The State Bank of Pakistan (SBP) announces a new and more “transparent mechanism, with complete delegation to banks” so that remitting disinvestment proceeds may become convenient in a bid to attract foreign direct investment (FDI).
According to the press release, a “transparent mechanism, with complete delegation to banks” is going to be introduced soon by the State Bank of Pakistan to make remitting disinvestment proceeds convenient. The new method and the prior method are different that it does not require companies’ designated banks to seek approval from the SBP before remitting the disinvestment proceeds “above market value for listed securities, and above breakup value for unlisted securities”.
3/3 It will also facilitate the local companies, in particular the start-ups, to attract foreign investment. New mechanism also incorporates feedback received from investors/other stakeholders. Circular is available at: https://t.co/XRJo9q0Fjn— SBP (@StateBank_Pak) October 27, 2020
SBP on Twitter posted, “#SBP introduces a transparent mechanism, with complete delegation to banks, for remitting disinvestment proceeds to facilitate foreign direct investment.”
It added, “The new mechanism enables companies in #Pakistan to conveniently remit out disinvestment proceeds to non-resident shareholders.”
“It will also facilitate the local companies, in particular the start-ups, to attract foreign investment. New mechanism also incorporates feedback received from investors/other stakeholders.”
Listing the documents required to go ahead with the new procedure, the central bank said a “copy of Share Purchase Agreement, broker’s memo in case of quoted shares/break-up value certificate of a QCR rated practicing Chartered Accountant in case of unlisted shares, latest audited financials of the company, signed M-Form, and an undertaking from the buyer that in case the transaction is between related parties, the same has been concluded at an arms-length basis” in case the remitting disinvestment proceeds do not exceed the market or break-up value.
If the disinvestment proceeds exceed the market or break-up value, the additional documents required to go ahead with the new procedure “include a detailed valuation/ transaction due diligence by the buyer showing basis, methodology and key valuation metrics used for valuation”.