KARACHI: Eyeing larger overseas direct funding (FDI) within the nation, the State Bank of Pakistan (SBP) on Tuesday introduced a brand new and extra “transparent mechanism, with complete delegation to banks”, to assist make remitting disinvestment proceeds handy.
In a press launch, it mentioned the brand new technique differs from the prior one in that it doesn’t require firms’ designated banks to hunt approval from the SBP earlier than remitting the disinvestment proceeds “above market value for listed securities, and above breakup value for unlisted securities”.
“The goal of this initiative is to make Pakistan a more attractive place for investment by increasing investors’ confidence and support ease of doing business,” the central financial institution underlined, saying the brand new technique “also incorporates feedback received from investors and other stakeholders”.
In its publish on Twitter, the SBP added that the clear mechanism would “also facilitate the local companies, in particular the start-ups, to attract foreign investment”.
Documents required underneath new course of
Listing the paperwork required to go forward with the brand new process, the central financial institution 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 disinvestment proceeds don’t exceed the market or break-up worth.
If, nonetheless, the disinvestment proceeds exceed the market or break-up worth, the extra paperwork required to go forward with the brand new process “include a detailed valuation/ transaction due diligence by the buyer showing basis, methodology and key valuation metrics used for valuation”.
Similarly, if the whole remittance of disinvestment proceeds exceeds $50 million throughout a six-month interval, “the applicant shall also submit an independent review of the buyer’s valuation, from QCR rated practicing chartered accountant, that shall be assessed by the designated bank without needing to send to the SBP”, the central financial institution highlighted.