Circulars/Notifications - Exchange Policy Department  
 F.E. Circular No. 31
December 15, 1997 

All Authorised Dealers
in Foreign Exchange,

Dear Sirs,


Government of Pakistan have allowed foreign investment on reportable basis in Services / Infrastructure, Social and Agriculture Sectors subject to certain conditions as spell out in the Investment Policy – 1997. Permission is hereby given to all those companies, which may be set up under this policy, to issue shares to those foreign investors who make investment in foreign exchange after the companies have obtained 'Entitlement Certificate' from the State Bank of Pakistan. The 'Entitlement Certificate' will be issued on submission of the following to the Joint Director, Investment Division, Foreign Exchange Department, State Bank of Pakistan, Central Directorate, Karachi through a designated Authorized Dealer:-

1) Encashment Certificate (EC) and / or Proceeds Realization Certificate (PRC) from an Authorized Dealer in original showing the amount of foreign currency received and its rupee equivalent paid to the company. Where the whole or part of the foreign equity is desired to be retained in Special Foreign Currency Account for the purpose of import of plant and machinery for the project, permission for such retention would be given by the State Bank on the basis of the Financing Plan of the company and the 'Entitlement Certificate' will be issued after the foreign equity contribution has been credited to the foreign currency account of the company.

2) Memorandum & Articles of Association and Certificate of Incorporation.

3) An attested copy of Board of Investment's Registration Letter alongwith confirmation of the company that all required formalities / approvals have since been completed / obtained.

4) Particulars of sponsor shareholders with name, address, nationality, proposed number and fare value of shares to be issued.

Once the shares have been issued to the non-residents on reportable basis, the share certificates can be exported and remittance of dividend and dis-investment proceeds will be permissible in accordance with the procedure laid down in the Foreign Exchange Manual. In the case of investment in the agriculture sector / reclamation and cultivation of land, however, where transfer / sale of land leased by the Government requires specific permission of the Federal and concerned Provincial Government, the permission for remittance of dis-investment proceeds will be given on specific basis on submission of the permission given by the Federal / concerned Provincial Government.

Authorized Dealers are requested to advise their clients of the above instructions and add the following as paragraph 6A in Chapter XX of Foreign Exchange Manual:-

"Issue of shares by companies incorporated in Services / Infrastructure, Social and Agriculture Sectors, to 'persons resident outside Pakistan' on reportable basis against payment in foreign exchange, provided the conditions prescribed in the Government's current Investment Policy have been fulfilled and an 'Entitlement Certificate' issued by the State Bank".

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