Circulars/Notifications - Exchange Policy Department  
 FE Circular No. 05 of 2020

October 26, 2020

The Presidents/Chief Executives of all
Authorized Dealers in Foreign Exchange

Dear Sir(s) / Madam,

Mechanism for Valuation and Repatriation of Disinvestment Proceeds

       Attention of the Authorized Dealers (ADs) is invited to the instructions contained in Para 7(vii), Chapter 20 of Foreign Exchange Manual in terms of which designated Authorized Dealer is allowed for remittance of disinvestment proceeds not exceeding the market value (in case of listed securities)/ break-up value (in case of unlisted securities) favoring the non-residents.

2.   In order to further streamline the process of remittance of disinvestment proceeds, State Bank of Pakistan has decided to further delegate the authority to designated Authorized Dealers of resident companies for remittance of disinvestment proceeds to non-resident investors.


Accordingly, the above referred Para of Chapter-20 ibid has been replaced as follows:

“Subject to observance of the procedure outlined above, the companies issuing/registering transfer of shares in favour of non-residents on repatriation basis, may export the share certificates through the designated Authorized Dealer to the shareholders. The designated Authorized Dealer shall also allow remittances in respect of the following:-


Dividend, net of applicable taxes, as permitted under Chapter 14.

(ii) Disinvestment proceeds, less brokerage / commission and taxes, as under:
A. For disinvestment proceeds not exceeding the market value (in case of listed securities)/ break-up value (in case of unlisted securities), the designated Authorized Dealer shall allow the remittance on submission and review of:

a) Name and address of the non-resident share holder.

b) Name and address of the company whose shares were sold by the non-resident beneficiary, indicating whether it is a listed or unlisted/private limited company and is covered under para 6 ibid. (This requirement may be waived by the Authorized Dealer in case of quoted shares).

c) Name, address and residential status of the buyer of the shares in question.

d) Copy of broker’s memo in case of quoted shares/break-up value certificate of a QCR rated practicing Chartered Accountant in case of unlisted shares.

e) Attested copy of executed Share Purchase Agreement (enforceable at law) between resident buyer and non-resident seller, showing rupee value of shares purchased.

f) Attested copy of latest audited financials of the company whose shares were being sold.

g) Duly filled/ signed M-Form for the rupee value of the remittance in favor of non-resident.

h) An undertaking from the buyer that the transaction is not between related parties. In case the transaction is between related parties, an undertaking that the same has been concluded at an arms-length basis.

i) Authorized Dealer will ensure due diligence of the transaction/ buyer from AML/ CFT perspective.
B. For disinvestment proceeds exceeding the market value (in case of listed securities)/ break-up value (in case of unlisted securities), the designated Authorized Dealer shall allow the remittance after satisfying itself about the genuineness of the transaction by reviewing the following additional documents:

a) Detailed justifications/ rationale/ basis of setting the transaction price per share, from the buyer, in original.

b) Attested copy of detailed valuation/ transaction due diligence by the buyer showing basis, methodology and key valuation metrics used for valuation of shares as per generally accepted best practices for valuation of shares.

c) In case the total remittance of disinvestment proceeds exceeds US Dollar 50 million (or equivalent in other currencies) during a span of six months, the applicant, in addition to above information/ documents, shall also submit an independent/ third party review of the buyer’s valuation, from QCR rated practicing chartered accountant as per the latest generally accepted valuation techniques/ methods for a particular type of industry in which resident company is operating. The review report should at least provide view on the appropriateness of the basis and methodology used in the valuation/ transaction due diligence. Further, the review report should also include local/ global comparable transactions and/or trading multiples of comparable publicly traded companies and key valuation metric(s) comparisons, if available.”
4. Authorized Dealers are advised to bring the above instructions to the knowledge of all their constituents for meticulous compliance.

Yours truly,


(Arshad Mehmood Bhatti)


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