Mudarba nbfc
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Transcript of Mudarba nbfc
Religious Board in Mudarba Ordinance
Federal Government
Casual Vacancy in Board filled by Federal
Govt
Grants Certificate to
ROC
Tenure of Members
3 Years
Is, has been qualified to be Judge of High Court;
Appoints ‘3’
Members
‘1’ Member Chairman of
Religious Board
‘2’ Members Religious Scholars
Then ROC grants
permission to Modarba
Company to float Mudarba
Mudabra Capital
500,000
Investment by Mudarba
Company 10% or More
Mudarba Company must
Investment 50,000 or plus
Capital of Mudarba is 500,000 so Mudarba Company must invest 10% or more
Mudarba Company
Mudarba -1 Mudarba -4Mudarba -2 Mudarba -3
Charge Fee 0% to 10% of the Profit
Mudarba
If Mudarba earn losses then no fees is charged by Mudarba Company
Profit of Mudarba
Rs. 100,000
0% to 10%Fees
Charge by Mudarba Company
Maximum 10,000 only because profit of
Mudara is just 100,000
Board of Directors
Mudarba Company has
BOARD
Does not have Board
Mudabra
Members of Company
elect/appoint Board of Mudarba Company work as Board of Mudabra
Appoint of Auditor
Mudarba Company
Certificate Holders does not
appoint
Mudabra
Members of Company appoint
Board of Mudarba appoint with the
permission of ROC
Meeting
Directors Calls
EOGM if they hold 10% or more Voting
Rights
Members Call
Statutory MeetingIn case of Public
Company
AGM in all Companies
EOGM in all Companies
Meeting
Directors Calls
EOGM if they hold 10% or more Voting
Rights
Members Call
Statutory MeetingIn case of Public
Company
AGM in all Companies
EOGM in all Companies
SECP has power to call
MeetingQuorum not met
If meeting is Called by Directors
Meeting is dissolved
If Meeting is called by Members
Meeting is adjourned
Stock Exchange
Gets Registration from Commission
Commission, if satisfied
Grant registration
Provides & Maintains
If it is in the interest of
Trade & Public
Market Place
Facilities for bringing together BUYER & SELLER
for Securities
Services
To form set up & starts activities
Stock Exchange
Establish Arrange
Clearing House for
Designate
Registration of dealing in Securities
Settlement of trading in Future
Stock Exchange(Organized Market for Shares & Debentures
Private Company Unlisted Company
Listed Company
Trade on Does not Trade On
Shares of Following Companies
Disclosure of Interest to avoid Conflict of Interest
Exercising a power
As a Delegate of Commission
Assisting AdvisingEmployee
To The Commission, Board, Any Committee or any Delegate of the Commission
Any Person during Performing a function
Shall forthwith give to Commission
Or servicing in capacity of
Written Notice stating his interest in the
transaction/ matter
Set out particulars of his
interest
SECP Act Section
17
Sponsors, Proposed Directors, CEO, Chairman of Board OF
NBFC
He has not been AssociatedIllegal
SPOSNSOR
DIRECTOR
CEO
CONVICTED
ADJUDGED
DEFAULTING
FINANCING COMPANY
COPERATIVE FINANCING
SOCIETY
Sponsors, Proposed Directors, CEO, Chairman of Board OF
NBFC
He has not been AssociatedIllegal
SPOSNSOR
DIRECTOR
CEO
CONVICTED
ADJUDGED
BANKING BUSINESS
FINANCIALDEALINGS
DESPOSITS TAKING
Sponsors, Proposed Directors, CEO, Chairman of Board OF
NBFC
He has not been AssociatedIllegal
SPOSNSOR
DIRECTOR
CEO
CONVICTED
ADJUDGED
Fraud
Offense Of Involving Moral
Turpitude
Breach Of Trust
From Misconduct & be Removed
from his Services
Sponsors, Proposed Directors, CEO, Chairman of Board OF
NBFC
He has not been AssociatedIllegal
SPOSNSOR
DIRECTOR
CEO
CONVICTED
ADJUDGED
As Insolvent
Has compounded
with his creditors
Suspended payment of
Debt
or
or
Sponsors, Proposed Directors, CEO, Chairman of Board OF NBFC
Has not been Company where he is Director/ Major
Share Holder
His wealth submitted at
tax Authorities
Double to the amount Subscribed
by him In NBFC
Tax defaulter or Loan Defaulter
Such Company shall not be tax defaulter or
Loan Defaulter or have over due Loan payment
Composition of SECP Policy BoardAppointed by FG
5 Members 4 Members
Ex- Officio
Secretary to the Government of
Pakistan
Commerce Division
Law Division
Finance Division
The Chairman of the SECP
Deputy Governor
nominated by Governor SBP
Composition of SECP Policy Board appointed by FG
5 Members 4 Members Well know People in
Integrity
Expertise
Experience
Corporate Law
Accountancy Financial Service
Insurance
Investment
Academia relevant field
Commerce & Industry
Code :IF CAR CIA
In the following Field
Disqualification of Members & Commissioners
• No person shall be appointed or continue as a Member or Commissioner if– Has been convicted of an offense involving moral
turpitude– Has been or is adjudged insolvent– Is incapable of discharging his duties by reasons of
Physical, Physiological or mental unfitness and has been so declared by registered medical practitioner appointed by the Federal government
Disqualification of Members & Commissioners
• Being member, absent himself from 3 consecutive meetings of the Board, without leave of the Board and in the case of a member ex-officio, or fails to appoint another person to act
• Fails to disclose any conflict of interest at or within the time provided for such disclosure by or under this Act or contravenes any of the provisions of this Act pertaining t unauthorized disclosure of information.
BOARD OF SECP
After Consultation to
Commission
Advise Federal Government in followings
Securities Industries/Insurance Industries
Regulation
Corporate Sector
Insurance Sector
Protection of interest
Investors
Insurance Policy
holder
BOARD OF SECP
After Consultation to
Commission
Advise Federal Government in followings
Measures
Encourage Promote
The development of & to regulate the securities
Market & Insurance Market
By Self regulation of Stock Exchange,Insurers,
Insurance intermediaries, Insurance Surveyors & NBFIs
by specifying the standards for such self regulations
BOARD OF SECP
Express its opinion in writing on any policy matter to it
by Federal Govt
By Commision
Board of SECP
• Consider and approve any regulations with respect to implement of policy decisions, proposed to be made by the commission
• Consider and approve the budget for each financial year of the Commission prepared and submitted to it pursuant to the provisions of law
Board of SECP
• Exercise all such powers and performs all such function as are conferred or assigned to it as per law.
• Oversee the performance of the Commission to the extent that the purpose of law.
• Specify fees, penalties, and other chargeable by the commission for carrying out the purpose law.
Board of SECP
• All policy decisions, including any change in previously established policy, in respect of all and any matters within jurisdiction of the commission shall be made only by the Board.
• The Board may make policy decisions suo moto or adopt such policy recommendations of the Commission, with or without modification, as the Board may deem fit in its sole discretion.
What are NBFCs?
• Same license Under section 282 A (a) of Co. Ordinance 1984 – Housing Finance – Asset Management – Leasing – Discounting Services– Investment Finance – Investment Advisory Services – Venture Capital – Code – HALDI-VI
Permission from SECP taken for NBFC• SECP grants permission to public company to carry on NBFC
activities.
• Period 6 months which can be extended for 3 further months under special circumstances.
• Commission issues license after satisfaction.
• A company may get license for engaging more than one business by paying fees.
• Minimum equity is required to inject in company as capital which commission decides time to time.
Only Public Limited company
Allowed to carrying business
of following
Banking NBFC
Housing Finance Asset Management Leasing Discounting ServicesInvestment Finance Investment Advisory Services Venture Capital
Public Company
Requires License
From Commission
To carry on NBFC
One form of Business
Multiple forms of Business
1. Housing Finance 2. Asset Management 3. Leasing 4. Discounting Services5. Investment Finance 6. Investment Advisory
Services 7. Venture Capital
CFO in NBFC• 3 years experience in the relevant field• CA/ICMA• Member of Professional body• Master degree in Commerce / Business
administration (Specialization in Finance)
Investment Finance Schemes
• Includes– Money Market– Capital Market– Project Finance activities– General services as specified by Commission in the
Official Gazette
House Financing Schemes
• Loans provided to Individuals for Purchase of Residential House, Apartment, or Land including facilities availed for the purpose of making improvement in house or apartment or land
Investment Advisory Schemes• The services provided for managing
discretionary or nondiscretionary portfolios for both individual & institutional clients and include the business of advising others as to the value of securities or as to the advisability of investment in purchase or selling of securities for remuneration.
VENTURE CAPITAL
• Money provided by investors to startup firms and small businesses with perceived long-term growth potential.
• This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns.
VENTURE CAPITAL• Venture capital can also include managerial and technical expertise.
• Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships.
• This form of raising capital is popular among new companies or ventures with limited operating history, which cannot raise funds by issuing debt.
• The downside for entrepreneurs is that venture capitalists usually get a say in company decisions, in addition to a portion of the equity.
Lease
• legal document outlining the terms under which one party agrees to rent property from another party.
• A lease guarantees the lessee (the renter) use of an asset and guarantees the lessor (the property owner) regular payments from the lessee for a specified number of months or years.
• Both the lessee and the lessor must uphold the terms of the contract for the lease to remain valid.
DISCOUNT HOUSE
• A discount house is a money dealer that participates in the buying and discounting of bills of exchange and other financial products such as money markets, certain government bonds and banker's acceptances.
Asset Management
• A company that invests its clients' pooled fund into securities that match its declared financial objectives.
• Asset management companies provide investors with more diversification and investing options than they would have by themselves.
Asset Management• Mutual funds, hedge funds and pension plans are all run by asset
management companies.
• These companies earn income by charging service fees to their clients.
• AMCs offer their clients more diversification because they have a larger pool of resources than the individual investor.
• Pooling assets together and paying out proportional returns allows investors to avoid minimum investment requirements often required when purchasing securities on their own, as well as the ability to invest in a larger set of securities with a smaller investment.
Close end Scheme
Constituted by way of trust
To raise Funds through Issue of
Certificate to Public Of definite
Period Securities
of indefinite Period
Securities
Shares
Debenture or Money
Market instrument
Does not include continuously offer
certificate
Closed End Schemes– When an investor wishes to buy or sell shares of a closed-end fund, another investor must be located who wishes to sell or buy these shares. Normally, an investor approaches a broker who places the order on an exchange in which the CEF is traded, and waits until the order is executed.
The pool of money collected by the CEF for investment remains constant after the initial public offering.
Open Ended SchemesIn contrast, the number of outstanding shares of an open-end fund changes due to issuances and redemptions.
When an investor wishes to buy shares in an open-end fund, the fund issues the investor new shares.
Similarly, when an investor wishes to sell shares in an open-end fund, the fund redeems these shares.
Buying and selling shares
Closed End SchemesThe price at which an investor buys or sells shares of a CEF is the market price, as determined by demand and supply market principles.
For example, if many investors wish to buy shares of a CEF and few shares are available for sale, an investor may be able to sell the CEF at a premium to the net asset value (NAV).
Open Ended SchemesIn contrast, the price at which an investor buys or sells shares of a mutual fund is the NAV of the assets under management at the close of a given business day.
SHARE PRICE –
Diversification – Like open-end mutual funds, CEFs may minimize risk of an individual investment through diversification, because CEFs invest in many companies, industries, and markets. For individual investors, achieving similar asset allocation would involve building a portfolio of many different investments.
Professional management – Both open- and closed-end funds are managed by portfolio managers who are assisted by a team of analysts. Together, they research the companies, industries, and markets in which the funds invest. Few individual investors can match the time and effort put in by professionals whose full-time job is to track investments and seek new opportunities.
Economies of scale – By pooling money from investors and buying and selling securities in large quantities, fund costs may be considerably lower than they might be for an individual investor. In addition, bookkeeping, tax calculations, and other activities can be simplified for the individual investor.
Open End and Close End Schemes
Open-end fund
• An open-end fund is equitably divided into shares which vary in price in direct proportion to the variation in value of the fund's net asset value.
• Each time money is invested, new shares or units are created to match the prevailing share price; each time shares are redeemed, the assets sold match the prevailing share price.
• In this way there is no supply or demand created for shares and they remain a direct reflection of the underlying assets.
Closed-end fund• A closed-end fund issues a limited number of shares (or units) in an
initial public offering (or IPO) or through private placement.
• If shares are issued through an IPO they are then traded on an exchange or directly through the fund manager to create a secondary market subject to market forces.
• If demand for the shares is high, they may trade at a premium to net asset value.
• If demand is low they may trade at a discount to net asset value.
• Further share (or unit) offerings may be made by the vehicle if demand is high although this may affect the share price.
IPO (Initial Public Offer)
• The first sale of stock by a private company to the public.
• IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.
• In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.
Connected Person• A person in relation to an NBFC or a Collective Investment Scheme
(Mutual Funds) mean
• Any person / trust beneficially owing, directly or indirectly, 10% or more of capital of the NBFC or the collective investment scheme
• Any person able to exercise, directly or indirectly, 10% or more of the total voting power in that NBFC or the collective investment scheme
• A collective investment scheme being managed by an NBFC
• The NBFC managing a collective investment Scheme
Connected Person
• A trustee / custodian of the collective investment scheme
• Any person / trust controlled by a person who or which meets the description given above
• Any director / officer of that NBFC or the investment company being managed by that NBFC or of any of their connected persons as specified above.
The buying or selling of a security by someone who has access to material, nonpublic information about the security.
Insider trading can be illegal or legal depending on when the insider makes the trade: it is illegal when the material information is still nonpublic--trading while having special knowledge is unfair to other investors who don't have access to such knowledge.
Illegal insider trading therefore includes tipping others when you have any sort of nonpublic information.
Directors are not the only ones who have the potential to be convicted of insider trading.
People such as brokers and even family members can be guilty
Inside Trading
Clearing House
• A house by whatever name or designation established or arranged to be established by Stock Exchange for registration of dealing in Securities or settlement of trading in future contracts.
Underwriters
• Underwriters generally receive underwriting fees from their issuing clients (Public Company), but they also usually earn profits when selling the underwritten shares to investors.
• However, underwriters assume the responsibility of distributing a securities issue to the public.
• If they can't sell all of the securities at the specified offering price, they may be forced to sell the securities for less than they paid for them, or retain the securities themselves
World COM Listed at NASDAK USA Stock
Exchange
Took over 60
Companies
$7 Billion expenses
not recorded
Paid $37 Billion & bought
60 Companies
$2 Billion additional
income shown
Default declared in
2002 $41 billion
AT & T is number 1, W. Com was No. 2
Now W. Com is being run under
Business Horizon
World largest Bankruptcy
Use of Corporate Governance is now Must