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ACT VII OF 2011 ACT VII OF 2011 BANKING COMPANIES (AMENDMENT) ACT, 2011 An Act further to amend the Banking Companies Ordinance, 1962 [Gazette of Pakistan, Extraordinary, Part - I 2nd April, 2011] F. No. 22(16)/2008-Legis. dated 2-4-2011.---The following Act of Majlis-e-Shoora (Parliament) received the assent of the President .on the 29th March, 2011 and is hereby published for general information: Whereas it is expedient further to amend the Banking Companies Ordinance, 1962, (LVII of 1962), for the purposes hereinafter appearing; It is hereby enacted as follows: 2. Amendment of section 14, Ordinance LVII of 1962.---In the Banking Companies Ordinance, 1962 (XLVII of 1962), hereinafter referred to as the said Ordinance, in section 14, after subsection (3), the following new subsections shall be added, namely:-- "(4) The State Bank, if satisfied, may require any banking company, by an order in writing stating reasons, to increase its paid-up capital by such amount and within such period as may be specified in the order and the State Bank shall exercise the power reasonably, fairly and justly. (5) Notwithstanding any provision contained in any other law for the time being in force.-- (a) if the State Bank has determined that a person is holding or is a beneficial owner of five per cent or more shares of a banking company without prior approval of the State Bank or a person that acquired shareholding with prior approval of the State Bank subsequently fails to meet the fit and proper test as the State Bank may, by an order in writing stating reasons, require such person to reduce, divest or transfer to a fit and proper person, his shareholding in the banking company within such reasonable period and in such manner as may be specified in the order; (b) where a person holding five per cent or more shares of a banking company is or is likely to be detrimental to the interest of the banking company or its depositors, the State Bank may, by an order in writing stating reasons, require such person to divest his shareholding to a. tit and proper person. The State Bank shall exercise the power reasonably, fairly and justly; and (c) no order under clause (a) or clause (b) shall be made unless the person concerned has been given reasonable opportunity making a representation to the State Bank against the proposed order; If the State Bank is of opinion that any delay would be detrimental to the public interest or the interest of the banking company or its depositors, the State Bank may, at the time of giving the opportunity aforesaid or at any time thereafter and pending the consideration of the representation aforesaid, if any, may make an appropriate interim order, and conduct the proceedings in a reasonably expeditious manner. The interim order may include prohibition of-- (i) transfer of, or the carrying out of the agreement or arrangement to transfer such shares; (ii) the exercise of voting rights in respect of such shares; (iii) the payment of cash or stock dividends in respect of such shares; and (vi) the issue of further shares to the concerned shareholder; (d) where direction given under clause (a) or clause (b) is not complied with, the State Bank may dispose of such shares either through stock exchange or public auction. The sale proceeds of such shares, after deduction of any expenses incurred by the State Bank, shall be paid to the respective shareholders within a period of three months. If necessary, the State Bank may require-- (i) issuance of duplicate shares in place of the original shares; and (ii) the Central Depository Company to make appropriate changes in their records; and (ii) any person aggrieved by the decision of the State Bank under clauses (a), (b) and (d), may prefer appeal to the Central Board of Directors of the State Bank but pending decision of the proceedings, the shareholder shall not derive any benefit including dividends, right shares, voting rights, etc from his shareholding without express permission of the Central Board. Explanation.---The expression "beneficial ownership" shall include the explanation given in section 224 of the Companies Ordinance, 1984 (XLVII of 1984)".