SRO 354 (I)/2017 Draft Amendments in NBFC & Notified Entities Regulations, 2008

GOVERNMENT OF PAKISTAN
Securities and Exchange Commission of Pakistan -.- NOTIFICATION

Islamabad, the 19th May, 2017

S.R.O. 354 (I)/2017.- The following draft amendments in the Non-Banking Finance Companies and Notified Entities Regulations, 2008 which are proposed to be made by the Securities and Exchange Commission of Pakistan in exercise of the powers conferred by sub-section (2) of section 282B of the Companies Ordinance, 1984 (XLVII of 1984) are hereby published for the information of all the persons likely to be affected thereby and notice is hereby given that comments, if any, received within fourteen days of the date of this notification will be taken into consideration,

DRAFT AMENDMENTS

In the aforesaid Regulations,-

(1) In regulation 2, in sub-regulation (1), after clause (xiib), the following new clause shall be inserted:- "(xiib) "Element of income" represents the income composition (income earned during the year and accumulated profit carried from prior years) of the net asset value of an open end collective investment scheme that the collective investment scheme receives on issue of units and pays out on redemption. Explanation:- Element of income is a transaction of capital nature and the receipt and payment of element of income is taken to unit holders' fund; however, to maintain same ex-dividend net asset value of all units outstanding on accounting date, net element of income contributed on issue of units lying in unit holders fund is refunded on units in the same proportion as dividend bears to accounting income available for distribution."

(2) In regulation 63, in sub-regulation (1), for the "Explanation" the following shall be substituted, namely:- "Explanation.- For the purpose of this Regulation the expression "accounting income" means income of an open end scheme, excluding the amount for the year referred to in clause (xiib) of regulation 2, at the close of the financial year or in case of interim distribution any interim date at which the financial statements of the fund are drawn up."

(3) In Schedule V, for clause 3, and the entries therein, the following shall be substituted, namely:-

"3. Income Statement.
(1) Total investment income net of withholding tax, broken down by category.
(2) Total other income, broken down by category.
(3) An itemized list of various costs which have been debited to the Collective Investment Scheme, including,- (a) fees paid to the Asset Management Company; (b) remuneration of the custodian; (c) remuneration of trustee; (d) amortization of formation costs; director's fee and remuneration; (e) safe custody and bank charges, auditor's remuneration; (f) borrowing expenses, legal and other professional fees; and (g) any other expense borne by the Collective Investment Scheme. (4) Taxes. (5) Net income. (6) Allocation of Net income for the year:
(a) Income already paid on units redeemed; and (b) Accounting income available for distribution – carried to Distribution Account:
i. Relating to Capital Gains; and
ii. Excluding Capital Gains."

(4) In Schedule V, for clause 4, and the entries therein, the following shall be substituted, namely:-

"4. Distribution statement
i. Amount brought forward at the beginning of the period bifurcated into realized and unrealized gains.
ii. Accounting income available for distribution for the period bifurcated between:

• Relating to Capital Gains; and
• Excluding Capital Gains.
  iii. Interim dividend, date of distribution, and dividend per unit for units entitled to full period dividend.
  iv. Final dividend, date of distribution, and dividend per unit for units entitled to full year/ period dividend.
  v. Undistributed income carried forward bifurcated into realized and unrealized gains.
  vi. Amounts transferred to and from reserves."

(5) In Schedule V, for clause 5, and the entries therein the following shall be substituted, namely:-

"5. Statement of movements in reserves or Unit holders' fund.
(1) Net asset value per share or unit as at the beginning of the period.
(2) Net asset value per share or unit as at the end of the period.
(3) Number of units issued and the amount received upon such issue, (i.e. capital value and element of income on issue of units). (4) Number of units redeemed and the amount paid on redemption (i.e. capital value of units redeemed and amount paid out for element of income); (5) Element of income paid on units redeemed out of income of fund; (6) Any item resulting in an increase or decrease in net asset value of the Share or unit including, -
i. surplus or loss on sale of investments;
ii. exchange gain or loss;
iii. unrealized appreciation or diminution in value of investments; and
iv. Accounting income for the period less distribution.
(7) Amounts transferred to and from the revenue account.
(8) Any refund on units as element of income."

No. SCD/NBFC/NBFR/2017-

(Usman Hayat)
Secretary to the Commission