State Bank of Pakistan (SBP) has introduced a new mechanism to allow companies in Pakistan to transfer proceeds from the sale of investments to their foreign shareholders.
The announcement was made through a circular. The initiative is intended to make Pakistan more attractive for investment by increasing investor confidence and making it easier to do business. As per the sources, SBP remained engaging with stakeholders over the past several months to commit to understanding issues and improving the regulatory framework for SBP.
As per the new mechanism, the bank appointed by the company is empowered to transfer the proceeds of the sale to non-resident shareholders in full, following the submission of the required documents and adopting appropriate mechanism, without referring the case to SBP. The number of documents required depends on the volume of the transaction.
For investment proceeds that do not exceed market value / retail value: Required documents include a copy of the share purchase agreement, a broker’s note in the case of listed shares / a certificate of the liquidation value of a practicing CPA classified by QCR in the absence of shares, and the most recent audited financial company records, M-Form Signature and buyer’s commitment that in the event of a related party transaction, the same was entered into on a commercial basis.
For investment returns in excess of market / retail value: additional documents required will include a detailed valuation / due diligence of the transaction by the purchaser explaining the basis, methodology and key valuation indicators used for the valuation.
In the event that the total return on investment exceeds US $ 50 million (or the equivalent in other currencies) over a six month period, the applicant must also submit an independent review of the buyer’s assessment from the QCR-rated CPA practitioner, which must be assessed by an authorized bank without the need to submit to State Bank of Pakistan.
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