All Authorized Dealers
In Foreign Exchange,

Dear Sirs,

ISSUE AND EXPORT OF BONUS SHARES IN FAVOUR OF NON-RESIDENTS

Attention of the Authorized Dealers is invited to the Circular Letter No.INT: 129/7(455)-93 dated the 13^th January, 1993 wherein it was clarified that exemption form the provisions of Section 13(1) of the Foreign Exchange Regulation Act, 194 granted vide para-6, Chapter XX of Foreign Exchange Manual does not cover issue and export of Bonus Shares and that the companies concerned should ensure to obtain specific approval of the State Bank for all bonus issues in favour of non-residents.

2. It has now been decided to grant general permission to such companies as are covered under para-6 (a) I & (a) II ibid i.e. companies listed on Stock Exchanges in Pakistan and manufacturing concerns which are either unlisted Public Limited or Private Limited Companies, for issue and export of bonus shares to their non-resident shareholders. However, before issuing bonus shares to non-residents the companies concerned must ensure:-

1. That the shares against which bonus shares are to be issued are held by the non-residents under the specific and/or general permission of the State Bank and registered at their foreign address.
2. That in case the shares are held under the general permission, the requirements as contained in para-7 (a), (b) & (c), Chapter XX ibid has been fully compiled with.
3. That the company fulfils statutory requirement of 25% free reserves for issue of bonus shares or necessary waiver from Corporate Law Authority has been obtained in this respect.
4. That the application on the prescribed form (Annexure 'B') is duly certified by the Company’s Auditors as well as their designated banker.

3. Within 30 days from the date of export of bonus shares issued in terms of para – 2 above, the companies concerned will submit the following documents to their designated banker:-

1. Application in duplicate in the prescribed form (Annexure 'B') duly certified by the company’s Auditors, which will also be counter-signed by the designated banker. There will be one consolidated application in respect of all the non-resident shareholders.
2. Tow certified copies of the audited annual Profit & Loss Account and Balance Sheet of the Company for the year to which the bonus issue pertains.
3. Two certified true copies of the shareholders/Directors’ resolution declaring the bonus.
4. Two certified true copies of Auditor’s Certificate regarding free reserves in terms of SRO.710(1)/80 dated the 26^th June, 1980.

4. It has further been decided that from now-onward the documents required in terms of sub-paras (a), (b) & (c) of para-7 ibid will not be passed on to the State Bank by the designated banks in piece-meal in respect of each issue/transfer but in the consolidated form for all the shares issued/transferred to non-residents alongwith the application for remittance of dividend and/or application for issue and export of bonus shares as above. The designated Authorized Dealer, before passing on the documents to the State Bank, will ensure that the following particulars of the inward remittance have been further certified by the concerned Authorized Dealer (issuing bank) under his signature and seal on the back of each Proceeds Realization Certificate:-

1. Amount of foreign currency.
2. Date of receipt.
3. Rate of exchange applied.
4. Rupee equivalent.
5. Page No; Item No.; reference of Schedules and period of monthly exchange returns under which the transaction has been reported to the State Bank.