall appoint a qualified and experienced person as a whole time paid Managing
Director who shall function as the Chief Executive of the Exchange. The appointment of
Managing Director shall be made for such period, not exceeding three years at a time, and
on such terms and conditions as the Board may determine. The person so appointed shall not
engage himself in any business, profession or vocation directly or indirectly including
trading or dealing in shares and securities during the period he holds office. The
Managing Director shall be liable to dismissal or removal from his office with three
fourth of the total number of Directors or by special resolution passed in a General
Meeting:
Provided that the appointment, removal and termination of the Managing Director shall be
made with the prior approval of the Securities and Exchange Commission of Pakistan and for
this purpose the term "removal and/or termination" shall include non-renewal of
his contract.
Article 55(b)
The General Manager under the general control and direction of the Managing Director shall
perform such functions and duties as may be entrusted or delegated to him by the Managing
Director. He shall maintain and have charge over the books, records and papers of the
Exchange and conduct all correspondence on behalf of the Exchange and the Board and shall
countersign all cheques or the payments of money. The General Manager and Secretary shall
report to the Managing Director on all day to day matters concerning the management of the
affairs of the Exchange.
Article 68
The Chairman shall be entitled to take the chair at every Annual or Extraordinary General
Meeting. If at any meeting the Chairman is not present within fifteen minutes of the time
appointed for such meeting of if present, he declines to act as Chairman, the members
present shall choose a member of the Board as Chairman ad if no member of the said Board
be present or if all the members of the said Board present decline to take the chair, the
members present shall choose one of the members to preside over the meeting.
Article 77
Every Chairman, Managing Director, Director, General Manager, Member of Committee,
Arbitrator, Secretary, Auditor and other Executive and staff of the Exchange shall, if so
required by the Directors, before entering upon duties, sign a declaration pledging
himself to observe a strict secrecy respecting all transactions of the Exchange and in all
matters relating thereto, and such declaration shall pledge himself not to reveal any of
the matters except when required so to do by the Directors or by a Court of Law and except
so far as may be necessary in order to comply with any of the provisions in these presents
contained.
Article 80
Every Chairman, Managing Director, Director, General Manager, Member of Committee,
Arbitrator, Secretary, Auditor and other Executives and staff of the Exchange shall be
indemnified by the Exchange against and it shall be the duty of the Directors, out of the
funds of the Exchange, to pay all costs, losses, penalties and expenses which any such
officer or servant may incur or become liable to by reason of any contract entered into or
act or deed done by, or omitted by him as such officer or servant or in any way in the
discharge of his duties and no directors or other officers of the Exchange shall be liable
for the acts, receipts, neglects or defaults of any other Director or officer for joining
in any receipt or other act for conformity or for any loss or expenses happening to the
Exchange through the insufficiency or deficiency of title to any property acquired by
order of the Directors for or on behalf of the Exchange or for the insufficiency or
deficiency or depreciation of any security in or upon which any of the moneys of the
Exchange shall be invested or for any loss or damage arising form the Bankruptcy or
insolvency or tortuous act of any person with whom any moneys, securities or effects of
the Exchange shall be deposited or for any loss occasioned by any error of judgment,
omission, default or oversight on his part or for any loss, damage or misfortune whatever
which shall happen in relation to the execution of the duties of his office or in relation
thereto unless the same happens through his own dishonesty.
The decision of the Commission regarding the above mentioned regulations was communicated
to the Exchange through a directive bearing No.2(46)CF/SE/97/04 dated 16th January, 2001
as per annexure.
ANNEXURE
SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN NIC BUILDING, JINNAH AVENUE
No.2(46)CF/SE/97
Islamabad, the 16th January, 2001
Mr. Muhammad Yacoob Memon,
Acting Managing Director,
Karachi Stock Exchange (Guarantee) Ltd.
Stock Exchange Building, Karachi.
Subject:
DIRECTIVE UNDER SECTION 34(4) OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969
Dear Sir,
Please refer to this Commission’s letter No.2(46)CF/SE/97 dated 7.12.2000 followed by
the letter No.2(46)CF/SE/97 dated 18.12.2000, whereby the Commission had, in exercise of
its powers conferred by sub-section (4) of section 34 of the Securities and Exchange
Ordinance, 1969, issued the following directions in the interest of capital market and had
directed that the Articles of Association of the Karachi Stock Exchange may be amended to
them in conformity with the directions:-
(i) That there shall be seven outside directors to be appointed by the Commission in
consultation with the Exchange from amongst non-member securities market experts, lawyers,
chartered accountants, investment bankers, etc.
(ii) That the Chairman shall be elected by the Board of Directors, from amongst the
elected directors.
(iii) That the position of Vice Chairman shall be abolished.
(iv) That the directors shall not delegate their authority relating to operational matters
to any director except the managing director.
(v) That the managing director shall be appointed, removed and terminated with the prior
approval of the Commission.
2. The above directives which were issued by the Commission after providing an opportunity
of hearing in the Exchange on December 15, 2000, were made effective w.e.f. December 31,
2000.
3. It has been noticed with concern that the Exchange has neglected to comply with the
above mentioned directions within the specified period and has violated the specified
provisions of the Securities and Exchange Ordinance, 1969. Therefore, the Commission, in
exercise of the powers conferred by sub-section (5) of the said section 34 and in the
interest of capital market and investors, has decided that the above mentioned five
directives as specified in the previous references of the Commission shall be the
regulations deemed to have been made by the Karachi Stock Exchange and Articles of the
Exchange shall be deemed to have been amended accordingly. Any provisions in the Articles
which may be repugnant to the above mentioned directives, would be void and ineffective
after 31st December, 2000.
Yours faithfully,
Sd/-
(SHAHID GHAFFAR)
Executive Director (SM)
No. 2(46)/CF/SE/97/04
Sd
(MOHAMMAD HAYAT JASRA)
Executive Director (Law)
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