public comments on the draft offer for sale …

NOTICE

LISTING DEPARTMENT | UAN: +9221 111-00-11-22 | E-mail: [email protected] | Web: psx.com.pk

PUBLIC COMMENTS ON THE DRAFT OFFER FOR SALE DOCUMENT OF

PAKISTAN REINSURANCE COMPANY LIMITED

It is hereby informed to all concerned that the Government of Pakistan through the Privatization Commission intends

to divest 60,000,000 (i.e. 20%) shares of Pakistan Reinsurance Company Limited (PAKRI or the Company) via a

Secondary Public Offering using the 100% Book Building Method. Since PAKRI is a listed entity, Floor Price of the Offer

will be disclosed close to the commencement of book building. The Floor Price after approval by the Privatization

Commission Board and Cabinet Committee on Privatization (CCOP) will be notified through the websites of Pakistan

Stock Exchange, Habib Bank Limited and Next Capital Limited. Details about the Offer can be reviewed through the

attached Draft Offer for Sale Document of the Company.

Pursuant to PSX Regulation No. 5.2.1(e), and Regulation 3 (11) of the Public Offering Regulations, 2017, the Draft

Offer for Sale Document is being placed on the PSX Website for seeking public comments. All concerned are

requested to provide their written comments on the Draft Offer for Sale Document, if any, to the Listing Department

by emailing at [email protected] latest by COB Monday, August 09, 2021.

Asmaa Saleem Malik General Manager Listing Department

Copy to: Additional Director / HOD, PMADD (SMD), SECP

PSX/N-933 Dated: July 30, 2021

Ny by of F

PAKISTAN REINSURANCE COMPANY LIMITED SECONDARY PUBLIC OFFERING

OFFER FOR SALE DOCUMENT (“OFSD”)

Incorporation Date and Place: 30th March 2000 in Karachi | Registration Number: 0041092 | Registered Address: PRC Towers, 32 - A, Lalazar Drive, M.T. Khan Road, Karachi PO. Box 4777 | Contact Person: Jamil Ahmed, Chief Financial Officer | Website: http://www.pakre.org.pk/ms | Email: [email protected] | Telephone: (+92-21) 99202908-14

THE PRESENT OFFER CONSISTS OF 60,000,000 SHARES OF PAKISTAN REINSURANCE COMPANY LIMITED (THE “COMPANY”) REPRESENTING 20% OF PAID-UP CAPITAL OF THE COMPANY AT A FLOOR PRICE WHICH SHALL BE NOTIFIED THROUGH A SUBSEQUENT ANNOUNCEMENT (THE “OFFER” OR “SECONDARY PUBLIC OFFERING”)

THE OFFER IS BEING MADE THROUGH THE BOOK BUILDING PROCESS AT A FLOOR PRICE WHICH SHALL BE AT A PREMIUM TO THE PAR VALUE OF PKR 10/- PER SHARE WITH AN UPPER LIMIT OF 40% ABOVE THE FLOOR PRICE. THE BIDDERS SHALL BE ALLOWED TO PLACE BIDS FOR HUNDRED PERCENT (100%) OF THE OFFER SIZE AND

THE STRIKE PRICE SHALL BE THE PRICE AT WHICH THE HUNDRED PERCENT (100%) OF THE OFFER IS SUBSCRIBED. HOWEVER, THE SUCCESSFUL BIDDERS SHALL BE PROVISIONALLY ALLOTTED ONLY SEVENTY-FIVE PERCENT (75%) OF THE OFFER SIZE I.E. 45,000,000 SHARES AND THE REMAINING TWENTY-FIVE PERCENT (25%) I.E. 15,000,000 SHARES SHALL BE OFFERED TO THE RETAIL INVESTORS. IN CASE RETAIL PORTION OF THE OFFER REMAINS UNSUBSCRIBED, THE UNSUBSCRIBED SHARES

WILL BE ALLOTTED TO THE SUCCESSFUL BIDDERS ON PRO RATA BASIS.

AS PER THE PO REGULATIONS, THE DRAFT OFSD WAS PLACED ON PSX’S WEBSITE FOR SEEKING PUBLIC COMMENTS FOR SEVEN (7) WORKING DAYS STARTING FROM DD/MM/2021 TO DD/MM/2021. HOWEVER, NO PUBLIC COMMENTS WERE RECEIVED/ THE COMMENTS RECEIVED HAVE BEEN DULY INCORPORATED / RESPONDED BY

THE LEAD MANAGER/CONSULTANT TO THE OFFER

REGISTRATION OF ELIGIBLE INVESTORS: THE REGISTRATION OF ELIGIBLE INVESTORS WILL COMMENCE AT 9:00 AM ON DD/MM/2021 AND WILL CLOSE AT 3:00 PM ON DD/MM/2021

BIDDING PERIOD DATES: FROM DD/MM/2021 TO DD/MM/2021 FROM: 9:00 AM TO 5:00 PM DATE OF PUBLIC SUBSCRIPTION: FROM DD/MM/2021 TO DD/MM/2021 (BOTH DAYS INCLUSIVE) FROM: 9:00 AM TO 5:00 PM

LEAD MANAGER TO THE OFFER BOOK RUNNER

BOOK BUILDING PORTION CREDIT UNDERWRITTEN BY:

BANKER TO THE BOOK BUILDING PORTION

BANKERS TO THE RETAIL PORTION OF THE OFFER Allied Bank Limited Bank Al Habib Limited Faysal Bank Limited Habib Bank Limited

Habib Metropolitan Bank Limited MCB Bank Limited United Bank Limited

For retail portion, Investors can submit application(s) through both electronic and physical mode. Electronic/online applications can be submitted through (i) PSX’s e-IPO system (PES) through the weblink “https://eipo.psx.com.pk”, (ii) CDC’s Centralized E-IPO system (CES) through the weblink, “www.cdceipo.com”, and (iii) UBL’s e-IPO system through the weblink, “http://www.ubldirect.com/corporate/ebank”. For details, please refer to Section 13 of Prospectus.

DATE OF PUBLICATION OF THIS OFSD: DD/MM/2021

OFSD, Bidding and Subscription Forms can be downloaded from the following websites: https://nextcapital.com.pk/, https://www.hbl.com/, www.cdceipo.com,

https://www.psx.com.pk

FOR FURTHER QUERIES YOU MAY CONTACT: Habib Bank Limited: Mr. Imaad Uddin, +92 21 311 16507, [email protected]; Ms. Humaira Asad, +92 21 331 16527 , [email protected];

Next Capital Limited: Mr. Syed Qamber Ali, +92 213 5222207, [email protected]; Mr. Saim Shahid, +92 213 522207, [email protected] Pakistan Reinsurance Company Limited: Mr. Jamil Ahmed, +92 21 992 02908-14 Ext: 212, [email protected]; Mr. Shams-ud-Din, +92 21 992 02937-14 Ext: 217,

[email protected] Privatisation Commission: Mr. Nauman Afzal Tariq, +92 51 920 3881, [email protected]; Mr. Muhammad Shamim Khan, +92 51 920 5146,

[email protected] The Company is already listed at Pakistan Stock Exchange Limited

ADVICE FOR INVESTORS INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS OFFER FOR SALE DOCUMENT, ESPECIALLY THE RISK FACTORS

GIVEN AT PART 5 BEFORE MAKING ANY INVESTMENT DECISION.

SUBMISSION OF FALSE & FICTITIOUS APPLICATIONS IS PROHIBITED AND SUCH APPLICATIONS’ MONEY MAY BE FORFEITED UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015.

INVESTMENT IN EQUITY SECURITIES INVOLVES A DEGREE OF RISK AND INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFER UNLESS THEY CAN AFFORD TO TAKE

THE RISK OF LOSING THEIR INVESTMENT. INVESTORS ARE ADVISED TO READ THE RISK FACTORS CAREFULLY BEFORE TAKING AN INVESTMENT DECISION IN THIS OFFERING. FOR TAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THE EXAMINATION OF THE COMPANY AND THE OFFER INCLUDING THE RISKS INVOLVED

AS DISCLOSED AT PART 5 OF THE OFFER FOR SALE DOCUMENT.

ADVICE FOR IINSTITUTIONAL INVESTORS AND HIGH NET WORTH INDIVIDUAL INVESTORS A SINGLE INVESTOR CANNOT SUBMIT MORE THAN ONE BIDDING APPLICATION EXCEPT IN THE CASE OF UPWARD REVISION OF BID. IF AN INVESTOR SUBMITS MORE

THAN ONE BIDDING APPLICATION THEN ALL SUCH APPLICATIONS SHALL BE SUBJECT TO REJECTION.

SUBMISSION OF CONSOLIDATED BID IS PROHIBITED UNDER THE PUBLIC OFFERING REGULATIONS 2017. A BID APPLICATION WHICH IS BENEFICIALLY OWNED (FULLY OR PARTIALLY) BY PERSONS OTHER THAN THE ONE NAMED THEREIN SHALL BE DEEMED TO BE A CONSOLIDATED BID.

PLEASE NOTE THAT A SUPPLEMENT TO THE OFFER FOR SALE DOCUMENT SHALL BE PUBLISHED WITHIN THREE WORKING DAYS OF THE CLOSING OF THE BIDDING PERIOD

WHICH SHALL CONTAIN INFORMATION RELATING TO THE STRIKE PRICE, THE OFFER PRICE, NAMES OF THE UNDERWRITERS OF THE RETAIL PORTION OF THE OFFER IF ANY, UNDERWRITING COMMISSION, BIFURCATING AS TAKE UP COMMISSION OR ANY OTHER, COMMITMENT BY THE SUCCESSFUL BIDDERS FOR SUBSCRIBING THE

UNDERSUBSCRIBED RETAIL PORTION IN CASE OF HUNDRED PERCENT BOOK BUILDING, CATEGORY WISE BREAKUP OF THE SUCCESSFUL BIDDERS ALONG WITH NUMBER OF SHARES ALLOCATED TO THEM, DATES OF PUBLIC SUBSCRIPTION AND SUCH OTHER INFORMATION AS SPECIFIED BY THE COMMISSION.

PLEASE NOTE THAT THIS IS AN OFFER FOR SALE DOCUMENT (OFSD) FOR BOOK BUILDING AND DOES NOT CONTAIN A FLOOR PRICE FOR THE OFFER. FOR AVOIDANCE OF

DOUBT THERE WILL BE NO SUBSEQUENT OFFER FOR SALE DOCUMENT AND THE FLOOR PRICE AFTER APPROVAL BY PC BOARD & CCoP WILL BE NOTIFIED THROUGH WEBSITES OF PAKISTAN STOCK EXCHANGE, HABIB BANK LIMITED AND NEXT CAPITAL LIMITED AFTER MARKET CLOSE ON DD/MM/2021.

THIS IS NOT A PROSPECTUS BY PAKISTAN REINSURANCE COMPANY LIMITED (THE “COMPANY”) BUT AN OFFER FOR SALE DOCUMENT BY THE GOVERNMENT OF

PAKISTAN (THE “OFFEROR”) THROUGH THE PRIVATISATION COMMISSION FOR OFFER FOR SALE OF SHARES HELD IN THE COMPANY.

http://www.pakre.org.pk/ms

mailto:[email protected]

https://nextcapital.com.pk/

https://www.hbl.com/

http://www.cdceipo.com/









Pakistan Reinsurance Company Limited - Offer for Sale Document

Page 2 of 154

UNDERTAKING BY THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER June 12, 2021 WE, DR. FIAZ ILLAHI MEMON, THE ACTING CHIEF EXECUTIVE OFFICER AND JAMIL AHMED, THE CHIEF FINANCIAL OFFICER OF PAKISTAN REINSURANCE COMPANY LIMITED CERTIFY THAT: 1. THIS OFFER FOR SALE DOCUMENT (“OFSD”) CONTAINS ALL INFORMATION WITH REGARD TO THE COMPANY AND

THE OFFER, WHICH IS MATERIAL IN THE CONTEXT OF THE OFFER AND NOTHING HAS BEEN CONCEALED IN THIS RESPECT;

2. THE INFORMATION CONTAINED IN THIS OFSD IS TRUE AND CORRECT TO THE BEST OF OUR KNOWLEDGE AND BELIEF; 3. THE OPINIONS AND INTENTIONS EXPRESSED THEREIN ARE HONESTLY HELD;

4. THERE ARE NO OTHER FACTS, THE OMISSION OF WHICH MAKES THIS OFSD AS A WHOLE OR ANY PART THEREOF

MISLEADING; 5. ALL REQUIREMENTS OF THE SECURITIES ACT, 2015; THE DISCLOSURES IN PUBLIC OFFERING REGULATIONS, 2017 FOR

PREPARATION OF OFSD RELATING TO APPROVALS AND DISCLOSURES HAVE BEEN FULFILLED; AND 6. NO CHARGES, FEE, EXPENSES, PAYMENTS ETC. HAVE BEEN COMMITTED TO BE PAID TO ANY PERSON IN RELATION

TO THIS PUBLIC OFFERING FOR SALE EXCEPT FOR THOSE AS DISCLOSED IN THIS OFSD. FOR AND ON BEHALF OF PAKISTAN REINSURANCE COMPANY LIMITED -Sd- ___________________________ DR. FAIZ ILLAHI MEMON ACTING CHIEF EXECUTIVE OFFICER

-Sd- ___________________________ JAMIL AHMED CHIEF FINANCIAL OFFICER


Page 3 of 154

UNDERTAKING BY THE OFFEROR

May 25, 2021 I, THE UNDERSIGNED, ON BEHALF OF GOVERNMENT OF PAKISTAN (THE “OFFEROR”) HEREBY CERTIFY THAT:

1. THIS OFFER FOR SALE DOCUMENT CONTAINS ALL INFORMATION WITH REGARD TO THE OFFEROR AND THE OFFER, WHICH IS MATERIAL IN THE CONTEXT OF THE OFFER AND NOTHING HAS BEEN CONCEALED IN THIS RESPECT;

2. THE INFORMATION CONTAINED IN THIS OFFER FOR SALE DOCUMENT IS TRUE AND CORRECT TO THE BEST OF OUR KNOWLEDGE AND BELIEF;

3. THE OPINIONS AND INTENTIONS EXPRESSED THEREIN ARE HONESTLY HELD;

4. THERE ARE NO OTHER FACTS, THE OMISSION OF WHICH MAKES THIS OFFER FOR SALE DOCUMENT AS A WHOLE

OR ANY PART THEREOF MISLEADING;

5. ALL REQUIREMENTS OF THE SECURITIES ACT, 2015; THE DISCLOSURES IN PUBLIC OFFERING REGULATIONS, 2017 FOR PREPARATION OF OFFER FOR SALE DOCUMENT, RELATING TO APPROVAL AND DISCLOSURES HAVE BEEN FULFILLED; AND

6. NO CHARGES, FEE, EXPENSES, PAYMENTS ETC. HAVE BEEN COMMITTED TO BE PAID TO ANY PERSON IN

RELATION TO THIS PUBLIC OFFERING EXCEPT FOR THOSE AS DISCLOSED IN THIS OFFER FOR SALE DOCUMENT.

FOR AND ON BEHALF OF THE OFFEROR

-SD- _____________________________ MUHAMMAD SHAMIM KHAN DIRECTOR GENERAL PRIVATISATION COMMISSION MINISTRY OF PRIVATISATION GOVERNMENT OF PAKISTAN


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SUPPLEMENT TO THE OFFER FOR SALE DOCUMENT

This Supplement is being published pursuant to the Public Offering Regulations, 2017 and in continuation of the Offer for Sale

Document of Pakistan Reinsurance Company Limited earlier published on DD/MM/2021

Pakistan Reinsurance Company Limited

FLOOR PRICE: PKR XX/- PER SHARE STRIKE PRICE: PKR XX/- PER SHARE ISSUE PRICE: PKR XX/- PER SHARE PRICE BAND (MAXIMUM 40%): PKR XX/- PER SHARE

Note: Since this Offer is being made through 100% book building with 25% allocation to retail investors, therefore, underwriting

of the retail portion is not needed. In case the Offer remains unsubscribed, the unsubscribed shares shall be allotted to

the successful bidders on pro rata basis. The successful bidders have already given undertakings to subscribe such

unsubscribed shares on pro rata basis.

Category wise Breakup of Successful Bidders

S. No Category No. of Bidders No. of shares provisionally allocated

1 Commercial Banks ● ●

2 Development financial institutions ● ●

3 Mutual Funds ● ●

4 Insurance Companies ● ●

5 Investment Banks ● ●

6 Employees’ Provident / Pension Funds ● ●

7 Leasing Companies ● ●

8 Modarabas ● ●

9 Securities Brokers ● ●

10 Foreign Institutional Investors ● ●

11 Any other Institutional Investors ● ●

Total Institutional Investors ● ●

12 Individual Investors: ● ●

Foreign ● ●

Local ● ●

Total Individual Investors ● ●

GRAND TOTAL

Note: This Supplement shall be published within 3 working days of the close of Bidding Period in at least all those newspapers in

which the OFSD is published.


Page 5 of 154

Glossary of Technical Terms

ACII Associateship of the Chartered Insurance Institute

ACT Securities Act, 2015

AEHIL Allianz EFU Health Insurance Limited

AICL Adamjee Insurance Company Limited

Bancassurance An arrangement between a bank and an insurance company allowing the insurance company to sell its products to the bank's client base.

BVPS Book Value Per Share

CAGR Compound Annualized Growth Rate

CCOP Cabinet Committee on Privatisation

CDC / CDCPL Central Depository Company of Pakistan Limited

CDS Central Depository System

Claims Ratio The claims ratio is the percentage of claims costs incurred in relation to the premiums earned.

COI Certificate of Incorporation

Combined Ratio Combined ratio is a measure of profitability used by an insurance company to gauge how well it is performing in its daily operations. It is calculated by taking the sum of incurred losses and expenses and then dividing them by the earned premium.

Commission / SECP Securities and Exchange Commission of Pakistan

Companies Act Companies Act, 2017

Company / PAKRI / PRCL Pakistan Reinsurance Company Limited. “PAKRI”, "PRCL" and “Company” have been used interchangeably in this document

CPEC China Pakistan Economic Corridor

ECO Economic Cooperation Organization

EFUG EFU General Insurance Limited

EPS Earnings Per Share

ERP Enterprise Resource Planning

Facultative Reinsurance

The coverage purchased by a primary insurer to cover a single risk or a block of risks held in the primary insurer's book of business. It allows the reinsurance company to review individual risks and determine whether to accept or reject them and so is more focused in nature than the treaty business

FAIR Federation Afro-Asian Insurers and Reinsurers

FED Federal Excise Duty

FPCCI Federation of Pakistan Chambers of Commerce & Industry

FY Fiscal Year

GOP Government of Pakistan

GWP Gross Written Premium

IAP Insurance Association of Pakistan

IBNR Incurred but not reported

JGICL Jubilee General Insurance Company Limited

KPT Karachi Port Trust

KSEW Karachi Shipyard & Engineering Works

KVA Kilovolt-Ampere

MAP Management Association of Pakistan


Page 6 of 154

Mn Million

MoC Ministry of Commerce

NOC No Objection Certificate

NTN National Tax Number

Offer Offer for Sale of Shares of the Company by the Offeror

Offeror Government of Pakistan through the Privatisation Commission

OFS Offer for Sale

OFSD Offer for Sale Document

OGDC Oil and Gas Development Company Limited

PARCO Pak-Arab Refinery Company Limited

PC Privatisation Commission

PC Board PC Board shall have the meaning assigned to the Board in the Privatisation Ordinance, 2000.

PIA Pakistan International Airline

PIB Pakistan Investment Bonds

PIC Pakistan Insurance Corporation

PKR or Rs. Pakistan Rupee(s)

PNSC Pakistan National Shipping Corporation

PPL Pakistan Petroleum Limited

PPP Purchasing Power Parity

Privatisation Privatisation shall have the meaning assigned to the same in the Privatisation Ordinance, 2000.

PSO Pakistan State Oil Company Limited

PSX / Exchange Pakistan Stock Exchange Limited

S&P Standard & Poor's

SBP State Bank of Pakistan

SLIC State Life Insurance Corporation of Pakistan

SOEs State-owned entities

SPO Secondary Public Offering

SRB Sindh Revenue Board

SRO Statutory Regulatory Orders

SST Sindh Sales Tax

TDAP Trade Development Authority of Pakistan

Treaty Reinsurance When the ceding company agrees to cede all risks within a specific class of insurance policies to the reinsurance company.

TREC Trading Rights Entitlement Certificate

UAE United Arab Emirates

UBLI UBL Insurers

USD United States Dollar


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DEFINITIONS

Application Money The amount of money paid along with application for subscription of shares which is equivalent to the product of the Offer Price per share and the number of shares applied for.

Banker to the Book Building Any bank with whom an account is opened and maintained by the Offeror for keeping the bid amount. Habib Bank Limited has been appointed as Banker to the Book Building for this Secondary Public Offering (“SPO”).

Bid Means an intention to buy a specified number of securities at a specified price.

Bid Amount The amount equals to the product of the number of shares Bid for and the Bid price.

Bid Collection Center Designated offices of the Book Runner, specified branches of any of the Scheduled Bank and offices of any other institutions specified by the Commission where bids are received and processed. For this Offer, addresses of the Bid Collection Centers are provided in Part 12.5 of this OFSD.

Bid Price The price at which bid is made for a specified number of shares.

Bid Revision The Eligible Investors can revise their bids upward subject to the provision of regulation 10(2)(iii) of the PO Regulations. The bids can be revised with a price variation of not more than 10% from the prevailing indicative Strike Price in compliance with regulation 10(2)(iii) of the PO Regulations. As per regulation 10(2)(vi) of the PO Regulations, the bidder shall not make downward revision both in terms of Bid Price and Bid Volume; provided that in case of upward revision of the Bid Price, the number of shares Bid for i.e. Bid Volume may be adjusted ensuring that the bid amount or bid money remains the same. As per regulation 10(2)(vii) of the PO Regulations, the bidders shall not withdraw their bids.

Bidder An Eligible Investor who makes bids for shares in the Book Building process.

Bidding Form The form prepared by the Offeror for the purpose of making bids.

Bidding Period

The period during which bids for subscription of shares are received. The Bidding Period shall be of two days, from DD/MM/2021 to DD/MM/2021 both days inclusive (daily from 9:00 a.m. to 5:00 p.m.).

Book Building

A process undertaken to elicit demand for shares Issued through which bids are collected from the Bidders and a book is built which depicts demand for the shares at different price levels.

Book Building Account

An account opened by the Offeror with the Collection Bank(s). The Bidder will pay the Margin Money / Bid Amount through demand draft, pay order or online transfer in favor of this account as per the instructions given in Part 12.15 of this OFSD.

Book Building Portion The part of the total Offer allocated for subscription through the Book Building.

Book Runner A securities broker or a scheduled bank who holds a valid license from the Commission to act as an Underwriter. Habib Bank Limited (“HBL”), a scheduled bank, has been appointed as Book Runner for this Offer.


Page 8 of 154

Book Building System An online electronic system operated by the Designated Institution for conducting Book Building.

Collection Bank Habib Bank Limited is the collection bank for the Book Building portion. For this purpose, the Offeror, has opened account with the Habib Bank Limited, titled “PAKRI BOOK BUILDING ACCOUNT”, Number: 00427992080003 at its State Life Branch. The Collection Bank shall keep and maintain the bid money in the said account. Once the Strike Price is determined and lists of successful bidders and successful applicants / allottees are finalized and shares are credited to the successful bidders and applicants, the Lead Manager / Consultant to the Offer, after obtaining NOC from PSX, may request in writing to the Collection Bank for transfer of the money of successful and accepted applications to the Offeror’s account(s).

Company Pakistan Reinsurance Company Limited (“PRCL”, “PAKRI” or “Pak-Re”).

Companies Act Companies Act, 2017.

Company’s Legal Advisor Ghazi & Magsi, Barristers, Advocates & Legal Consultants.

Commission Securities & Exchange Commission of Pakistan (“SECP”).

Consolidated Bids A bid which is fully or partially beneficially owned by persons other than the one named therein.

Designated Institution Pakistan Stock Exchange Limited (“PSX”) will act as the Designated Institution for this Offer.

Dutch Auction Method The method through which Strike Price is determined by arranging all the Bids in descending order based on Bid Prices along with the number of shares and the cumulative number of shares bid for at each Bid Price level. The Strike Price is determined by lowering the Bid Price to the extent that the total number of shares offered under the Book Building Portion is subscribed.

e-IPO facility

e-IPO refers to electronic submission of applications for subscription of securities offered in an IPO. The following systems are available for e-IPOs: (i) PSX’s e-IPO System (PES): In order to facilitate investors, PSX has developed an e-IPO System (“PES”) through which electronic applications can be filed for subscription of securities offered to the general public. PES can be accessed through the web link (https://eipo.psx.com.pk). Investors can register themselves online at any time 24/7. On behalf of an investors, registration can also be done by:

the TREC Holder with whom the investor has a sub-account, or

the Bank with whom the investor has a bank account. An e-IPO application can be filed by an investor during the public subscription period which shall close at midnight on DD/MM/YYYY. On behalf of investors, e-IPO applications can also be filed by:


the Bank with whom the investor has a bank account. Subscription money can paid by the investor through 1LINK or NIFT. On behalf of investors, subscription money can also be paid by:


the Bank with whom the investor has a bank account.


Page 9 of 154

In case of queries regarding PES, investors may contact Mr. Farrukh Shahzad at phone number: 111-001-122 or (021)-35274401-10, and email: [email protected]. (ii) Centralized e-IPO System (CES): CES can be accessed through the web link (www.cdceipo.com). Payment of subscription money can be made through 1LINK’s member banks available for CES.

For making application though CES, investors must be registered with CES. Registration can be done under a self-registration process by filling the CES registration form, which is available 24/7 all throughout the year.

In addition to the above, investors/sub-account holder(s) can request their respective TREC Holders who are Participants in Central Depository System (CDS) to make electronic subscription on their behalf for subscription of securities of a specific company by authorizing (adding the details of) their respective Participant(s) in CES. Consequently, authorized Participants will electronically subscribe on behalf of their sub-account holder(s) in securities offered through Initial Public Offerings and will also be able to make payment against such electronic subscriptions through all the available channels mentioned on CES only after receiving the subscription amount from the sub-account holder(s). To enable this feature, the CDS Participant may request CDC to activate his ID on the CES portal.

For queries regarding CES, investors may contact CDC at phone number: 0800 – 23275 (CDCPL) and e-mail: [email protected] or contact Mr. Owais Anwer at Phone 021-111-111-500 Ext 500 and email: [email protected]

(iii) e-IPO facilities by Bankers to the Issue: Currently, UBL is providing e-IPO facilities to its respective accountholders. UBL account holders can use UBL Net Banking to submit their application via link http://www.ubldirect.com/corporate/ebank Account holders of UBL can submit their applications through the above mentioned link 24 hours a day during the subscription period which will close at midnight on xx.

Eligible Investor An Individual or Institutional Investor whose Bid Amount is not less than the minimum bid size of PKR 1,000,000 (One Million Rupees only).

Floor Price The minimum price per share set by the Offeror in consultation with Lead Manager / Consultant to the Offer. This will be notified through an announcement through the Pakistan Stock Exchange and/or placed on its website and on websites of the Lead Manager / Consultant to the Offeror and Book Runner after close of market hours on DD/MM/2021 after approval of PC Board and CCOP.

General Public All Individual and Institutional Investors including both Pakistani (residents & non-residents) and foreign investors.

High Net Worth Individual (HNWI)

Individual investor who bids for shares of the value of PKR 1,000,000/- or above.

Institutional Investors Any of the following entities: A financial institution; A company as defined in the Companies Act; An insurance company established under the Insurance Ordinance, 2000; A securities broker; A fund established as Collective Investment Scheme under the Non-Banking

Finance Companies and Notified Entities Regulations, 2008;




http://www.ubldirect.com/corporate/ebank


Page 10 of 154

A fund established as Voluntary Pension Scheme under the Voluntary Pension System Rules, 2005;

A private fund established under Private Fund Regulations, 2015; Any employee’s fund established for beneficial of employees; Any other fund established under any special enactment; A foreign company or any other foreign legal person; and Any other entity as specified by the Commission.

Lead Manager to the Offer Any person licensed by the Commission to act as a Consultant to the Offer under the Public Offering (Regulated Securities Activities Licensing) Regulations, 2017. Next Capital Limited has been appointed as Lead Manager/ Consultant to the Offer by Privatization Commission for this SPO.

Limit Bid The bid at a Limit Price.

Limit Price The maximum price (up to 40% of the Floor Price) a prospective Bidder is willing to pay for a share under the Book Building.

Listing Regulations Chapter 5 of the Rule Book of the Pakistan Stock Exchange Limited, titled ‘Listing of Companies and Securities Regulations’. The PSX Rule Book is available at: https://www.psx.com.pk/psx/themes/psx/uploads/PSX_Rulebook_%28updated_on-June_22_2021%29.pdf

Margin Money The partial or total amount, as the case may be, paid by a bidder at the time of registering as an Eligible Investor. The Book Runner shall collect full amount of the bid money as Margin Money in respect of bids placed by an individual investor and not less than twenty five percent (25%) of the bid money as Margin Money in respect of bids placed by institutional investors.

Minimum Bid Size The Bid amount equal to One Million Rupees (PKR 1,000,000/-).

Offeror Government of Pakistan.

Offer for Sale 60,000,000 ordinary shares of the Company representing 20% of paid-up capital of the Company (“OFS”).

Offer for Sale Price The price at which Ordinary Shares of the Company are offered to the Eligible Investors / General Public. In this Offer, the Offer for Sale Price will be the Strike Price.

Ordinary Shares Ordinary shares of the Company.

OFSD OFSD means any document described or issued as an Offer for Sale Document and includes any document, notice, circular, material, advertisement, and Offer for Sale Document, publication or other invitation offering to the public (or any section of the public) or inviting offers from the public for the subscription or purchase of any securities of a company.

Price Band Floor Price with an upper limit of 40% above the Floor Price, allowing Bidder to make Bid at Floor Price or within the Price Band.

PO Regulations The Public Offering Regulations, 2017 as amended from time to time. The PO Regulations are available at: https://www.secp.gov.pk/document/s-r-o-296i-2017-public-offering-regulations-2017/?wpdmdl=41322&refresh=60e55e2d938991625644589

https://www.psx.com.pk/psx/themes/psx/uploads/PSX_Rulebook_%28updated_on-June_22_2021%29.pdf

https://www.psx.com.pk/psx/themes/psx/uploads/PSX_Rulebook_%28updated_on-June_22_2021%29.pdf

https://www.secp.gov.pk/document/s-r-o-296i-2017-public-offering-regulations-2017/?wpdmdl=41322&refresh=60e55e2d938991625644589




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Registration Form The form which is to be submitted by the Eligible Investors for registration to participate in the Book Building process.

Registration Period The period during which registration of bidders is carried out. The registration period shall commence at least three days before the start of the Bidding Period from DD/MM/2021 to DD/MM/2021 from 9:00 am to 5:00 pm (during working days) and shall remain open till 3:00 pm on the last day of the Bidding Period i.e. DD/MM/2021.

Related Employees Related Employees mean such employees of the Offeror, the Company, the Book Runner, and the Lead Manager / Consultant to the Offer, who are involved in the Offer. Please refer to Part 12.28 for further details.

Secondary Public Offering Means offer of securities to the general public subsequent to Initial Public Offering.

Sponsor a) A person who has contributed initial capital in the issuing company or has the right to appoint majority of the directors on the board of the issuing company directly or indirectly; b) A person who replaces the person referred to in clause (a) above; and c) A person or group of persons who has control of the issuing company whether directly or indirectly.

Step Bid Step Bid means a series of Limit Bids at increasing prices. In case of a step bid, the amount of each step will not be less than Rupees One Million (PKR 1,000,000/-).

Strike Price

The price per ordinary share of the Offer determined / discovered on the basis of Book Building process in the manner provided in the PO Regulations, at which the shares are issued to the successful bidders. The Strike Price will be disseminated after conclusion of Book Building through publication of Supplement to the OFSD in at least all those newspapers in which the OFSD was published and also posted on the websites of the PSX, Lead Manager / Consultant to the Offer and Book Runner.

Supplement to the OFSD The Supplement to the OFSD shall be published within three (3) working days of the closing of the Bidding Period at least in all those newspapers in which the OFSD was earlier published and disseminated through the PSX.

System An online electronic system operated by the Designated Institution for conducting Book Building. In this SPO, the System is being provided by PSX.

Transaction Legal Advisor Haidermota & Co.

Interpretation: ANY CAPITALIZED TERM CONTAINED IN THIS OFSD, WHICH IS IDENTICAL TO A CAPITALIZED TERM DEFINED HEREIN, SHALL, UNLESS THE CONTEXT EXPRESSLY INDICATES OR REQUIRES OTHERWISE AND TO THE EXTENT AS MAY BE APPLICABLE GIVEN THE CONTEXT, HAVE THE SAME MEANING AS THE CAPITALIZED / DEFINED TERM PROVIDED HEREIN.


Page 12 of 154

Table of Contents

1 APPROVALS, CONSENTS, AND LISTING ON THE STOCK EXCHANGE .................................................. 13

2 SUMMARY OF THE OFSD ................................................................................................................... 15

3 OVERVIEW, HISTORY AND PROSPECTS ............................................................................................. 21

3A SHARE CAPITAL AND RELATED MATTERS .......................................................................................... 46

4 PRINCIPAL PURPOSE OF THE OFFER AND FUNDING ARRANGEMENTS ............................................. 48

4A VALUATION SECTION ....................................................................................................................... 48

5 RISK FACTORS .................................................................................................................................... 49

6 FINANCIAL INFORMATION ................................................................................................................ 58

6A REVALUATION OF FIXED ASSETS ....................................................................................................... 80

6B DIVIDEND POLICY............................................................................................................................... 80

7 MANAGEMENT OF THE COMPANY ................................................................................................... 81

8 LEGAL PROCEEDINGS AND OVERDUE LOANS .................................................................................... 89

9 UNDERWRITING ARRANGEMENT, COMMISSIONS, BROKERAGE AND OTHER EXPENSES................. 97

10 MISCELLANEOUS INFORMATION ...................................................................................................... 99

11 MATERIAL CONTRACTS ................................................................................................................... 102

12 BOOK BUILDING PROCEDURE ......................................................................................................... 103

13 APPLICATION AND ALLOTMENT INSTRUCTIONS FOR RETAIL PORTION .......................................... 125

14 SIGNATORIES TO THE OFSD ............................................................................................................. 135

15 MEMORANDUM OF ASSOCIATION ................................................................................................. 138

16 BIDDING FORMS .............................................................................................................................. 147

17 APPLICATION FORM ........................................................................................................................ 153


Page 13 of 154

1 APPROVALS, CONSENTS, AND LISTING ON THE STOCK EXCHANGE

1.1. APPROVAL OF THE SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN

Approval of the Securities & Exchange Commission of Pakistan (the "Commission" or the "SECP") under Section 87(2) of the Securities Act, 2015 read with Section 88(1) thereof, has been obtained for the Issue, circulation and publication of this offering document (hereinafter referred to as the “Offer for Sale Document”) vide their letter No. XX. DISCLAIMER: IT MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS APPROVAL, SECP DOES NOT TAKE ANY RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF THE COMPANY AND ANY OF ITS SCHEMES STATED HEREIN OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINIONS EXPRESSED WITH REGARD TO THEM BY THE COMPANY IN THIS OFSD. SECP HAS NOT EVALUATED QUALITY OF THE OFFER AND ITS APPROVAL FOR ISSUE, CIRCULATION AND PUBLICATION OF THE OFSD SHOULD NOT BE CONSTRUED AS ANY COMMITMENT OF THE SAME. THE PUBLIC / INVESTORS SHOULD CONDUCT THEIR OWN INDEPENDENT DUE DILIGENCE AND ANALYSIS REGARDING THE QUALITY OF THE ISSUE BEFORE SUBSCRIBING. SECP NEITHER TAKES RESPONSIBILITY FOR CORRECTNESS OF THE CONTENTS OF THIS OFSD NOR THE ABILITY OF THE OFFEROR TO FULFILL ITS OBLIGATIONS THEREUNDER. 1.2. APPROVAL OF OFSD BY PSX

The OFSD has been approved by PSX vide letter No. XX dated DD/MM/2021. DISCLAIMER: PSX HAS NOT EVALUATED THE QUALITY OF THE OFFER AND ITS APPROVAL SHOULD NOT BE CONSTRUED AS ANY COMMITMENT OF THE SAME. THE PUBLIC / INVESTORS SHOULD CONDUCT THEIR OWN INDEPENDENT INVESTIGATION AND ANALYSIS REGARDING THE QUALITY OF THE OFFER BEFORE SUBSCRIBING. THE PUBLICATION OF THIS DOCUMENT DOES NOT REPRESENT SOLICITATION BY PSX. THE CONTENTS OF THIS DOCUMENT DOES NOT CONSTITUTE AN INVITATION TO INVEST IN SHARES OR SUBSCRIBE FOR ANY SECURITIES OR OTHER FINANCIAL INSTRUMENT BY PSX, NOR SHOULD IT OR ANY PART OF IT FORM THE BASIS OF, OR BE RELIED UPON IN ANY CONNECTION WITH ANY CONTRACT OR COMMITMENT WHATSOEVER OF PSX. IT IS CLARIFIED THAT INFORMATION IN THIS OFSD SHOULD NOT BE CONSTRUED AS ADVICE ON ANY PARTICULAR MATTER BY PSX AND MUST NOT BE TREATED AS A SUBSTITUTE FOR SPECIFIC ADVICE. PSX DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWEVER ARISING FROM OR IN RELIANCE UPON THIS DOCUMENT TO ANYONE, ARISING FROM ANY REASON, INCLUDING, BUT NOT LIMITED TO, INACCURACIES, INCOMPLETENESS AND / OR MISTAKES, FOR DECISIONS AND / OR ACTIONS TAKEN, BASED ON THIS DOCUMENT.


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PSX NEITHER TAKES RESPONSIBILITY FOR THE CORRECTNESS OF CONTENTS OF THIS DOCUMENT NOR THE ABILITY OF THE COMPANY TO FULFILL ITS OBLIGATIONS THEREUNDER. ADVICE FROM A SUITABLY QUALIFIED PROFESSIONAL SHOULD ALWAYS BE SOUGHT BY INVESTORS IN RELATION TO ANY PARTICULAR INVESTMENT. 1.3. STATEMENT OF FILING OF OFSD

The Offeror has delivered to the Registrar of Companies as required under Sections 57 (1) of the Companies Act, a copy of this OFSD signed by the Offeror and Directors of the Company.

[the space has been left blank intentionally]


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2 SUMMARY OF THE OFSD

2.1. PRIMARY BUSINESS OF THE COMPANY AND THE INDUSTRY IN WHICH IT OPERATES

Pakistan Reinsurance Company Limited (PAKRI) is the only reinsurance company of Pakistan. PAKRI is involved in providing reinsurance / retakaful services to general insurance and takaful companies.

2.2. SPONSORS

The Government of Pakistan holds approximately 45% of the shareholding in the Company through Ministry of Commerce.

2.3. SALIENT FEATURES OF THE OFFER

Government of Pakistan through the PC intends to divest 20% shares of PAKRI via Secondary Public Offering. Accordingly, 60,000,000 shares are being offered via this OFSD to the Institutional Investors, High Net Worth Individuals and general public. The shares will be offered by conducting 100% Book Building. Successful bidders will be provisionally allocated 75% of the Offer size (45 million shares) and 25% of the total transaction (15 million shares) will be issued to the general public. Any unsubscribed shares from the general public portion will be allotted to successful bidders on a pro rata basis.

2.4. PRE AND POST SHAREHOLDING AND FREE FLOAT

Ministry of Commerce ,

44.9%

State Life –Policy

Holders’ Fund, 24.4%

PRCL Employees Emp. Trust,

6.1%

National Bank of

Pakistan , 3.5%

Directors, 0.0%

Others, 21.1%

Pre SPO Shareholding

Ministry of Commerce ,

24.9%

State Life –Policy

Holders’ Fund, 24.4%PRCL

Employees Emp. Trust,

6.1%

National Bank of

Pakistan , 3.5%

Directors, 0.0%

Others, 41.1%

Post SPO Shareholding


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Pattern of Shareholding Pre SPO Post SPO

No. of Shares % No. of Shares %

Ministry of Commerce 134,639,785 44.9% 74,639,785 24.9%

State Life – Policy Holders’ Fund 73,232,201 24.4% 73,232,201 24.4%

PRCL Employees Emp. Trust 18,359,971 6.1% 18,359,971 6.1%

National Bank of Pakistan 10,555,000 3.5% 10,555,000 3.5%

Directors 610 0.0% 610 0.0%

Others 63,212,433 21.1% 123,212,433 41.1%

Banks, DFIs, Insurance 13,196,031 4.4%

123,212,433 41.1%

Foreign Companies 12,750,000 4.3%

Mutual Funds 1,519,000 0.5%

General Public 34,491,342 11.5%

Others 1,256,060 0.4%

300,000,000 100.0% 300,000,000 100.0%

Free Float Pre SPO Post SPO

No. of Shares in Free Float 75,000,000 135,000,000

% of Free Float 25% 45%

2.5. PRINCIPAL PURPOSE OF THE OFFER

Divestment of stake by GoP is being undertaken with the following main objectives:

Mobilize savings of individuals, households and institutions of Pakistan by allowing them to take ownership in the successful business of PAKRI;

Improve standing of domestic capital markets; and

Maximize sale proceeds for GoP.

2.6. VALUATION SECTION

Details on the floor price of the SPO are given in part 4A.

2.7. QUALIFIED OPINION BY AUDITORS

Year Auditors Qualifications

2020 Auditors Remarks: 1. As disclosed in note 13 to the financial statements, loans and other receivables include

receivable from Sindh Revenue Board (SRB) amounting to Rs. 2,573.89 (2019: Rs. 2,573.89) million which was recovered by SRB against the sales tax liability on reinsurance services. The Company has recorded this amount as an asset, however the Company could not substantiate any control over the underlying asset and the flow of economic benefits is improbable due to ongoing Court case. Had the Company not recorded this asset, total assets, accumulated profits, shareholders’ equity and solvency would have been reduced by the same amount accordingly.

Management’s Point of View: Based on the legal opinion, the Company is expecting a favourable decision from Honorable Sindh High Court and the amount recovered by SRB shall


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be refunded to the Company. Accordingly, the Company has recorded the amount recovered by SRB as receivable

2. As disclosed in 16, 24, 34, 35, 36, 20, 32, 43 and 50 to the financial statements, certain

account balances and class of transactions have been recorded against treaty proportional business. We were unable to obtain sufficient and appropriate audit evidence in respect of such account balances and class of transactions because the Company does not obtain necessary documents from ceding companies for record keeping and verification, but solely relies on the amounts mentioned in statutory quarterly returns for the purpose of recording transactions. Consequently, we were unable to determine whether any adjustment to these amounts were necessary.

Management’s Point of View: As prescribed under section 43 of Insurance Ordinance 2000, the

Company records the transactions relating to Premiums, Claims and Commissions on account of its treaty business on the basis of returns received from Ceding Insurance Companies and require the supporting documents from them whenever deemed necessary. However, as pointed out by the auditors, the further supporting documents are also being required from the ceding insurers.

2019 None

2018 Auditors Remarks: 1. As on December 31, 2018, the balance under the head “Insurance/Reinsurers

receivables” include an amount of Rs. 699.018 million in respect of which balance confirmation has not been received. Management has recorded a provision amounting to Rs. 325.752 million in respect of these balances. In the absence of an independent confirmation we are unable to confirm the existence and valuation related to this amount. The Company is in process of reconciling all balances with ceding companies as detailed in note 14.2 of the financial statements. Due to pending confirmation/reconciliation relating to all balances, resultant adjustment and consequential impact therefore, if any, on the financial statements remain unascertained.

Management’s Point of View: The Company has requested these companies for the confirmation of the balance several times. Sufficient provision has however been made against balances receivable from the companies which are either closed or are not actively doing the business. Auditors Remarks: 2. Ceding companies were requested to report their Treaty IBNR claim reserves for the year

ended December 31, 2018 on the basis of which the Company recorded Treaty IBNR claim reserves amounting to Rs. 65.12 million in respect of confirmation provided by one ceding company. The Company has not received intimation in respect of IBNR claim reserves from other ceding companies in respect of Treaty claims reserves, however, negative confirmation has been circulated. In respect of IBNR claim reserves for facultative insurance, the Company recorded Facultative IBNR on basis of actuarial valuation amounting to Rs. 142.683 million.

Management’s Point of View: As explained above, the Company recorded IBNR on the basis of actuarial valuation for facultative business. For treaty business IBNR has been recorded to the extent of information received from ceding companies.


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2.8. FINANCIAL HIGHLIGHTS OF THE COMPANY

Summary of Financials (PKR million) – for the year ended Dec 31, 2017 2018 2019 2020

Paid Up Capital 3,000 3,000 3,000 3,000

Net Worth / Equity 10,050 9,408 9,829 10,242

Total Assets 23,983 24,459 35,807 35,765

Total Liabilities 13,933 15,051 25,978 25,253

Gross Premium 8,036 10,734 17,655 16,896

Net Premium 5,006 5,464 6,905 6,709

Net Claims 3,740 2,990 4,259 3,925

Underwriting Results (677) 583 506 766

Profit from Window Retakaful Operations - Operator's fund - 0.11 9.24 30.45

Profit Before Tax 2,876 1,730 2,189 1,972

Profit After Tax 2,226 1,228 1,484 1,391

Underwriting Results (%) -14% 11% 7% 11%

Net Margin 44% 22% 21% 21%

Claims Ratio 75% 55% 62% 58%

Combined Ratio 114% 89% 93% 82%

EPS 7.42 4.09 4.95 4.64

BVPS 33.50 31.36 32.76 34.14

Cash flow from operations (3,318) 544 531 1,436

2.9. OUTSTANDING LEGAL PROCEEDINGS OF THE COMPANY

Case Description Financial Impact

Dispute with Karachi Port Trust

The Company has a dispute in respect of the unilateral increase in rentals of its lease hold land by Karachi Port Trust (KPT) being exorbitant and unreasonable, a view supported by the Company's legal advisor. Details and status of the case are provided in Part 8.

PKR 31,693,297

Notice from Regional Director of Employee Old Age Benefit Institution (EOBI)

The Company has received a notice from the Regional Director of Employee Old Age Benefit Institution (EOBI) vide letter dated October 31, 2009 that Pakistan Reinsurance Company Limited is required to be registered with EOBI. The Company is of the view that since it is a statutory body corporate under the management and control of Ministry of Commerce, Government of Pakistan and have its own pensioner rules and limitation and therefore provisions of EOBI Act, 1976 are not applicable. Details and status of the case are provided in Part 8.

PKR 455,900

Contingency related to Sales Tax

The Company received a notice from Sindh Revenue Board (SRB) relating to non-filing of Sales Tax return on services provided by PRCL to Insurance Companies. The Company contested the notice, however, the decision was made against the Company giving rise to sales tax liability amounting to Rs. 3,242 million and tax penalty of Rs. 880 million for financial year 2011 and 2012. The Company filed an appeal with Commissioner of Appeals, Sindh Revenue Board, however, it was rejected. The Company again filed an appeal with the Appellate Tribunal

PKR 13,199,516,538


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where the decision was made against the Company vide order number AT-02/2013/109/2013 dated February 03, 2016. As a result, the Company filed reference in the Honourable High Court of Sindh against the orders of Appellant Tribunal. Further developments on the matter are disclosed in Part 8.1 of the OFSD. Based on the legal opinion of the company’s legal advisor, management is confident that strong grounds exist to contest the case and that the eventual resolution of the matter would be in favour of the Company. Accordingly, no provision for sales tax liability for the years 2011 to 2020 has been recorded in these financial statements.

Contingency related to income tax

Federal Board of Revenue (FBR) has issued show-cause notices dated November 22, 2017, whereby the Company is required to explain as to why Federal Excise Duty (FED) on aggregate reinsurance premium revenue has not been paid in respect of tax periods from October 2012 to September 2017. The Company has submitted its reply against show-cause challenging levy of FED on various legal grounds. Further, the Company also filed Constitutional Petition against show cause notices in the Honourable High Court of Sindh and the Honourable High Court of Sindh vide order dated January 29, 2018 has suspended the proceedings initiated through the above show-cause notice. This case is pending for finalization before the Honourable High Court of Sindh. The Company is confident that outcome of the case will be in favor of Company in light of the 18th amendment in the Constitution of Pakistan.

PKR 1,728,665,305

Federal Excise Duty

Federal Board of Revenue (FBR) has issued show-cause notices dated November 22, 2017, whereby the Company is required to explain as to why Federal Excise Duty (FED) on aggregate reinsurance premium revenue has not been paid in respect of tax periods from October 2012 to September 2017. The Company has submitted its reply against show-cause challenging levy of FED on various legal grounds. Further, the Company also filed Constitutional Petition against show cause notices in the Honourable High Court of Sindh and the Honourable High Court of Sindh vide order dated January 29, 2019 has suspended the proceedings initiated through the above show-cause notice.

PKR 4,073,379,063

Insurance Payables

The ceding companies have filed various suits amounting to Rs. 65,149,495 (2019: Rs. 57,135,015) against the Company for recovery of claims. Based on the legal opinion of the company’s legal advisor, management is confident that strong grounds exist to contest the cases and that the eventual resolution of the matter would be in favour of the Company. Accordingly, no provision has been recorded in the financial statements relating to these claims.

PKR 65,149,495

Details of all the outstanding legal proceedings of the Company have been disclosed in Part 8. 2.10. RISK FACTORS

A detailed description of the risk factors of the Company is given in Part 5.

2.11. RELATED PARTY TRANSACTIONS

Summary of related party transactions of the Company is provided below:


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(PKR Million) – for the year ended Dec 31, 2017 2018 2019 2020

Major shareholder

Government of Pakistan (GoP) through Ministry of Commerce

Dividend paid for the preceding year 404 471 269 269

State Life Insurance Corporation of Pakistan


Total dividend 624 728 416 416

Related parties by virtue of GoP's holdings

State Bank of Pakistan

Purchase of investment (Treasury Bills) 4,980 6,662 10,792 4,816

Dividend received during the year 0.05 0.05 0.05 0.05

Pakistan State Oil Company Limited

Dividend received during the year 0.17 0.15 0.12 -

National Investment Trust Limited

Dividend received during the year 68 48 48 54

National Insurance Company Limited

Premium due but unpaid 1,398 1,545 2,277 3,760

Insurance premium written during the year 2,733 4,353 10,203 10,350

Premium received (2,586) (3,620) (7,108) (10,782)

Balance at the end of year 1,545 2,277 5,372 3,327

Insurance commission paid 232 61 501 504

Insurance claims paid 1,645 27 2,850 5,752

Received from Ministry of Religious Affairs against National Investment Trust (NIT) zakat deduction

114 - - -

Amount received on account of PIGL bogus reinsurance claims from National Accountability Bureau

- 64 - -

Other related parties

Remuneration including benefits and perquisites of key management personnel

677 627 456 286


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3 OVERVIEW, HISTORY AND PROSPECTS

3.1. COMPANY HISTORY AND OVERVIEW

Name Pakistan Reinsurance Company Limited

Registration Number 0041092

Date of Incorporation 30th March, 2000

Date of Commencement of Business 9th August, 2001

Pakistan Reinsurance Company Limited (“PAKRI”) is the sole reinsurance company of Pakistan. PAKRI was incorporated in Pakistan as a public limited company in 2000. In 2001, it took over all the assets and liabilities of former Pakistan Insurance Corporation (PIC) formed under PIC Act 1952 in order to support local insurance industry. It is a public sector company working as an autonomous body under the Ministry of Commerce, Government of Pakistan. PAKRI’s prime objective is the development of insurance and reinsurance business in Pakistan. As the national reinsurer, it provides reinsurance protection to the local insurance industry in view of treaty and facultative business. By providing reinsurance services locally, PAKRI enhances the foreign exchange retention capacity of the country. The Company is also collaborating and participating with its international counterparts in the field of reinsurance. This is being achieved under the aegis of Economic Cooperation Organization (ECO) with the object of reducing the outflow of foreign exchange and improving the standard of insurance and reinsurance services in the region. PAKRI is also one of the pioneers and founder members of the Federation Afro-Asian Insurers and Reinsurers (FAIR) which promotes cooperation among insurance and reinsurance companies in Africa and Asia.

3.2. PATTERN OF SHAREHOLDING OF THE COMPANY

44.9%

24.4%

6.1%

3.5%

0.0%

21.1%Ministry of Commerce

State Life – Policy Holders’ Fund

PRCL Employees Emp. Trust

National Bank of Pakistan

Directors

Others


Page 22 of 154

Pattern of Shareholding as at December 31 2020 No. of Shares %

Ministry of Commerce 134,639,785 44.9%

State Life – Policy Holders’ Fund 73,232,201 24.4%

PRCL Employees Emp. Trust 18,359,971 6.1%

National Bank of Pakistan 10,555,000 3.5%

Directors 610 0.0%

Others 63,212,433 21.1%

300,000,000 100.0%

Ministry of Commerce The Ministry of Commerce is a Cabinet-level ministry of the Government of Pakistan concerned with economic growth and commerce development and promotion in Pakistan. The organizations attached to the ministry include Trade Development Authority of Pakistan, Trading Corporation of Pakistan, State Life Insurance Corporation of Pakistan (SLIC), National Insurance Company Limited (NICL), Pakistan Reinsurance Company Limited (PAKRI), Trade Dispute Resolution Organization, Expo Center Lahore, National Tariff Commission, Directorate General of Trade Organizations, Pakistan Institute of Trade and Development, Pakistan Horticulture Development & Export Company and Intellectual Property Organization of Pakistan. PRCL Employee Empowerment Trust Government of Pakistan (GoP) launched Benazir Employees' Stock Option Scheme in 2009 for employees of certain State-Owned Enterprises (SOEs) and Non-State-Owned Enterprises where GoP holds significant investments (Non-SOEs). The Scheme is applicable to permanent and contractual employees who were in employment of these entities including PAKRI on the date of launch of the Scheme, subject to completion of five years vesting period by all contractual employees and by permanent employees in certain instances. Under the scheme, GoP transferred 12% of its investment in PAKRI to PRCL Employees Empowerment Fund in 2009; GoP had 51% holding at that time, 12% of which was transferred making the effective holding of Trust to 6.1%. The Scheme provides a cash payment to employees on retirement or termination based on the price of shares of PAKRI. State Life Insurance Corporation of Pakistan – Policyholders’ Fund State Life Insurance Corporation (“SLIC”) is the largest life insurance company of Pakistan with gross written premium of approximately PKR 119 billion and total assets of PKR 1,203 billion as of December 2020. It operates throughout Pakistan within its 38 zonal offices while serving to gulf countries of UAE and Kuwait through its Dubai zonal office. SLIC’s major sponsor is Government of Pakistan holding 96.93% shareholding in the company. National Bank of Pakistan National Bank of Pakistan (“NBP”) is the largest commercial bank of Pakistan with total assets of over PKR 3,348 billion, deposits of over PKR 2,280 billion and advances of over PKR 948 billion as of March 2021. The Bank has a distribution network of over 1,514 branches in Pakistan and 21 branches overseas. It also handles treasury transactions for the Government of Pakistan as an agent to the State Bank of Pakistan. NBP’s largest sponsor is the Government of Pakistan holding 75.6% via State Bank of Pakistan.


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3.3. KEY REVENUE AND COST DRIVERS OF THE COMPANY

Key Revenue Drivers a. Economic Growth

The principle revenue driver of PAKRI is the growth in non-life insurance industry which is mainly driven by economic growth. As the business activity grows, demand for insurance also increases which in turn leads to generating demand for reinsurance business. Pakistan has started showing signs of economic development with 26% increase in income per capita during FY10 to FY19, reaching to USD 4,884 per capita on PPP basis. The ease of doing business in Pakistan has also improved as according to World Bank’s Doing Business Index 2020, Pakistan was among ‘top ten best improvers’ and has clinched its highest rank in 15 years owing to significant reforms in the areas of starting a business, registering property and resolving insolvency. As businesses will prosper, the demand for insurance would increase ultimately increasing the demand for reinsurance. Being the only domestic reinsurance company, PAKRI is well positioned to capture any anticipated growth in insurance industry. b. Statutory Requirement of Reinsurance As the insurance sector develops, the statutory requirement under Insurance Ordinance 2000 creates an obligation for reinsurance. In Section 42 of Insurance Ordinance 2000, the Federal Government directs that every insurer shall offer to reinsure with PAKRI a certain proportion of its direct non-life insurance business. Further, SRO 771 (1)/2007 of Ministry of Commerce specifies that every insurer operating in Pakistan shall continue to reinsure with PAKRI not less than 35% of the business which is in excess of the aggregate of:

Insurer’s net retention; and

The sum insured otherwise reinsured with PAKRI or with any other insurer in Pakistan but excluding any part reinsured outside Pakistan

Hence, the thriving insurance industry, statutory requirement of reinsurance along with first right of refusal are the key revenue drivers for PAKRI. c. Growth in Insurance Sector

i. Facultative Business

Facultative Business of PAKRI expands when key insurance companies like NICL book higher premiums and subsequently reinsure with PAKRI. NICL acts as the insurer of public property that includes public sector entities. As public sector companies explore new business opportunities and insure it with NICL, demand for PAKRI’s facultative business would be automatically generated. The gross written premiums from facultative business have almost tripled from PKR 4,706 million in 2014 to PKR 12,613 million in 2020. The key contributor of this staggering growth is the engineering segment while other major contributor is the fire segment with premiums of PKR 9,677 million and PKR 1,954 million respectively during 2020.


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ii. Treaty Business Treaty business grows due to strong business performance of insurance companies. Multiple treaties with insurance companies in various segments would warrant growing business for PAKRI. The premiums from treaty business have remained within the band of ~PKR 4 - 4.5 billion during the last 5 years, however its contribution to the GWP generated has declined due to excessive growth in facultative business.

d. Investment Income PAKRI holds a diversified investment portfolio of debt and equity securities of ~ PKR 12,034 million as at 31st December 2020. The portfolio generates investment income which includes dividend income, profits on Term Finance Certificates, return on sovereign debt (Pakistan Investment Bonds and Treasury Bills) and realized gain/losses on equity securities.

Category Value in PKR million

Debt 8,272

Mutual Funds1 2,001

Equity1 2,275

Total 12,548 1Based on no. of shares as of Dec 31, 2020 and share prices as of 7th July 2021

PAKRI has a qualified investment team which diligently monitors equity and debt markets to make profitable investments. In addition, the Company also invests in Mutual Funds of leading asset management companies such as HBL Asset Management, National Investment Trust, JS Investments and NBP Fund Management. e. China Pakistan Economic Corridor (“CPEC”) CPEC is another strong demand driver as dozens of projects are commissioned under it. The first phase of CPEC has been completed and second phase is gaining momentum. Projects under CPEC would create demand for insurance sector of Pakistan and would eventually be reinsured by PAKRI.

f. Takaful Islamic Finance industry has emerged with many investors opting for Shariah Compliant services. This extends to insurance as well with businesses preferring takaful product and services. As this market gets tapped by

75% 72%58% 58%

25% 28%42% 42%

2020 2019 2018 2017

Facultative Treaty


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takaful companies, the re-takaful industry will grow. In an attempt to capture this untapped market, PAKRI started its window re-takaful operations in 2018. This window operation is expected to grow as several takaful companies would offer their surplus to PAKRI.

Key Cost Drivers a. Retrocession Retrocession is the reinsuring of risks by PAKRI with foreign reinsurers. The Company has excess of loss re-insurance arrangements and relationship with some of the top global reinsurers such as Hannover Re, XL Re, Partner Re and Korean Re which are rated at least A+ by S&P. The Company follows a policy of optimizing risk retention through a carefully designed program of re-insurance. The reinsurance coverage of the Company is based on Company’s exposures, accumulation & concentration of risk at the location. Retrocession is directly proportional to the premiums generated by PAKRI. As the gross premiums booked by PAKRI rise, the premiums ceded to global reinsurers will also rise. b. Claims An insurance claim is a request by a policyholder to an insurance company for coverage or compensation for a covered loss or policy event. This creates a liability for an insurance company which it covers by ceding premiums and risks to a reinsurance company like PAKRI. Hence claims paid / payable are the direct costs of an insurance and reinsurance company. The net claims for PAKRI are calculated after deducting claims received for retrocession from claims paid to insurance companies. The claims payable is also proportional to the premiums written. PAKRI has historically witnessed a claims ratio of 50-75%. c. Commission Since the local insurance companies bring business to PAKRI, the Company pays a commission to them in return. Similarly, PAKRI gets paid a commission for providing business to foreign reinsurers by ceding premiums to them. Commissions are also directly related to the business activity of the Company. PAKRI pays commission for proportionate treaty arrangements. As the volume of premiums brought to PAKRI by the insurance companies increases, the commissions payable would also rise accordingly. d. Management Expenses Management expenses are the administrative expenses of running the Company. The major portion is related to salaries and other employee benefits while other significant expenses include utilities, medical and repairs & maintenance. These expenses are expected to grow by the rate of general increase in price level i.e. inflation rate as well as any major business expansions. These expenses are controlled by effective cost management activities.

3.4. ORGANISATIONAL STRUCTURE OF THE COMPANY AND GROUP INFORMATION

The Company had a total manpower strength of 184, including 157 permanent employees and 27 contractual employees at at December 31, 2020. The organizational structure promotes formal reporting lines, while the final reporting authority rests with the CEO. Each individual within the organization is responsible to his/her


Page 26 of 154

immediate supervisor. It is the responsibility of all Divisional Heads to consolidate and forward information, on all issues that arise, to the CEO for approval.

Government of Pakistan (the Offeror) is the sponsor of the Company holding 45% shares via Ministry of Commerce. In the listed companies where the GoP has substantial shareholding, those listed companies are required to comply with the existing applicable regulatory framework. Information regarding such companies is available on the PSX's Data Portal as well as on the websites of the respective companies.

3.5. MAJOR EVENTS IN THE HISTORY OF THE COMPANY

Year Description

2000 Incorporation of the Company

2001 Transfer of business from Pakistan Insurance Corporation to PAKRI

2009 1st Achiever Award by RAKz Communications (Pvt.) Limited

Board of Directors

CEO

Reg. Director

North Zone

GM Information

Management

Manager Fire

Manager Accident

& Fire

Manager Health &

Lif e 1

Manager Marine

& Av iation

Manager Claims

Ex. Director

Business

Development

Ex. Director

Reinsurance

Company

SecretaryCFO

Ex. Director

HR

GM ReinsuranceGM Business

DevelopmentGM Finance

Chief Internal

Auditor

Manager

Business Dev

Manager Risk

Mgmt & Research

Manager NZ

Lahore

Manager Data

Mgmt

Manager

Operations

Manager

Business Sy stems

Manager Legal Manager Treasury

Manager Account

Planning

Manager HR

Manager Admin

Manager Internal

Audit

GM WRTOCompliance

Officer

GM Risk

Management


Page 27 of 154

2012 Winner of 28th Corporate Excellence Award in Non-Life Insurance by Management Association of Pakistan

Gold Medal by Federation of Pakistan Chambers of Commerce & Industries for 1st FPCCI Achievement Award

2013 Winner of 29th Corporate Excellence Certificate in Non-Life Insurance by Management Association of Pakistan

2018 Re-takaful Window opened

2019 Added into Active Privatisation Programme

PAKRI was incorporated in Pakistan as a public limited company on March 30, 2000. Subsequently, it took over all the assets and liabilities of former Pakistan Insurance Corporation (PIC) vide SRO No.98(1)/2000 dated February 14, 2001 of the Ministry of Commerce issued in terms of Pakistan Insurance Corporation (Re-organization) Ordinance, 2000 to convert PIC into PAKRI. Accordingly, PIC has been dissolved and ceased to exist and the operations and undertakings of PIC are being carried out by PAKRI. The Company has earned multiple awards and achievements since its inception. During 2009, it was the recipient of 1st Achiever Award by RAKz Communications (Pvt.) Limited at National Achiever Award Ceremony. Similarly, in 2012 it received the 28th Corporate Excellence Award in Non-Life Insurance by Management Association of Pakistan (MAP) and a Gold Medal by Federation of Pakistan Chambers of Commerce and Industries for 1st FPCCI Achievement Award. Next year, it bagged the 29th Corporate Excellence Certificate in Non-Life Insurance by Management Association of Pakistan (MAP). In order to cater to the Shariah Compliant companies, PAKRI applied for Retakaful license which was granted by SECP in 2018 under Rules 6 of Retakaful Rules, 2012 to undertake General Window Retakaful Operations. Accordingly, the Company started its Retakaful business in 2019. During 2019, the Company was added into the Active Privatisation Program of the Government of Pakistan vide PC Board Decision dated 26th August 2019, in pursuance to CCoP’s decision dated 08th August 2019.

3.6. NATURE AND LOCATION OF THE COMPANY’S PROJECTS

This information requirement is not applicable as PAKRI is a service company.

3.7. INFRASTRUCTURE FACILITIES

The Company owns following properties:

Name Address

PRC Towers Plot No. 32-A, Lalazar Drive, M.T Khan Road, Karachi

PRC Building Plot No. G - K 7 / 76, M.W. Tower, Bundar Road, Karachi

PRC House House No. 30-B, Lalazar Drive, M.T Khan Road, Karachi


Page 28 of 154

3.8. SERVICES OF THE COMPANY

Understanding of Reinsurance Reinsurance is defined as an insurance policy issued by a reinsurance company such as PAKRI to the ceding insurance company. The ceding insurance company initially underwrites policies from its policyholders, and then later shifts part or all of the risk for coverage to a reinsurer by entering into reinsurance contracts. The reinsurance companies provide reimbursement to the ceding insurance company for claims payments covered by the reinsurance contracts. It does not alter the underlying insurance policies, or the obligations created by those policies. However, it does provide protection to the ceding insurance companies against frequent or severe losses. Typically, the policyholders of insurance companies have no direct claim on the reinsurance company i.e. the policyholder does not “look through” to the reinsurer as the source of indemnification. If the reinsurance company wants to reduce its exposure, it may in turn further reinsure a portion of the risk. This reinsurance purchased by reinsurers is known as retrocessions. PAKRI’s product portfolio is broadly categorized into Treaty and Facultative business. Both types of services are further broken down into five departments namely Fire, Marine, Engineering, Accident and Aviation.


Treaty & Business Development Services

Facultative Business

Fire

Building

Machinery

Stocks

Building Components

Others

Marine

Hull & Machinery

All types of Cargo

Pleasure Boats

Ship Breaking Risk

Third Party Liability

Engineering

Property Damage

Business Interruption

Machinery Breakdown

Contractor All Risk

Erection All Risk


Aviation & Aerospace

Hull

Cargo

Spares

Hijacking & Terrorism

Personal Accident

Loss of License

Burglary

Cash in safe / counter

Product Liability

Personal Accident

Employee Liability

Professional Indemnity

Health Insurance

Livestock

Fidelity Guarantee

Crop Insurance

Accident


Page 29 of 154

Facultative Business Facultative reinsurance is coverage purchased by a primary insurer to cover a single risk or a block of risks held in the primary insurer's book of business. It is considered to be a transactional deal and is typically used for high-value or hazardous risks because the policies can be tailored to specific circumstances. Insurance companies looking to cede risk to a reinsurer may find that facultative reinsurance contracts are more expensive than treaty reinsurance because of its nature of one-time transactional deal instead of a long-term contract. While the increased cost is a burden, a facultative reinsurance arrangement may allow the ceding company to reinsure risks it may otherwise not be able to take on. PAKRI books its facultative business by reinsuring risk ceded by NICL for its key public sector clients and other insurance companies on case to case basis. Facultative business of PAKRI has been the major contributor to the revenue and have substantially increased over the last 5 years. Treaty Business Treaty reinsurance occurs whenever the ceding company agrees to cede all risks within a specific class of insurance policies to the reinsurance company. In turn, the reinsurance company agrees to indemnify the ceding company of all risks therein, even though the reinsurance company has not performed individual underwriting for each policy. By signing a treaty reinsurance contract, the reinsurer and the ceding insurance company indicate the business relationship will likely be long-term. PAKRI books its treaty business by reinsuring risks ceded by general insurance companies. As per the SRO 771 (1)/2007 of Ministry of Commerce, every insurer shall offer to reinsure at least 35% of the surplus of its direct non-life insurance business with PAKRI providing it first right of refusal. The gross written premiums from treaty business have remained within the band of ~PKR 4 - 4.8 billion during the last 5 years.

Segment Wise Gross Written Premiums (PKR Million)

Gross Written Premium 2020 2019

PKR million % PKR million %

Treaty 4,284 25.4% 4,874 27.6%

Facultative: 12,613 74.6% 12,781 72.4%

Fire 1,954 11.6% 1,899 10.8%

Marine Cargo 29 0.2% 42 0.2%

Marine Hull 378 2.2% 495 2.8%

Accident 225 1.3% 263 1.5%

4,284

9,677

1,954

350 407 225

2020

Treaty Engineering Fire Aviation Marine Accident

4,874

6,651

3,431

1,899

537 263

2019

Treaty Engineering Aviation Fire Marine Accident


Page 30 of 154

Aviation 350 2.1% 3,431 19.4%

Engineering 9,677 57.3% 6,651 37.7%

Fire & Property Damage The department came into effect in 1953 when the Pakistan Insurance Corporation was formed. This department constitutes a major portion of its business and is the focal point of the country’s insurance industry. The department is managed by vigilant staff members which are headed by an expert manager. The Fire Department has specialized expertise in the following areas:

Building

Building and contents

Stocks

Machinery

And other Insurable interest The department jointly collaborates in foreign risk sharing pacts. The following functions come under its domain:

To underwrite all facultative acceptance from the cedants i.e. insurance companies of Pakistan

To manage and supervise, treaty portfolios of the insurance industries

To assess and process claims and if necessary, their recovery from the excess of loss reinsures participants

To guide and assist its clients in complex reinsurance matter Key clients of this segment are:

Marine The Marine Department was established during the initial period of the establishment of the company divided into following categories:

Marine Cargo

Marine Hull Marine Cargo is concerned with only cargo within the particular vessels whereas Marine Hull deals with reinsurance of machinery/ body of the ships. Both Marine Cargo & Marine Hull departments make primary decision with respect to acceptance of the risks by means of Facultative and Treaty arrangements. This department consists of professionally competent employees headed by a proficient Officer having ACII qualification. The Marine Department specializes in providing reinsurance support in the following areas:


Page 31 of 154

All types of Cargo (whether by Road, Rail, Air, and by Sea)

Hull & Machineries

Freight and Ship Breaking Risks

Pleasure Boats


Key clients of this segment include:

Marine Cargo

Marine Hull

Engineering The Engineering Department is working since establishment of the Company. It specializes in reinsurance coverage to the local insurance market including National Insurance Company Limited through treaty agreements and facultative placements. The Engineering Department has specialized expertise in the following areas:

Property Damage

Business Interruption

Machinery Breakdown/Boiler

Contractor All Risks (CAR)

Erection All Risks (EAR)

Third Party Liability (TPL) Key clients of this segment include:


Page 32 of 154

Accident The Accident Department originated with the formation of the Company. The department specializes in provision of reinsurance coverage to local Insurance companies as well as foreign based companies accommodating the acceptance/retro business. Accident department of PAKRI deals with Motor/Liabilities business and accept all Motor/Non-motor risks ceded by local insurance companies. The motor risks constitute all private and commercial modes of transportation. The Non-motor includes the following areas:

Workman Compensation

Burglary

Fidelity Guarantee

Cash in Safe, Cash in Transit and Cash on Counter

Employers Liability

Public/product liability

Professional Indemnity

Personal Accident

Health Insurance

Crop Insurance

Livestock Key employees of this department possess professional qualification related to insurance and have considerable work experience of underwriting, which play an important role in effective and efficient decision-making process. The department actively conducts training sessions to update the employees about current market trends and changing market scenario. Key clients of this segment include:

Aviation & Aerospace The aviation department specializes in the aviation reinsurance arrangement to private insurance companies as well as to NICL. It offers expertise for the coverages in the following risk areas:

Hull (Body of the Aircraft)

Spares

Liabilities

Hull Deductible

Cargo

Hi-jacking and terrorism

Hull and Spares War

Loss of License / Additional Loss of License

Personal Accident to Crew

Personal Accident to Passenger


Page 33 of 154

For all the above-mentioned risks, due covers for the risks are arranged in the International Aviation Market. Among all the accounts maintained in the Aviation Department, PIA’s Fleet is the largest. Following risks are covered by five main reinsurance policies for PIA Fleet:

Hull All Risks / Spares / Liabilities

Primary Cargo

Hull War

Hull Deductible

AVN 52 E (Extended Coverage endorsement against Hijacking and Terrorism) The Aviation Department comprises of experienced and qualified staff serving with dedication and integrity. NICL is the major client of this segment which covers ~97% of the segments’ premiums.

3.9. END USERS, DEMAND FOR THE PRODUCTS AND COMPETITORS

Customer Base

The customers and end users of services offered by PAKRI are the insurance companies that cede their risks with PAKRI. The demand for the services of PAKRI will increase as the demand for insurance business increases because of statutory requirement for reinsurance. A detailed analysis of demand drivers for the services provided by PAKRI is given in a previous section.

PAKRI is the sole general reinsurer in Pakistan and hence possesses a strong customer base of over 45 general insurance companies. The biggest customer of PAKRI is National Insurance Company Limited (“NICL”) which is the sole insurer of public sector clients including PIA, PARCO, PSO, OGDC, PPL, PNSC, KSEW etc. As per letter No. 1(37)/2000-Ins II of Ministry of Commerce, NICL has to reinsure with PAKRI, on generally accepted terms and conditions, such portion of its insurance businesses it cannot retain on its own account. The gross written premiums (GWP) booked from NICL grew from PKR 3.25 billion in 2014 to PKR 10.35 billion in 2020 representing a 6-year CAGR of 21.3%. GWP from other companies also grew from PKR 5.41 billion in 2014 to PKR 6.55 billion in 2020 representing a 6-year CAGR of 3.23%. The Company also started Retakaful window in 2018 and booked gross contributions of PKR 604 million in 2020.

Some of the major revenue contributors apart from NICL include Adamjee Insurance Company Limited (AICL), Allianz EFU Health Insurance Limited (AEHIL), EFU General Insurance Limited (EFUG), Jubilee General Insurance Company Limited (JGICL) and UBL Insurers (UBLI). The revenue contribution from key customers is demonstrated below:

7% 7% 5% 5%

8% 7% 5% 5%

14% 13%9% 5%

9%8%

6% 6%

34% 40% 58% 61%

7% 6%4% 2%

20% 20% 14% 16%

2017 2018 2019 2020

AICL AEHIL EFUG JGICL NICL UBLI Others


Page 34 of 154

Competition

PAKRI is the only local reinsurance company operating in Pakistan. However, global reinsurers are operating in Pakistan through their agents. Among these, Hannover Re and Swiss Re are the most active reinsurers. Given that these companies do not have a subsidiary in Pakistan, and they operate through agents, it is very difficult to directly compare their business operations with PAKRI. Therefore, in order to gauge the efficiency of PAKRI in comparison to these global companies, the global property and casualty reinsurance figures of these companies have been compared with PAKRI. This segmental comparison is conducted because PAKRI operates only in the business of general reinsurance while these global companies have life reinsurance businesses as well. The comparison below is based on figures from annual reports of 2020 for the respective companies.

a. Combined Ratio Combined ratio is a measure of insurer profitability, calculated simply by taking the sum of claims related losses and general business costs and then dividing that sum by the earned premiums over the period. The combined ratio is arguably the most important performance ratio for an insurance company because it provides a comprehensive measure of an insurer's profitability. The combined ratio is typically expressed as a percentage. A ratio below 100 percent indicates that the company is making an underwriting profit, while a ratio above 100 percent means that it is paying out more money in claims that it is receiving from premiums. This implies that a combined ratio below 100 means that the core business is profitable with reduced reliance on investment income.

Source: Financial Statements of 2020 of respective companies

PAKRI has the lowest combined ratio compared to the top reinsurance companies providing services in Pakistan. Both comparables have a combined ratio over 100% reflecting greater claims paid in comparison to premiums earned while PAKRI has a combined ratio less than 100% reflecting core profitability. This means that claims related losses and general business costs are adequately covered by the premiums earned.

82%

102%

109%

PAKRI

Hannover RE

Swiss RE

Client wise Gross Premiums –

for the year ended Dec 31, 2017 2018 2019 2020

PKR Mn % PKR Mn % PKR Mn % PKR Mn %

Adamjee Insurance Company Limited 570 7% 719 7% 843 5% 835 5%

Allianz EFU Health Insurance Limited 671 8% 700 7% 803 5% 806 5%

EFU General Insurance Limited 1,137 14% 1,379 13% 1,541 9% 882 5%

Jubilee General Insurance Company Limited 721 9% 852 8% 1,010 6% 1,014 6%

National Insurance Company Limited 2,733 34% 4,280 40% 10,203 58% 10,350 61%

UBL Insurers 579 7% 669 6% 700 4% 349 2%

Others 1,625 20% 2,135 20% 2,555 14% 2,660 16%

Total 8,036 100% 10,734 100% 17,655 100% 16,896 100%


Page 35 of 154

b. Claims Ratio Claims Ratio measures the amount of net claims paid in a period and dividing that by the earned premium for the same period. Claims are payable when an event covered by the insurance / reinsurance policy takes place. The claims ratio of PAKRI is lower than both Swiss Re and Hannover Re indicating deployment of effective risk management techniques.


c. Premium/Equity Premiums over Equity is an activity ratio that gauges business activity generated as compared to the shareholders’ investment in the Company.


PAKRI’s Premium / Equity is higher than Hannover reflecting that it generates competitive premiums for the shareholders’, however, it is lower than Swiss Re indicating room for business expansion.

d. Net Margin Net margin refers to a company’s profit margin after all of its expenses have been accounted for, such as direct costs, operating expenses, interest, and taxes.


The net margins of PAKRI are robust compared to its global peers. PAKRI is conducting effective business operations that outperforms established global players.

58%

73%

79%

PAKRI

Hannover RE

Swiss Re

1.47

1.65

2.34

Hannover RE

PAKRI

Swiss RE

-1.2%

4.4%

20.7%

Swiss RE

Hannover RE

PAKRI


Page 36 of 154

Comparison with Local Insurance Companies In addition to the above, a comparison with leading listed insurance companies is also provided in Part 6.9 of the OFSD as the business model of PAKRI is similar to insurance companies. 3.10. INTELLECTUAL PROPERTY RIGHTS

The Company does not have any intellectual property except its logo. 3.11. MATERIAL PROPERTY

The Company owns PRC Towers located at 32 - A, Lalazar Drive, M.T Khan Road, Karachi. It is a 15-level building and is spread over 7,918 square yards with a covered area of 253,000 square feet. It has the distinction of being one of the first buildings to be designed with the earthquake resistance code. The building has an exclusive car park in the basement and ground level parking lots that can accommodate over 110 cars. It has high tension power supply of 11 KVA from K Electric supported by an in-house 500 KVA emergency standby generator. PRC Towers also possess fire protection with firefighting equipment, water hose reels and two separate fire and emergency exits. PAKRI rents out the office space in the building that generates rental income. 3.12. FUTURE OUTLOOK

During recent years, PAKRI’s gross premium have raised to PKR 17-18 billion as compared to PKR 8-10 billion in 2014-18. This huge growth is mainly attributed to new power projects reinsured during the period. Further, more projects are expected to be developed under the CPEC initiative providing potential revenue stream for the Company. In addition, the Company launched its Retakaful business in 2018 and underwrote PKR 424.8 million in 2019 and PKR 603 million during 2020. As per Insurance Association of Pakistan (IAP) Yearbook 2019-20, there are 3 general takaful companies while 22 window takaful operations. PAKRI is yet to capture this entire market that will manifold contribution of the retakaful window. The treaty business of PAKRI has been in losses due to high claims and commission expense. In a bid to make the treaty business profitable, PAKRI intends to revamp its existing treaty portfolio and intends to reduce its share in those treaties which are giving losses to the Company. As per SECP Circular Letter ID/PRDD/MISC/2016/4703 there is a per party or per risk limit whereby PAKRI can only extend its revenue per client or per risk up to 5% of its equity. As the sole reinsurer to which every general insurance company has to offer at least 35% of their surplus, there is ample room for expansion for PAKRI. In order to capture this lucrative market, the Company intends to increase the retention ratio in order to consolidate its equity and subsequently increasing the per party exposure.

Location Usage Total Area

PRC Towers Office Space 7,918 Sq Yards

PRC Building Vacant 890 Sq Yards

PRC House Bungalow 1,388 Sq Yards


Page 37 of 154

Additionally, the Company owns several investment properties including PRC Towers and PRC Building. PRC Building and some floors of PRC Towers are vacant. The Company is focusing on finding new tenants so that investment property could be fully utilized, and rental income could be increased. The development of ERP software is under process in order to improve business operations of the Company including improving quality of risk acceptance, speeding up claims processing and reducing reliance on human resources. 3.13. RETROCESSION BASE (KEY VENDORS OF THE COMPANY)

PAKRI reinsures its risks with leading global reinsurers through their agents/brokers. It deals with a group of ~40 agents / brokers but only 5-6 agents receive most of its retrocession. These include Abu Dhabi Insurance Company (ADIC), AON Group Limited (AON), Arthur G Gallagher (UK) Limited (AGG), CGNMB LLP, Guy Carpenter (GUY), Lockton (MENA) Limited Dubai (LMTD), Marsh Limited (Marsh), Willis Towers Watson (WTW). The retrocession to key parties is demonstrated in the table and chart below.

Retrocession – for the year ended Dec 31, 2017 2018 2019 2020

PKR Mn % PKR Mn % PKR Mn % PKR Mn %

Abu Dhabi Insurance Co. 303 9% 297 6% 460 4% 486 4%

Aon Group Limited 1,502 45% 190 4% 704 7% 413 4%

Arthur G Gallagher (UK) Limited - - 1,198 12% 1,466 14%

CGNMB LLP 188 6% 216 4% (12) -

Guy Carpenter 38 226 5% 368 4% 450 4%

Lockton (MENA) Limited Dubai 420 13% 1,867 39% 2,945 29% 3,810 35%

Marsh Limited 633 19% 1,719 36% 3,081 30% 572 5%

Willis Towers Watson - - 1,350 13% 3,004 28%

Others 264 9% 286 6% 177 2% 615 6%

3.14. KEY APPROVALS NECESSARY TO CONDUCT BUSINESS

Reinsurance business of the Company is conducted under Insurance Ordinance, 2000

For re-takaful business, authorization under Rule 6 of the Takaful Rules, 2012 have been obtained

9% 6% 4% 4%

45%

4% 7% 4%

12% 14%

6%

4%5%

4% 4%

13%

39% 29% 35%

19%36%

30%5%

13%

28%

9% 6% 2% 6%

2017 2018 2019 2020

ADIC AON AGG CGNMB GUY LMTD MARSH WTW Others


Page 38 of 154

3.15. GROUP STRUCTURE OF THE OFFEROR

Government of Pakistan (the Offeror) is the sponsor of the Company holding 45% shares via Ministry of Commerce. In the listed companies where the GoP has substantial shareholding, those listed companies are required to comply with the existing applicable regulatory framework. Information regarding such companies is available on the PSX's Data Portal as well as on the websites of the respective companies.

3.16. ASSOCIATED COMPANIES

In the listed companies where the GoP has substantial shareholding, those listed companies are required to comply with the existing applicable regulatory framework. Information regarding such companies is available on the PSX's Data Portal as well as on the websites of the respective companies.

3.17. RELATED PARTY TRANSACTIONS

The related parties comprise major shareholders, associated company, Directors, companies with common directorship, key management personnel, and staff retirement benefit funds. The Company in normal course of business pays for electricity, gas and telephone to entities controlled by Government of Pakistan which are not material and hence not disclosed in the financial statements. The transactions with related parties are in the normal course of business at contracted rates and terms and conditions determined on commercial terms. Summary of transactions conducted with related parties are as follows:

(PKR Million) – for the year ended Dec 31, 2017 2018 2019 2020

Major shareholder

Government of Pakistan (GoP) through Ministry of Commerce


State Life Insurance Corporation of Pakistan


Total dividend 624 728 416 416

Related parties by virtue of GoP's holdings

State Bank of Pakistan

Purchase of investment (Treasury Bills) 4,980 6,662 10,792 4,816

Dividend received during the year 0.05 0.05 0.05 0.05

Pakistan State Oil Company Limited

Dividend received during the year 0.17 0.15 0.12 -

National Investment Trust Limited

Dividend received during the year 68 48 48 54

National Insurance Company Limited

Premium due but unpaid 1,398 1,545 2,277 3,760

Insurance premium written during the year 2,733 4,353 10,203 10,350

Premium received (2,586) (3,620) (7,108) (10,782)


Page 39 of 154

Balance at the end of year 1,545 2,277 5,372 3,327

Insurance commission paid 232 61 501 504

Insurance claims paid 1,645 27 2,850 5,752

Received from Ministry of Religious Affairs against National Investment Trust (NIT) zakat deduction

114 - - -

Amount received on account of PIGL bogus reinsurance claims from National Accountability Bureau

- 64 - -

Other related parties

Remuneration including benefits and perquisites of key management personnel

677 627 456 286

3.18. PERFORMANCE OF ASSOCIATED LISTED COMPANIES

In the listed companies where the GoP has substantial shareholding, those listed companies are required to comply with the existing applicable regulatory framework. Information regarding such companies is available on the PSX's Data Portal as well as on the websites of the respective companies.

3.19. INVESTMENT PORTFOLIO OF PAKRI

PAKRI owns a diversified portfolio invested in debt securities, equity securities, mutual funds as well as investment property. The Company manages these investments in-house except for mutual funds which are outsourced to leading asset management companies.

The Company had an equity-oriented portfolio during 2017 when the equity market was booming. However, as the interest rates started to increase later on, a shift in favor of debt securities was observed. The investments at the end of 2020 were 69% in debt securities while 31% in equity securities. The portfolio has generated fruitful returns over the period that has added to the Company’s earnings. Investment income has provided adequate support to the profitability of the Company. Notably. the unusual return during 2017 was due to outstanding performance of equity market.

7.5 7.0 9.5

10.6

1.7 1.7

1.5 1.4

2017 2018 2019 2020

PK

R B

illio

n

Managed Outsourced

5.0 4.2 3.9 3.8

4.2 4.5

7.1 8.3

2017 2018 2019 2020

PK

R B

illio

n

Equity Investments Debt Investments


Page 40 of 154

The book value per share (BVPS) has been slightly higher than portfolio value / share which reflects the profitability from the core business of the Company. The latter became higher than the former in late 2019, as significant new debt investments were made.

Investment Portfolio The investment portfolio of debt and equity securities valued at latest prices sums up to PKR 12,242 million:

Category Value in PKR million

Debt 8,272

Mutual Funds1 2,001

Equity1 2,275

Total 12,548 1Based on no. of shares as of Dec 31, 2020 and share prices as of 7th July 2021 a. Debt Securities

The debt investments are primarily in Pakistan Investment Bonds (PIBs) and Treasury Bills (T-Bills). Apart from that, PAKRI has invested in a Term Finance Certificate of Bank Al Habib Limited that pays a markup of 6M KIBOR + 0.5% and matures in 2028.

Debt Instruments Market Value as of December 31, 2020 Pakistan Investment Bonds 3,199 Treasury Bills 4,793 BAHL Term Finance Certificate 100 Value of Debt Portfolio 8,272

b. Mutual Funds

A portion of PAKRI’s portfolio is invested in Mutual Funds of leading asset management companies such as National Investment Trust Limited, HBL Asset Management Company, NBP Funds Management Limited and JS Investments Limited.

3.3

0.7 1.0 1.0

2017 2018 2019 2020

PK

R B

illio

n

Investment Income

3431

3334

3129

36

40

20

30

40

50

2017 2018 2019 2020

PK

R

BVPS Portfolio Value / Share


Page 41 of 154

Mutual Funds Units (mn) NAV Market Value

HBL Growth Fund - Class A 30.41 24.28 738

NIT 8.29 75.56 627

NAFA Stock Fund 20.67 16.15 334

HBL Growth Fund - Class B 15.00 19.57 294

JS Value Fund 0.04 222.86 9

HBL Investment Fund - Class A 0.02 8.83 0

Value of Mutual Fund Investments 2,001

Based on NAV of 7th July 2021

c. Equity Investments

Equity portfolio of the Company is mainly comprised of KSE 100 Index securities with large trading volumes. The Company has chosen value stocks that generate dividend income as its mutual fund investments account for the growth stocks.

Equity Portfolio1 Shares (mn) Price (PKR/share) Market Value

Sui Northern Gas Pipeline Limited 8.7 47.7 415

Packages Limited 0.8 523.1 430

ICI Pakistan Limited 0.3 871.4 268

National Bank of Pakistan 6.8 35.9 243

Sui Southern Gas Company 12.7 13.7 173

MCB Bank Limited 0.5 158.6 79

Pakistan Petroleum Limited 0.9 86.3 77

National Refinery Limited 0.4 477.5 167

Adamjee Insurance Company Limited 1.4 40.5 57

The Hub Power Company Limited 0.5 78.4 38

Oil & Gas Development Company Limited 0.4 95.3 33

United Bank Limited 0.3 123.7 31

Pak Elektron Limited 0.6 34.8 19

Philip Morris (Pakistan) Limited 0.0 980.0 10

Ohers KSE 100 Stocks 3.6 - 21

Other than KSE 100 Stocks - - 213

Value of listed portfolio - - 2,274

Value of unlisted portfolio - - 0.62

Total Equity Portfolio - - 2,275 1Based on no. of shares as of Dec 31, 2020 and share prices as of 7th July 2021

The other KSE 100 stocks include leading companies such as Pakistan State Oil, Fauji Fertilizer Company Limited, Faysal Bank, Kot Addu Power Company Limited, Pakistan Tobacco Company Limited, K-Electric Limited while some of the other than KSE 100 stocks include Security Papers Limited, Attock Cement Pakistan Limited, Towellers Limited, The United Insurance Company and Aisha Steel Mills Limited.


Page 42 of 154

0.87%

1.94%

3.89%

7.23%

Pakistan

Emerging EMEA

Emerging APAC

Global

Insurance Penetration

192 233 255 293 308349 363

0.8% 0.9% 0.9%0.9% 0.9% 0.9%

0.9%

0.0%

0.5%

1.0%

0

100

200

300

2014 2015 2016 2017 2018 2019 2020

PK

R B

illio

n

Gross Premiums

Total Premiums Insurance Penetration

3.20. INDUSTRY OVERVIEW

Insurance Market Pakistan’s insurance industry remained underdeveloped, with very low levels of penetration and density. The affordability of insurance products is the key barrier to growth, as household incomes are low. There is also a lack of awareness of the benefits of cover and persistent cultural barriers to further uptake of insurance. Total premiums underwritten by the entire industry stood at 363 billion for 20201 representing a meager 0.87% insurance penetration in the country as compared to emerging EMEA markets average of 1.94%, emerging Asia Pacific average of 3.89% and global average of 7.23%2. However, insurers are increasingly educating the population and reaching first time users through leveraging digital solutions. There is enormous long-term potential for Pakistan’s insurance industry in light of the large, young population and the growing economy that will boost incomes and increase demand for insurance.

Sources of Data: Insurance Association of Pakistan and Swiss Re Institute Sigma 4/2020

The insurance sector of Pakistan constitutes of 39 companies as reflected in members of Insurance Association of Pakistan (IAP). These include public sector companies, private sector companies as well as foreign companies. PAKRI is the only general reinsurance company of the domestic industry. There are 30 active general insurance companies in Pakistan and 8 active life insurance companies. The premiums written by general and life insurance companies reported by IAP stood at PKR ~102 billion and PKR ~260 billion respectively for 20203. The insurance industry of Pakistan has grown from gross premiums of PKR 192 million in 2014 to PKR 363 million in 2020 representing a 6-year CAGR of 11%. This growth is mostly originating from life insurance premiums that have grown with a 6-year of CAGR of 13% while the general insurance premiums have grown by 6-year CAGR of 8%. Since the advent of the Islamic finance industry, Takaful has emerged as the counterpart to the conventional insurance service. There are 5 takaful companies in Pakistan while 27 conventional insurance companies have launched window takaful operations in order to cater to the Shariah compliant investors. The gross premiums written by takaful industry stood at PKR 42 billion for 2020 capturing 11% of the market share4 with significant growth prospects.

1 Source: Insurance Association of Pakistan – Key Financial Data 31 December 2020 2 Source: Swiss Re Institute Sigma 4/2020 3 Source: Insurance Association of Pakistan – Key Financial Data 31 December 2020 4 Source: Insurance Association of Pakistan – Key Financial Data 31 December 2020


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Source of Data: Insurance Association of Pakistan

The insurance sector is dominated by strong business groups with proven track record of successfully executing business across various sectors. These include Adamjee Group, Jubilee Group, EFU and IGI. These groups have insurance companies in both general and life insurance segment with leading market shares. These companies have operations beyond Pakistan as well; Adamjee Insurance booked 26% of its topline outside of Pakistan in 2020 while Jubilee has several foreign insurance entities operating in different parts of the world.

Source of Data: Insurance Association of Pakistan

Reinsurance Market The reinsurance sector of Pakistan stands untapped with a single local reinsurance company. Global reinsurers operate in the domestic market from their regional offices outside Pakistan through insurance brokers. The general insurance companies of Pakistan ceded premiums of PKR ~57.2 billion in 20205 representing a cession ratio of 53% and a reinsurance penetration of 0.16%. Out of this, PAKRI was able to book PKR ~17.5 billion while the rest was reinsured by other companies. This reflects that PAKRI has a market share of 31% and a huge potential exists for further penetration.

5 Source: Annual Reports of Non-Life Insurance Companies registered at IAP while PAKRI provided data for premiums ceded by NICL

28%

72%

General vs Life Insurance Gross Premiums/ Contribution 2020

General Insurance Life Insurance

89%

11%

Conventional vs TakafulGross Premiums/ Contribution 2020

Conventional Insurance Takaful

22%

15%

10%

9%6% 6%

5%

28%

Market Share of General Insurance(Based on GWP of 2020)

EFUG

AICL

JGICL

SGI

IGIIL

United Ins.

UBL Insurer

Others 46%

22%

15%

8%

6%

4%

Market Share of Life Insurance(Based on GWP of 2020)

State Life

JLICL

EFUL

Adamjee Life

PQFT

Others


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Source of Data: Annual Reports of Non-Life Insurance Companies registered at IAP and PAKRI Industry Outlook The insurance penetration in the country is currently at a very low level and insurers are working to enhance it to the emerging markets’ average. This provides huge growth potential for both insurance and reinsurance players. The insurance industry has expanded by around 89% during the past 6 years6. This growth can be attributed to the change in perception of insurance which is now being recognized as security for a prosperous future in the event of some unfortunate incident and business growth in the country. The insurance penetration in the country is currently at a very low level and insurers are working to enhance it to the emerging markets’ average. This provides huge growth potential for both insurance and reinsurance players. The Government of Pakistan is also keen to develop the sector and in a move to stabilize the industry, SECP has prescribed minimum paid up capital requirement for life and non-life insurance companies at PKR 700 million and PKR 500 million respectively8 which has led to restructuring of certain companies while others are expected to merge with bigger players. In addition, the health segment premiums are also expected to receive a boost as the government plans to expand its National Health Insurance Program. Innovation and new product development are also supporting the industry growth in Pakistan. In a bid to realize the entire potential of the industry, the existing players are introducing product and operational innovations to meet customer needs. Similarly, cross selling activities like bancassurance has been a game changer in the industry having significantly improved the insurance penetration via accessibility to banks’ wide network of branches and broad customer base, however, the bancassurance segment will support the growth in life insurance only. In addition to this, micro-insurance is also emerging as a strong growth driver with various insurance companies and microfinance institutions actively providing these services. Window Takaful Operations have also been very successful in promoting growth in the industry with various conventional insurance companies opening the takaful window. It is pertinent to note that the window takaful operations generated gross premiums of PKR 29 billion during 2019 while the standalone takaful companies

6 Source: IAP Yearbooks 2014-20 8 Insurance Rules 2017 9 IAP Yearbook 2019-20 10 IAP Yearbooks 2014-20

57.1 55.4

17.5 18.1

2020 2019

PK

R B

illio

nReinsurance Premiums

Premiums ceded by General Insurance Companies

PAKRI Premiums

31%

69%

Market Share of Reinsurance 2020

PAKRI Other Companies


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were able to book PKR 12 billion during the same period9. The Non-life Takaful industry has witnessed commendable growth over the years with a 5-year CAGR of 45% during 2014-201910.



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3A SHARE CAPITAL AND RELATED MATTERS

3A.1. SHARE CAPITAL

1 Out of the total shares outstanding:8 were fully paid in cash; 5,000,000 were issued for consideration other than cash; and 294,999,992 were issued as fully paid bonus shares.

The share capital of the Company will remain same post SPO as no new shares are being issued.

3A.2. PATTERN OF SHAREHOLDING

Pattern of shareholding of PAKRI as at December 31, 2020 is shown below:

Pattern of Shareholding No. of Shares %

Ministry of Commerce 134,639,785 44.9%

State Life – Policy Holders’ Fund 73,232,201 24.4%

PRCL Employees Emp. Trust 18,359,971 6.1%

National Bank of Pakistan 10,555,000 3.5%

Directors 610 0.0%

Others 63,212,433 21.1%

Banks, DFIs, Insurance 13,196,031 4.4%

Foreign Companies 12,750,000 4.3%

Mutual Funds 1,519,000 0.5%

General Public 34,491,342 11.5%

Others 1,256,060 0.4%

300,000,000 100.0%

Number of Shares Share Capital Face Value

(PKR) Premium

(PKR) Total (PKR)

2,500,000,000 Authorized Share Capital 10 - 25,000,000,000

300,000,0001 Issued, subscribed and paid-up share capital 10 - 3,000,000,000

Issued, Subscribed & Paid-Up Capital of PAKRI as at December 31, 2020 is held as follows:

Number of Shares Shares held by Sponsors Face Value

(PKR) Premium

(PKR) Total (PKR)

134,639,785 Ministry of Commerce 10 - 1,346,397,850

18,359,971 PRCL Employees Empowerment Trust 10 - 183,599,710

Shares held by Associates

73,232,201 State Life – Policy Holders’ Fund 10 - 732,322,010

610 Shares held by Directors 10 - 6,100

73,767,433 Shares held by Others 10 - 737,674,330

300,000,000 Total Paid up Capital 10 - 3,000,000,000


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3A.3. SHARES ISSUED IN PRECEDING YEARS

S. No. No. of Shares Issued Consideration Date of Issuance

1 5,000,000 Other than Cash 15/02/2001

2 40,000,064 Bonus (1st) 14/11/2002

3 8 Cash 14/12/2002

4 9,000,014 Bonus (2nd) 07/06/2007

5 245,999,914 Bonus (3rd) 15/05/2008

Total 300,000,000 - -

3A.4. BONUS SHARES, RIGHT SHARES AND NON-CASH SHARES ISSUED

Details of shared issued since the inception of the Company are disclosed in Part 3A.3.

3A.5. BENAZIR EMPLOYEES’STOCK OPTION SCHEME

On August 14, 2009, the Government of Pakistan (GoP) launched Benazir Employees' Stock Option Scheme (“the Scheme”) for employees of certain State-Owned Enterprises (SOEs) and Non-State-Owned Enterprises, where GoP holds significant investments (Non-SOEs). The Scheme is applicable to permanent and contractual employees who were in employment of these entities including PAKRI on the date of launch of the Scheme, subject to completion of five years vesting period by all contractual employees and by permanent employees in certain instances. The Scheme provides for a cash payment to employees on retirement or termination based on the price of shares of respective entities. To administer this scheme, GoP has transferred 12% of its investment in such SOEs and Non-SOEs to a Trust Fund, established under a Trust Deed, created for the purpose by each of such entities. The eligible employees are entitled to be allotted units by each Trust Fund in proportion to their respective length of service and on retirement or termination, such employees would be entitled to receive such amounts from Trust Funds in exchange for the surrendered units, as would be determined based on market price for listed entities or breakup value for non-listed entities. The shares relating to the surrendered units would be transferred back to GoP. The Scheme also provides that 50% of dividend related to shares transferred to the respective Trust Fund would be distributed amongst the unit-holder employees. The balance 50% dividend would be transferred by the respective Trust Fund to the Central Revolving Fund, managed by the Privatisation Commission of Pakistan for payment to employees against surrendered units. The deficit, if any, in Trust Funds to meet the re-purchase commitment would be met by GoP.



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4 PRINCIPAL PURPOSE OF THE OFFER AND FUNDING ARRANGEMENTS

4.1. PRINCPAL PURPOSE OF THE OFFER

Divestment of stake by GoP is being undertaken with the following main objectives:

Mobilize savings of individuals, households and institutions of Pakistan by allowing them to take ownership in the successful business of PAKRI;

Improve standing of domestic capital markets; and

Maximize sale proceeds for GoP.

4A VALUATION SECTION

4A.1. FLOOR PRICE Since PAKRI is a listed entity, Floor Price of the Offer will be disclosed close to the commencement of book building. The Floor Price after approval by PC board and CCOP will be notified through the websites of Pakistan Stock Exchange, Habib Bank Limited and Next Capital Limited after market close on dd/mm/2021. 4A.2. POST OFFER FREE FLOAT

Free Float Pre SPO Post SPO

No. of Shares in Free Float 75,000,000 135,000,000

% of Free Float 25.0% 45%

4A.3. PEER GROUP Since PAKRI is the only local reinsurance company of Pakistan, there is no exact peer group, however, comparison with global insurance companies operating in Pakistan is provided in Part 6.9 while comparison with leading listed insurance companies is provided below:

Comparison with Local Insurance Companies – 2020 PAKRI AICL EFUG JGICL

PKR Million unless otherwise stated

Gross Premiums 16,896 18,279 20,241 9,110

Net Premiums 6,709 13,295 8,617 4,959

Net Claims 3,925 7,987 4,359 3,058

Net Commissions 925 1,833 775 341

Management Expenses 667 3,099 2,744 1,536

Investment Income 1,043 1,093 2,185 1,710

Profit After Tax 1,391 1,876 2,371 1,533

Shareholders' Equity (excl. surplus on revaluation of property and equipment)

10,242 22,235 19,579 9,547


Claims Ratio 58% 60% 51% 62%

Net Margin 21% 14% 28% 31%

Premiums / Equity (times) 1.65 0.82 1.03 0.95

Source: Financial Statements of Insurance Companies as of December 31, 2020


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5 RISK FACTORS

INTERNAL RISKS 5.1. INSURANCE RISK

The risk under any insurance contract is the possibility that the insured event occurs and the uncertainty in the amount of compensation to the insured. Generally, most insurance contracts carry the insurance risk for a period of one year. Risk associated with general insurance contracts includes the reasonable possibility of significant loss as well as the frequent occurrence of the insured events. The Company’s risk exposure is mitigated by employing a comprehensive framework to identify, assess, manage and monitor risk. This framework includes implementation of underwriting strategies which aim to ensure that the underwritten risks are well diversified in terms of type and amount of the risk. Adequate reinsurance is arranged to mitigate the effect of the potential loss to the Company from individual to large or catastrophic insured events. Further, the Company adopts strict claim review policies including active management and prompt pursuing of the claims, regular detailed review of claim handling procedures and frequent investigation of possible false claims to reduce the insurance risk. 5.2. LIQUIDITY RISK

Liquidity risk is the risk that the Company will be unable to meet its funding requirements. To guard against

the risk, the Company has diversified funding sources and assets are managed with liquidity in mind,

maintaining a healthy balance of cash and cash equivalents and readily marketable securities. The maturity

profile is monitored to ensure adequate liquidity.

5.3. CREDIT RISK AND CONCENTRATION OF CREDIT RISK

Credit risk is the risk that arises with the possibility that one party to a financial instrument will fail to discharge

its obligation and cause the other party to incur a financial loss. The Company attempts to control credit risk

by monitoring credit exposures by undertaking transactions with a large number of counterparties in various

industries and by continually assessing the credit worthiness of counterparties.

Concentration of credit risk occurs when a number of counterparties have a similar type of business activities.

As a result, any change in economic, political or other conditions would affect their ability to meet contractual

obligations in similar manner. The Company’s credit risk exposure is not significantly different from that

reflected in the financial statements.

The management monitors and limits the company’s exposure to credit risk through monitoring of client’s

exposure and conservative estimates of provisions for doubtful assets, if any. The management is of the view

that it is not exposed to significant concentration of credit risk as its financial assets are adequately diversified

in entities of sound financial standing, covering various industrial sectors.

5.4. CONTINGENCY RELATED TO SALES TAX

The Company received a notice from Sindh Revenue Board (SRB) relating to non-filing of Sales Tax return on

services provided by PRCL to Insurance Companies. The Company contested the notice; however, the decision

was made against the Company giving rise to sales tax liability amounting to Rs. 3,242 million and tax penalty

of Rs. 880 million for financial year 2011 and 2012. The Company filed an appeal with Commissioner of Appeals,


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Sindh Revenue Board, however, it was rejected. The Company again filed an appeal with the Appellate

Tribunal where the decision was made against the Company vide order number AT-02/2013/109/2013 dated

February 03, 2016. As a result, the Company filed reference in the Honourable High Court of Sindh against the

orders of Appellant Tribunal. Further developments on the matter are disclosed in section 8.1 of the OFSD.

Based on the legal opinion of the Company’s legal advisor, management is confident that strong grounds exist

to contest the case and that the eventual resolution of the matter would be in favor of the Company.

Accordingly, no provision for sales tax liability for the years 2011 to 2020 has been recorded in the financial

statements.

However, in the event the matter is decided against the Company, the charge to profit or loss account would

amount to Rs. 3,299.130 million pertaining to the years 2011, 2012 and 2013, excluding any additional penalty

or default surcharge. Further, if the matter is decided against the Company, the charge to accumulated profits

would amount to Rs. 14,042.042 million (approximately) pertaining to the years 2011 to 2020 excluding any

additional penalty or default surcharge.

5.5. NEGATIVE OPERATING CASHFLOWS

The Company has a unique business model in which operating cashflows are not consistent mainly due to payment of claims which cannot be predicted. The Company pays claims to an insurance company when an insured event occurs and the claims may be substantial leading to negative operating cashflows for the particular period. PAKRI witnessed negative cashflows in 2017 due to major claims raised through NICL and one-off payments regarding taxes. However, the Company mitigates the risk of claims through retrocession and receives reinsurance recoveries against covered risks.

5.6. VENDOR CONCENTRATION RISK

The Company is involved in retrocession with several agents and reinsurance companies however, it is reliant on a few companies for major portion of retrocession. Among these PAKRI has incurred 29-39% of its retrocession with Lockton (MENA) Limited Dubai during 2018-2020 while the recently inducted Willis Towers Watson has been allocated 28% of PAKRI’s retrocession in 2020. The Company has spread rest of its retrocession with a number of reinsurance companies / agents in order to mitigate this risk.

5.7. RISK OF NON-COMPLIANCE WITH PSX AND SECP REGULATIONS

In the event of non-compliance with any regulatory requirements of SECP or PSX, the Company may be placed

on Defaulter Segment of PSX which may potentially hamper trading in the Company’s shares leading up to

potential suspension in trading as well.

EXTERNAL RISKS 5.8. MARKET RISK

Market risk is a risk that the value of a financial instrument will fluctuate as a result of changes in market

prices. The Company is exposed to market risk with respect to its investments. The Company has invested its

funds in Government securities, ordinary shares, National Investment Trust Units and close ended mutual

funds resulting in risk arising from fluctuation in the rate of interest and dividend earned thereon and the

possibility of capital gains or losses arising from the sale of these investments.


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The Company minimizes such risk by having a diversified investments portfolio. In addition, the Company

actively monitors the key factors that affect investment market.

5.9. INTEREST / MARK-UP RATE RISK

The Company invests in securities and has deposits that are subject to interest / mark-up rate risk. Interest /

mark-up rate risk to the Company is the risk of changes in market interest / mark-up rates reducing the overall

return on its interest-bearing securities. The Company limits interest / mark-up rate risk by monitoring

changes in interest / mark-up rates in the currencies in which its cash and investments are denominated.

5.10. FOREIGN CURRENCY RISK

Foreign currency risk is the risk that the value of financial instrument will fluctuate due to change in foreign

exchange rates. The Company principal transactions are carried out in Pakistani Rupee and its exposure to

foreign exchange risk arises primarily with respect to US Dollar and UK Pound. The Company mitigates this

risk by reducing the payment gap between receipt of premiums and payment of premiums ceded to foreign

reinsurance companies and also maintains a USD based account to avoid impact of exchange rate fluctuations.

5.11. CAPITAL MANAGEMENT

Capital management objectives and requirements related to regulatory, solvency and paid up capital

requirements are set and regulated by the Securities and Exchange Commission of Pakistan (SECP). These

objectives and requirements are put in place to ensure sufficient solvency margins. Further, objectives are set

by the Company to maintain a strong credit rating and healthy capital ratios in order to support business

objectives, maximize shareholders value and provide returns for benefits for other stakeholders.

The Company manages its capital structure by monitoring return on net assets and adjusts it in the light of

changes in economic conditions. In order to maintain or adjust the capital structure, the Company may adjust

the amount of dividend paid to shareholders or issue new shares.

5.10. THREAT OF NEW ENTRANTS

PAKRI is the sole reinsurer of Pakistan having first right of refusal via SRO 771 (1)/2007. There exists a possibility of entry of other local reinsurers, however, any new entrant would only be able to capture significant share by deploying sizeable amount of equity. Given the huge under penetration in reinsurance, PAKRI’s share is least likely to be affected by the entrance of another local reinsurer. Further, global reinsurers are already operating in Pakistan through their brokers and also have their presence in South Asia through their regional offices in India. In addition, this is pertinent to mention that no new reinsurer has entered the industry since the inception of PAKRI. 5.11. IMPACT OF COVID-19

The pandemic of COVID-19 that has rapidly spread all across the world has not only endangered human lives

but has also adversely impacted the global economy. On March 23, 2020, the Government of Sindh announced

a temporary lock down as a measure to reduce the spread of the However, after implementing all the

necessary Standard Operating Procedures (SOPs) to ensure safety of employees, the Company continued to

carry out its operations and has taken all necessary steps to ensure smooth and adequate continuation of its

business. Management believes that there is no significant accounting adverse impact of the effects of COVID-

19 on the operations of the Company and on these financial statements.


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5.12. REGULATORY RISK

Regulatory risk can arise due to any changes in the regulatory regime that might impact the Company and its business. The business model of PAKRI has been fairly stable for the last many years due to SRO 771 (1)/2007 of Ministry of Commerce that identify that every insurer operating in Pakistan shall continue to reinsure with PAKRI not less than 35% of the business and letter No 1(37)/2000-Ins II of Ministry of Commerce requiring NICL to reinsure with PAKRI, on generally accepted terms and conditions, such portion of its insurance business it cannot retain on its own account. Any change in the aforementioned documents might impact the business of PAKRI but any such change has not taken place since the issuance of these documents.

5.13. UNDER-SUBSCRIPTION RISK

The Offer might be under-subscribed due to lack of interest on the part of the investors. The book building process shall be considered as cancelled if:

The Offeror does not receive bids for the number of shares allocated under the Book Building portion;

The Offeror does not receive at least 40 bids.

NOTE: IT IS STATED THAT ALL MATERIAL RISK FACTORS HAVE BEEN DISCLOSED AND THAT NOTHING HAS BEEN INTENTIONALLY CONCEALED IN THIS RESPECT.



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CERTIFICATE BY CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF THE COMPANY July 09, 2021 The Chief Executive Pakistan Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi We being the Chief Executive Officer and Chief Financial Officer of the Company accept absolute responsibility for the disclosures made in this Offer for Sale Document. We hereby certify that we have reviewed this Offer for Sale Document and that it contains all the necessary information with regard to the Offer and constitutes full, true and plain disclosures of all material facts relating to the Company and the Offer and that nothing has been concealed. The information contained in this Offer for Sale Document is true and correct to the best of our knowledge and the opinions and intents expressed herein are honestly held. There are no other facts, the omission of which makes this Offer for Sale Document as a whole or any part thereof misleading. For and behalf of Pakistan Reinsurance Company Limited

________________________ [.] Acting Chief Executive Officer

-sd- __________________ Jamil Ahmed Chief Financial Officer


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STATEMENT BY THE COMPANY

July 09, 2021

The Chief Executive

Pakistan Stock Exchange Limited

Stock Exchange Building

Stock Exchange Road

Karachi

On behalf of Pakistan Reinsurance Company Limited, we hereby confirm that all material information as

required under the Securities Act, 2015, the Public Offering Regulations, 2017 and the Listing of Companies

and Securities Regulations of the Pakistan Stock Exchange Limited has been disclosed in the Offer for Sale

Document (OFSD) for the Secondary Public Offering of the Company and that whatever is stated in OFSD and

the supporting documents is true and correct to the best of our knowledge and belief and that nothing has

been concealed.

For and on behalf of Pakistan Reinsurance Company Limited

________________________ [.] Acting Chief Executive Officer

-sd- __________________ Jamil Ahmed Chief Financial Officer


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STATEMENT BY THE OFFEROR

May 25, 2021

The Chief Executive



Stock Exchange Road

Karachi

On behalf of the Offeror of shares Pakistan Reinsurance Company Limited, we hereby confirm that all material

information as required under the Securities Act, 2015, the Public Offering Regulations, 2017 and the Listing

of Companies and Securities Regulations of the Pakistan Stock Exchange Limited has been disclosed in the

Offer for Sale Document and that whatever is stated in the OFSD and the supporting documents is true and

correct to the best of our knowledge and belief and that nothing has been concealed.

For and on behalf of the Offeror

-sd- ________________________ Muhammad Shamim Khan Director General Privatisation Commission


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STATEMENT BY THE LEAD MANAGER/ CONSULTANT TO THE OFFER

[.]

The Chief Executive



Stock Exchange Road

Karachi

Being mandated as the Lead Manager/ Consultant to this Secondary Public Offering of Pakistan Reinsurance

Company Limited through the Book Building process, we hereby confirm that all material information as

required under the Securities Act, 2015, the Public Offering Regulations, 2017 and the Listing of Companies

and Securities Regulations of the Pakistan Stock Exchange Limited has been disclosed in this Offer for Sale

Document (“OFSD”) and that whatever is stated in OFSD and in the supporting documents is true and correct

to the best of our knowledge and belief and that nothing has been concealed.

For and on behalf of Next Capital Limited

__________________

Muhammad Najam Ali

Chief Executive Officer


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STATEMENT BY THE BOOK RUNNER

October 6, 2020

The Chief Executive



Stock Exchange Road

Karachi

Being mandated as the Book Runner to this Secondary Public Offering of Pakistan Reinsurance Company

through the Book Building process, we hereby confirm that all material information as required under the

Securities Act, 2015, the Public Offering Regulations, 2017 and the Listing of Companies and Securities

Regulations of the Pakistan Stock Exchange Limited has been disclosed in this Offer for Sale Document

(“OFSD”) and that whatever is stated in OFSD and in the supporting documents is true and correct to the best

of our knowledge and belief and that nothing has been concealed.

For and on behalf of Habib Bank Limited

-sd-

__________________

Name: Imaad Uddin, CFA

Designation: Head, Equity Capital Markets and Advisory


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6 FINANCIAL INFORMATION

6.1. AUDITOR’S CERTIFICATE ON ISSUED & SUBSCRIBED AND PAID-UP CAPITAL


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6.2. AUDITOR’S CERTIFICATE ON BREAK-UP VALUE PER SHARE


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6.3. AUDITOR REPORT UNDER CLAUSE 1 OF SECTION 2 OF FIRST SCHEDULE TO THE PUBLIC OFFERING REGULATION, 2017


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6.4. SUMMARY OF FINANCIAL HIGHLIGHTS

Summary of Financials (PKR million) 2017 2018 2019 2020 1QCY21

For the year ended December 31,

Earnings

Gross Premium A 8,036 10,734 17,655 16,896 3,648

Reinsurance Ceded B 3,348 4,740 10,270 10,816 10,816

Net Premium C 5,006 5,464 6,905 6,709 1,550

Net Claims D 3,740 2,990 4,259 3,925 649

Net Commission E 1,148 1,047 1,243 925 234

Underwriting Results F -677 583 506 766 563

Management Expenses G 796 844 775 667 104

Investment Income H 3,326 691 868 1,043 217

Profit Before Tax I 2,876 1,730 2,189 1,972 814

Profit After Tax J 2,226 1,228 1,484 1,391 551

Balance Sheet

Paid up Capital K 3,000 3,000 3,000 3,000 3,000

Shareholders' Equity L 10,050 9,408 9,829 10,242 10,650

Investments M 9,223 8,634 10,942 12,035 12,296

Cash and Bank Balances N 2,517 2,602 816 1,571 1,039

Total Assets O 23,983 24,459 35,807 35,765 34,866

Total Liabilities P 13,933 15,051 25,978 25,253 24,216

Book Value Per Share L/(K/10) 33.50 31.36 32.76 34.14 35.50

Operating Performance

Underwriting Profit / Gross Premium F/A -8.42% 5.43% 2.86% 4.53% 15.43%

Underwriting Profit / Net Premium F/C -13.52% 10.67% 7.32% 11.41% 36.33%

Cession Ratio B/A 41.66% 44.15% 58.17% 64.01% 296.49%

Claims Ratio D/C 74.71% 54.72% 61.68% 58.50% 41.85%

Expense Ratio (E+G)/C 38.83% 34.61% 29.22% 23.73% 21.82%

Combined Ratio (D+E+G)/C 113.54% 89.33% 90.90% 82.23% 63.67%

Risk Retained C/A 62.29% 50.90% 39.11% 39.71% 42.48%

Net Margin J/C 44.47% 22.47% 21.50% 20.74% 35.55%

Return on Assets J/Average O 8.91% 5.07% 4.92% 3.89% 6.24%*

Return on Equity J/Average L 25.51% 12.62% 15.43% 13.87% 21.10%*

Gross Premium/Equity (x) A/L 0.80x 1.14x 1.80x 1.65x 0.34x

Gross Premium/Assets A/O 0.34x 0.44x 0.49x 0.47x 0.10x

Total Asset Turnover (x) A/Average O 0.32x 0.44x 0.59x 0.47x 0.41x*


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Capital Adequacy

Paid up Capital/Total Assets K/O 12.51% 12.27% 8.38% 8.39% 8.60%

Paid up Capital/Equity K/L 29.85% 31.89% 30.52% 29.29% 28.17%

Equity/Total Assets L/O 41.90% 38.46% 27.45% 28.64% 30.54%

Investments

Investment Yield H/Average M 41.97% 7.74% 8.87% 9.08% 7.14%*

Investment Income / Net Premium H/C 66.44% 12.65% 12.58% 15.55% 14.01%

Cashflows

Cash flow from operations Q (3,318) 544 531 1,436 (385)

Payout

Earnings per Share R 7.42 4.09 4.95 4.64 1.84

Dividend Per Share S 3.50 2.00 2.00 2.50 -

Dividend Yield S/R 47.17% 48.86% 40.42% 53.90% -

*annualized

COMMENTARY ON FINANCIAL PERFORMANCE Claims Ratio Claims Ratio measures the amount of net claims paid in a period and dividing that by the earned premium for the same period. Claims are payable when an event covered by the insurance / reinsurance policy takes place. Claims ratio of the Company has remained within the range of 55-75% demonstrating the optimal risk profile of PAKRI’s operations that promotes growth with reasonable exposure. Combined Ratio Combined ratio is a measure of insurer profitability, calculated simply by taking the sum of claims related losses and general business costs and then dividing that sum by the earned premiums over the period. The combined ratio is arguably the most important performance ratio for an insurance company because it provides a comprehensive measure of an insurer's profitability. The combined ratio is typically expressed as a percentage. A ratio below 100 percent indicates that the company is making an underwriting profit, while a ratio above 100 percent means that it is paying out more money in claims that it is receiving from premiums. This implies that a combined ratio below 100 means that the core business is profitable with reduced reliance on investment income. While the combined ratio globally hovers around ~95-100%, PAKRI has maintained it within the band of ~80-90% which reflects that claims related losses and general business costs are adequately covered by the premiums earned.


Page 77 of 154

Net Margins The net margins of PAKRI have remained robust around ~20% reflecting consistent business returns. As observed in the insurance / reinsurance business, the net margins have been significantly higher than underwriting results primarily on account of investment income that has consistently yielded lucrative returns.

6.5. SUMMARY OF MAJOR ITEMS OF REVENUE AND EXPENDITURE

(PKR million) 2017 2018 2019 2020

Key Revenue Items

1. Gross Premiums

Fire and Property Damage 1,561 1,634 1,899 1,954

Marine Cargo 48 50 42 29

Marine Hull 69 100 495 378

Accident 151 193 263 225

Aviation 1,273 1,401 3,431 350

Engineering 1,564 2,895 6,651 9,677

Treaty 3,369 4,462 -

Treaty - Proportional - - 4,180 3,434

Treaty - Non Proportional - - 694 850

Total 8,035 10,735 17,655 16,896

2. Investment Income 3,326 691 868 1,043

Key Expense Items

1. Reinsurance Expense 3,052 4,137 7,289 12,125

2. Net Claims 3,740 2,990 4,259 3,925

3. Net Commission 1,148 1,047 1,243 925

4. Management Expenses 796 844 775 667

6.6. BREAKUP OF OTHER INCOME

PAKRI’s other income mainly comprised of exchange gains during 2017-19 and return on deposits in 2020. The exchange gains arose as the Company maintains a USD based account in Bahrain and PKR devalued against USD by 5%, 26% and 12% in 2017, 2018 and 2019 respectively.

Other Income (PKR Million) 2017 2018 2019 2020

Return on deposits 0.6 0.8 140 65

Miscellaneous income 131 1.4 0.5 0.07

Net return on loans to employees -59 -12 8 9

Exchange gain 103 415 603 -

Return on premium deposits - - 0.3 -

Total 175 405 752 74

as a % of operating results 6.1% 23.4% 34.5% 3.8%


Page 78 of 154

6.7. CUSTOMER WISE BREAKUP OF REVENUE

National Insurance Company Limited (NICL) is the largest client of the Company with significant revenue

contribution. As per letter No 1(37)/2000-Ins II of Ministry of Commerce, NICL is required to reinsure with

PAKRI, on generally accepted terms and conditions, such portion of its insurance business it cannot retain on

its own account. The Company has generated around ~30-40% of the gross written premiums from NICL over

the last few years, however the contribution has increased to ~60% in as premiums written have significantly

increased from PKR 2-4 billion in 2014-18 to PKR ~10 billion in 2019-20.

6.8. MAJOR SUPPLIERS

No service provider of the Company is responsible for more than 50% of the services purchased by the Company. Refer

to part 3.13 for details of the aforementioned.

6.9. PEER COMPARISON

PAKRI is the only local reinsurance company in Pakistan hence there is no exact peer group. However, as the business model of the Company is similar to insurance companies, comparison with leading listed insurance companies have been provided below:

3.252.26 2.57 2.73

4.28

10.20 10.35

38%

28% 29%34%

40% 58%61%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0.00

2.00

4.00

6.00

8.00

10.00

12.00

2014 2015 2016 2017 2018 2019 2020

PK

R M

illio

n

Revenue Contribution of NICL

GWP of NICL % of Total GWP

Comparison with Listed Insurance Companies3 PAKRI AICL EFUG JGICL

Business Comparison

Gross Premiums 16,896 18,279 20,241 9,110

Net Premiums 6,709 13,295 8,617 4,959

Net Claims 3,925 7,987 4,359 3,058

Net Commissions 925 1,833 775 341

Management Expenses 667 3,099 2,744 1,536

Investment Income 1,043 1,093 2,185 1,710

Profit After Tax 1,391 1,876 2,371 1,533

Shareholders’ Equity 10,242 22,235 19,579 9,547


Claims Ratio 58% 60% 51% 62%


Page 79 of 154

1. Prices are as of July 07, 2021 2. Free Float data has been taken from the website of PSX 3. Sources of the data include Pakistan Stock Exchange and financial statements of the relevant

insurance companies as of December 31, 2020


Net Margin 21% 14% 28% 31%

Premiums / Equity 1.65 0.82 1.03 0.95

Pricing Comparison

EPS 4.64 5.36 11.85 7.72

BVPS 34.14 63.53 97.89 48.10

Price/share1 24.85 40.45 113.00 39.40

P/E 5.20 7.65 9.60 5.70

P/B 0.71 0.65 1.16 0.91

ROE 13.59% 8.43% 12.11% 16.05%

ROA 3.89% 3.79% 12.20% 6.75%

Free Float (%)2 25% 80% 30% 20%

Free Float (Shares mn)2 75 280 60 39.7


Page 80 of 154

6A REVALUATION OF FIXED ASSETS

The Company has not revalued any of its fixed assets and no such change has been made in the financial accounts. However, the market value of investment properties of the Company is PKR 1,229.30 million based on valuation carried out by M/s M.J. Surveyors (Private) Limited on March 10, 2021. 6B DIVIDEND POLICY

6B.1. Dividend Policy

The Company intends to follow a consistent profit distribution policy for its members, subject to profitability, availability of adequate cash flows, the Board’s recommendation and shareholders’ approval, where required. The rights in respect of bonus issue and dividends attached to each ordinary share are and will be the same. The Company in its general meeting may declare dividends but no dividend shall exceed the amount recommended by the Directors. Dividend, if declared in the general meeting, shall be paid according to the provisions of the Companies Act. The Board of Directors may from time to time declare interim dividends as appear to it to be justified by the profits of the Company. No dividend shall be paid otherwise than out of the profits of the Company for the year or any other undistributed profits. No unpaid dividend shall bear interest or mark-up against the Company. The dividends shall be paid within the period laid down in the Companies Act. Under Section 242 of the Companies Act, any dividend payable in cash by a listed company, shall only be paid through electronic mode directly into the bank account designated by the entitled shareholder. Therefore, the applicants must provide the details of the bank account in the relevant part of the Shares Subscription Form. Details of dividends paid over the past five years is as follows:

CY15 CY16 CY17 CY18 CY19 CY20 25% 30% 35% 20% 20% 25%

Covenants / Restriction on Payment of Dividends: It is stated that there is no restriction on the Company by any regulatory authority, creditor, stakeholder etc. on the distribution and capitalization of its profits. 6B.1. Dividend Payout History of Associated Listed Companies In the listed companies where the GoP has substantial shareholding, those listed companies are required to comply with the existing applicable regulatory framework. Information regarding such companies is available on the PSX's Data Portal as well as on the websites of the respective companies.


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7 MANAGEMENT OF THE COMPANY

7.1. BOARD OF DIRECTORS OF THE COMPANY

Name Designation CNIC No. Address Date of Appointment

Directorships in Other Companies

Mr. Mumtaz Ali Rajper

Chairman -Non Executive Director

61101-9523869-3

House No.15, Sumbul Road, Sector F-10/3, Islamabad

31-12-2019

NIL

Dr. Musleh ud Din

Non Executive

Director - MoC Nominee

61101-2028406-7

House # 25, Street 10, Sector H, Phase-2, DHA, Islamabad

16-03-2017

NIL

Dr. Kausar Ali Zaidi

Non Executive

Director - MoC Nominee

61101-3632981-9

House No.370, Street No.18, Sector-2, Airport Housing Society, Islamabad

04-09-2020

NIL

Dr. Faiz Illahi Memon

Non Executive

Director - SLIC Nominee

41306-6113209-5

House No.44-B/1, 10 Gizri Phase IV, DHA, Karachi

08-04-2021

NIL

The Company does not have at least 7 directors as required under Section 154 (d) of the Companies Act, 2017. Further, at present there is no independent director on the Board

Dr. Faiz Illahi Memon was appointed as Acting CEO on 08-04-2021 for a period of three months which expired on 06-07-2021. Approvals from Ministry of Commerce for the position are underway. As of now there is no acting CEO of the Company.

7.2. PROFILES OF DIRECTORS

Mr. Mumtaz Ali Rajper – Chairman – Non Executive Director Mr. Mumtaz Ali Rajper was appointed by the GoP in 2009 and subsequently continued this affiliation by being

elected as Chairman of the Board, representing minority shareholders from 2015-2016. Currently he has been

reappointed as the elected Director of PRCL. He also serves on the Boards of Directors of Matrix Private

Limited, a private company involved in indenting and trading of chemicals and plastic. He has previously

served as the Country/Regional Head at Pakistan Airlines Limited for 33 years.

Education:

Holds BA (Hons.) and MA (Economics) degrees

Certified Director by the Institute of Chartered Accountants of Pakistan

Dr. Musleh ud Din – Non Executive Director – MoC Nominee Dr. Musleh ud Din has 30+ years of experience in teaching and policy-oriented research and has published

widely in national and international journals in the areas of macroeconomics, financial sector development,

and trade policy. He also acts as executive editor of the Pakistan Development Review and has conducted a

number of research projects under the aegis of the World Bank, Asian Development Bank, and UN.


Page 82 of 154

Education:

Ph.D. in Economics from the Johns Hopkins University

Dr. Syed Kausar Ali Zaidi – Non Executive Director – MoC Nominee Dr. Kausar Ali Zaidi is an administration and finance expert with 22 years of practical experience as DG, Trade Dispute, Joint Secretary Special Initiative, Executive Director, Joint Secretary Admin and Insurance, Director General Admin and Director Admin at various Ministries and Divisions. He is an expert in negotiating Pakistan’s key trade agreements, conducting economic research on regional connectivity, and strategy formation for the enhancement of the trade sector. Dr. Kausar is currently serving as the Director General Trade Dispute Resolution Organization and has been involved in preparation of the Model Agreement for Trade of Goods and Services and Draft Law for resolving the Trade Related Disputes. He has also published 8 international publications including 5 research studies and one module for the ITC which is taught in Pakistan and in Geneva. Education:

MBBS from Rawalpindi Medical College

Master’s in international law and Economics (MILE) from World trade Institute, University of Bern,

Switzerland

Dr. Faiz Illahi Memon – Non Executive Director – SLIC Nominee Dr. Faiz Illahi Memon, a Civil Servant in BS-21, currently Executive Director, State Life Insurance Corporation

of Pakistan, joined Inland Revenue Service (IRS) after completing the competitive examination of Central

Superior Services in the year 1989. He participated in many administration related programs, seminars and

trainings from time to time at both local as well as international institutes. He remained posted at many senior

positions under the domain of Federal Board of Revenue like Chief Commissioner, Member (Administration),

Member (FATE) and DG (Special Initiatives) etc,. He resumed as Chief Executive Officer of Pakistan Reinsurance

Company Limited with effect from April 8, 2021, in addition to his duties as Executive Director, SLIC.

7.3. DETAILS ON HISTORICAL DIRECTORSHIPS OF EXISTING DIRECTORS

Details of current and past directorship(s) in listed companies whose shares have been/were suspended

from being traded on the securities exchange during his/her tenure: None

Details of current and past directorship(s) in listed companies which have been/were delisted from the

stock exchange: None

7.4. PROFILES OF SENIOR MANAGEMENT

Mr. Muhammad Junaid Moti – Executive Director (Underwriting)

Mr. Junaid Moti has more than 27 years of experience in the insurance industry, currently working as Executive

Director (Underwriting) of PAKRI, looking after entire operations of the Company. He has previously worked

at different positions and levels in various insurance companies like Adamjee Insurance Co. Ltd., EFU General

Insurance Ltd., New Jubilee Insurance Co. Ltd. (now Jubilee General Insurance), PICIC Insurance Ltd., Pak-Qatar

General Takaful Ltd. and EFU General Insurance Ltd. (Window Takaful Operations).


Page 83 of 154

Education:

Associate of Chartered Insurance Institute (ACII) / Chartered Insurer, London

Bachelor of Commerce (B. Com.)

Mr. Jamil Ahmed – Chief Financial Officer

Mr. Jamil Ahmed has more than 27 years of experience in the field of accounting and finance across various

industries. He has worked for some of the renowned groups of Pakistan including Maple Leaf and Askari. He

joined PAKRI as GM in September 2016 and was assigned the charged of CFO in October 2016. Previously he

served as the GM Finance/CFO in Takaful Pak for 2 years and as CFO in Askari General for 7 years. Also worked

as DM (Finance) in Maple Leaf Cement Factory for 6 years, as Sr. Mgr. Finance in Global Pharmaceuticals, as

Manager Accounts at Cirin Pharmaceuticals (Pvt) Ltd and as Manager in Peter & Co. Chartered Accountants.

Education:

Fellow Chartered Accountant

Mr. Sultan Hammad Gul - Chief Internal Auditor

Mr. Sultan Hammad Gul with more than 15 years of experience, is presently working as Chief Internal Auditor

in PAKRI. Previously worked as Senior Manager in Beaconhouse, as Audit Expert in PIFRA Auditor General, and

as Audit Senior in KPMG.

Education:

Fellow Member of the Association of Chartered Certified Accountants

Certified Internal Auditor

Mr. Shamsuddin - Company Secretary

Mr. Shamsuddin with more than 23 years of experience, is working as Company Secretary in PAKRI since 2016.

He has previously worked as Deputy Director in SECP, and as DM in State Life Insurance Corporation.

Education:

Associateship of the Chartered Insurance Institute and MBA

Mrs. Raana Munir Ahmed - General Manager (Protocol)

With more than 30 years of experience, Mrs. Ahmed is presently working as General Manager Protocol. She

has been associated with different managerial positions for the 10 years including being the Head of NZO.

Education:

MA Economics

Mr. Muhammad Sheraz Ashraf - General Manager (Risk Management)

Mr. Sheraz with more than 22 years of experience, is currently working as General Manager Risk Management

in PAKRI. He has previously worked as country Risk Manager in HBL UAE, as Risk Manager (International


Page 84 of 154

Banking) in HBL, as Regional Risk Manager in UBL. Has also served as a visiting faculty member at NUST

Business School.

Education:

MBA

Associate Cost and Management Accountant (ACMA)

Financial Risk Manager (FRM)

Omega Performance / Chartered Banker CSD (Credit Skills Development) Certified

7.5. APPOINTMENT AND ELECTION OF DIRECTORS

The Directors of the Company are elected for a term of three years in accordance with the procedure laid down in Section 159 of the Companies Act. The Directors shall comply with the provisions of Sections 154 to 159 and Sections 161 and 167 of the Companies Act relating to the election of Directors and matters ancillary thereto. Subject to the provisions of the Companies Act, the Company may from time to time increase or decrease the number of Directors. Any casual vacancy occurring on the Board of Directors may be filled up by the Directors, but the person so appointed shall be subject to retirement at the same time as if he / she had become a Director on the day on which the Director in whose place he / she is chosen was last elected as Director. The Company may remove a Director in accordance with the provisions of the Companies Act. The last election of Directors was held on Dec 31, 2019. The Company is already listed on PSX, hence it is subject to compliance with the Listed Companies (Code of Corporate Governance) Regulation, 2019 together with any amendments thereof. The auditors of the Company issued a review report to the members on the Statement of Compliance prepared by the Board of Directors of Pakistan Reinsurance Company Limited for the year ended December 31, 2020 in compliance with the Public Sector Companies (Corporate Governance) Rules, 2013, Listed Companies (Code of Corporate Governance) Regulations, 2019 and Code of Corporate Governance for Insurers, 2016 (“the Code”). Following instances of non-compliance with the requirements of the Codes were observed which were not stated in the Statement of Compliance:

Disclosure Reference Clause Description

Public Sector Companies (Corporate Governance) Rules, 2013

8(2) The Board has not assessed the performance of senior management during the year.

21 (2) The chairman of the Board is a member of audit committee.


Page 85 of 154

Code of Corporate Governance for Insurers, 2016

XVII The minutes of the meetings of the Board of Directors were not circulated to directors and officers entitled to attend Board meetings within fourteen days.

LVII The minutes of audit committee meeting were not circulated within the stipulated time in one out of four meetings.

XXVIII The key officers and Directors has not declared any conflict of interest to the Board during the year.

XLIX The Board has not undertaken any review of Investment Policy during the year

Listed Companies (Code of Corporate Governance) Regulation, 2019

7 The Company does not have any female director on its Board.

Further, auditors have highlighted below instances of non-compliance with the requirements of the Codes which the Company has disclosed in its Statement of Compliance in the Annual Report 2020:

Public Sector Companies (Corporate Governance) Rules, 2013

3(2)

The Board does not have at least one-third of its total members as independent directors. Furthermore, there are no Independent directors in Board Committees as per the requirement of provision 12(2).

Code of Corporate Governance for Insurers, 2016

Viii Casual vacancy in the Board was not filled up within the stipulated time.

XLIII All committees (whether management committees or the Board committees) did not meet at least once in every quarter.

7.6. INTEREST OF DIRECTORS AND THEIR SHAREHOLDING

The directors may deem to be interested to the extent of fees payable to them for attending Board meetings. The Directors performing whole time services in the Company may also be deemed interested in the remuneration payable to them by the Company. The nominee directors have interest in the Company to the extent of representing the sponsors in the Company. Few Directors also have interest to the extent of their shareholding in the Company as disclosed below:

Name of Director No. of Shares Held % of Shareholding

Mr. Mumtaz Ali Rajper 555 0.00019%

Mr. Musleh ud Din 55 0.00002%

7.6. INTEREST OF THE DIRECTOR AND PROMOTER IN PROPERTY/ASSETS AND PROFIT

None.


Page 86 of 154

7.7. BENEFITS (MONETARY OR OTHERWISE) PROVIDED TO SPONSORS, SUBSTANTIAL SHAREHOLDERS AND DIRECTORS DURING LAST THREE YEARS

No amount of benefits has been paid or given during the last three years or is intended to be paid or given to

any sponsor shareholders or to any officer of the Company other than as remuneration for services rendered

as whole-time executives of the Company or as meeting fee for attending Directors Committee meetings to

non-executive directors as per the approved scale of fee.

7.8. BOARD AUDIT COMMITTEE

The Board Audit Committee supervises the internal audit function of the Company and comprises of the following members:

Dr. Musleh ud Din- Chairman

Dr. Faiz Illahi Memon - Member

Dr. Kausar Ali Zaidi - Member

Chief Internal Auditor - Secretary

7.9. ETHICS, HUMAN RESOURCE & REMUNERATION COMMITTEE

The Board HR Committee comprises of the following members:

Mr. Mumtaz Ali Rajper - Chairman

Dr. Faiz Illahi Memon - Member

Dr. Musleh ud Din - Member

Dr. Kausar Ali Zaidi - Member

GM/Head of HR Department - Secretary

7.10. INVESTMENT COMMITTEE

The Board Investment Committee comprises of the following members:

Dr. Faiz Illahi Memon - Chairman

Dr. Musleh ud Din - Member

Mr. Mumtaz Ali Rajper – Member

Chief Financial Officer – Member

Manager / Head of Investment Department - Secretary

7.11. POWERS OF DIRECTORS

As required under clause 47 of Part I of Table A of First Schedule of the Companies Act and the Articles of Association of the Company, the authority to conduct business of the Company is vested with its Board of Directors and they may exercise all such powers of the Company as are not required by the Companies Act or the Articles of Association of the Company or by a special resolution, required to be exercised by the Company in the general meeting of the shareholders.


Page 87 of 154

7.12. BORROWING POWERS OF DIRECTORS

According to article 26 of the Articles of Association, the Board may from time to time borrow any moneys for the purposes of the Company from the members or from any other persons, firms, companies, corporations, institutions, or banks, or the Directors may themselves lend any money to the Company. According to article 27 of the Articles of Association, the Board may secure payment of such sum or sums of money in such manner and upon such terms and conditions in all respect as they think fit, and in particular by the issue of bonds, perpetual and redeemable debentures of by mortgage or charge or other security on the whole or any part of the property, asset and rights of the Company (both present and future). 7.13. INDEMNITY

As per Article 106 of the Articles of Association, every Director, Chief Executive, Manager or Officer of the Company or any person (whether an Officer of the Company or not), employed by the Company as Actuary, Auditor or Advisor, shall be indemnified out of the funds of the Company against any liability incurred by him, as such Director, Chief Executive, Manager, Officer, Actuary, Auditor or Advisor in defending any proceedings, whether civil or criminal, in which judgment is given in his favor or which he is acquitted or in connection with any application under section 488 of the Companies Ordinance, 1984 (currently section 492 of the Companies Act) in which relief is granted to him by court.

7.14. CORPORATE GOVERNANCE

The Company is compliant with all the rules and regulations applicable to the Company with regards to the

Listed Companies (Code of Corporate Governance) Regulation, 2019.

7.15. NUMBER OF DIRECTORS

Pursuant to section 154 of the Companies Act, the number of directors of a listed company should not be less than seven (7). However, at present, the Board consists of 4 directors, including the CEO and vacancies are to be filled by directors nominated by Ministry of Commerce. 7.16. QUALIFICATION OF DIRECTORS

Pursuant to Article 65 of the Articles of Association of the Company, the qualification of a Director shall be the holding of the shares in the Company of the nominal value of Rs. 10/- at least in his own name. In the case directors representing interest holding shares of the requisite value no qualification shall be required. 7.17. REMUNERATION OF DIRECTORS

According to article 63 of the Articles of Association, subject to any approval or limits required by law, the remuneration to be paid to the Directors for attending the meeting of the Board shall from time to time be determined by the Board of Directors of the Company. Each Director (including each alternate Director) shall be entitled to be reimbursed his reasonable expenses incurred in consequence of his attendance at meeting of the Directors, or of Committees of Directors.


Page 88 of 154

Director’s rumuneration for the last three years is given below:

PKR 2018 2019 2020

Director's Remuneration 7,912,500 7,200,000 3,152,950

The breakup is given below:

Name Designation 2018 2019 2020

Dr. Kausar Ali Zaidi Director - - 450,000

Faisal Mumtaz Director - - 250,000

Manzoor Ali Shaikh Director - - 300,000

Maria Kazi Director - - 150,000

Mr. Asad Halipota Director - - 250,000

Mr.Musleh-Ud-Din. Director 925,000 1,200,000 600,000

Mumtaz Ali Rajper Director 1,487,500 1,550,000 752,950

Riaz Ahmed Memon Director - - 400,000

Mr. Abdul Sami Kehar. Director 1,675,000 1,650,000 -

M/S. Shahab Anwar Khawaja. Director 812,500 900,000 -

Dr. Nazim Latif. Director 1,437,500 750,000 -

Mr. Mushtaq Ahmed Mehar. Director - 1,000,000 -

Dr. Taimur Tajammal. Director - 150,000 -

Mr. Shoaib Mir. Director 1,100,000 - -

Mrs. Ghazala Ahmed. Director 475,000 - -

Total 7,912,500 7,200,000 3,152,950



Page 89 of 154

8 LEGAL PROCEEDINGS AND OVERDUE LOANS

8.1. LEGAL PROCEEDINGS

There are no pending legal proceedings other than those mentioned in note 31.1 and 33 of the annual accounts of 2020 of the Company and reproduced below:

1. The Company has dispute in respect of the unilateral increase in rentals of its lease hold land by

Karachi Port Trust (KPT) being exorbitant and unreasonable, a view supported by the Company's legal

advisor. The amount not acknowledged in this regard, however, the Company has recorded provision

in this regard as at December 31, 2020 amounting to Rs. 31.693 million (2019: Rs. 29.950 million).

Currently, a stay is operating in favour of the Company and the matter is pending before the

Honourable High Court of Sindh, for the issue and hearing of application. The matter is currently being

contested by both parties and there has been no negotiation to settle the matter out of the Court.

Most likely outcome of the case, may be in accordance with the market rate in the vicinity. The case

is pending in the Honourable High Court of Sindh and a hearing has been fixed on April 09, 2021 and

the matter is still pending.

2. The ceding companies have filed various suits amounting to Rs. 65,149,495 (2019: Rs. 57,135,015)

against the Company for recovery of claims. Based on the legal opinion of the company’s legal advisor,

management is confident that strong grounds exist to contest the cases and that the eventual

resolution of the matter would be in favour of the Company. Accordingly, no provision has been

recorded in the financial statements relating to these claims.

3. The Company has received a notice from the Regional Director of Employee Old Age Benefit Institution

(EOBI) vide letter dated October 31, 2009 that Pakistan Reinsurance Company Limited is required to

be registered with EOBI. The Company is of the view that since it is a statutory body corporate under

the management and control of Ministry of Commerce, Government of Pakistan and have its own

pensioner rules and limitation and therefore provisions of EOBI Act, 1976 are not applicable. A suit

was filed with the Honourable Civil Court in 2011 where the judgment was passed against the

Company.

Further, the Company filed an appeal in the Honourable High Court of Sindh against the Civil Court

judgment and there has been no further proceeding in the court but the management expects a

favourable outcome. On the basis of meeting held with EOBI officials, the Company is considering

registration of its contractual employees with EOBI which is pending approval from Ministry of

Commerce. Further, it has been agreed that advice from Ministry of Law and Justice may be sought

on the issue of registration of permanent employees who are already covered under Company's own

pension scheme. The financial impact pertaining to contractual employees along with penalty, if any,

amounts to Rs. 455,900 (Rs. 243,100) and the impact of permanent employees to the financial

statements is currently not ascertainable. Therefore, no provision has been made in these financial

statements.


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Contingency related to sales tax is presented below:

The Company received a notice from Sindh Revenue Board (SRB) relating to non-filing of Sales Tax

return on services provided by PRCL to Insurance Companies. The Company contested the notice,

however, the decision was made against the Company giving rise to sales tax liability amounting to

Rs. 3,242 million and tax penalty of Rs. 880 million for financial year 2011 and 2012. The Company

filed an appeal with Commissioner of Appeals, Sindh Revenue Board, however, it was rejected. The

Company again filed an appeal with the Appellate Tribunal where the decision was made against the

Company vide order number AT-02/2013/109/2013 dated February 03, 2016. As a result, the

Company filed reference in the Honourable High Court of Sindh against the orders of Appellant

Tribunal.

In the aforementioned tribunal orders, the SRB was directed to reconcile and separate the sales tax

liability on reinsurance premium generated within the province of Sindh and rest of Pakistan.

Subsequently, the Company received two orders in pursuance of Appellate Tribunal (SRB) Order

against Appeal No. AT- 02/2013 and AT-109/2015 dated May 23, 2016 from Sindh Revenue Board

(SRB) demanding the amount of sales tax liability on re-insurance services provided / rendered by the

Company in Sindh from the period from July 2011 to November 2011 and for the period from

December 2011 to December 2012 which were worked out and calculated by SRB amounting to Rs.

372.2 million and Rs. 1,118.1 million respectively. The Company has filed reference in the Honourable

High Court of Sindh, dated April 18, 2016 against the Orders of Appellant Tribunal.

Further, the Company has also received a notice from Sindh Revenue Board (SRB) for the period from

January 2013 to December 2013. The Company contested the notice; however, the order was passed

against the Company giving rise to sales tax liability amounting to Rs. 1,385 million and tax penalty

amounting to Rs. 424 million. The Company filed an appeal against the order with Commissioner of

Appeals, Sindh Revenue Board which was decided against the Company. The Company being

aggrieved by the said order has filed an appeal before Appellant Tribunal-SRB which has been heard

and order is awaited. Stay of tax demand has been obtained in this regard which was valid up to April

05, 2017.

During the year 2017, the Company has paid an amount of Rs. 2,131.464 million under protest against

the principal amount of sales tax liability in respect of above notices issued by SRB for tax years 2011,

2012 and 2013.

The Company has also apprised Ministry of Commerce through letter dated April 14, 2017, on the

matter of disputed sales tax demand raised by SRB. Ministry of Commerce through letter dated on

May 03, 2017, directed to take action as per Board of Directors decision and also directed that the

Company may keep contesting the case in High Court vigorously.


Page 91 of 154

After obtaining legal opinion and approval from Board of Directors and Ministry of Commerce, the

Company wrote a letter dated May 17, 2017, to the Commission (SRB) that the Company is in

agreement to make payment of the principal amount of the demand under protest subject to the

condition that SRB will withdraw all notices issued u/s 66 of Sindh Sales Tax Act, 2011, to the clients

and debtors of the Company for the attachment of payables to Company, SRB will not initiate any

further proceedings in relation to the amount of default surcharge and penalty until the liability of tax

on reinsurance services is finally decided by the Honourable High Court of Sindh and SRB will not

initiate any further proceedings against the Company for the tax periods subsequent to these three

tax periods and matter shall be decided after the decision of the Honourable High Court of Sindh.

During previous year, the SECP vide letter No. ID/PRDD/TAXATION/2020/15 dated March 13, 2020

highlighted taxation issues to SRB faced by the insurance industry in Pakistan. SECP highlighted that,

insurance companies obtained reinsurance services to mitigate their risk by sharing it with other

insurance/reinsurance companies, hence, forming part of the overall risk management function of

insurance companies. The imposition of sales tax on reinsurance services through service charge

mechanism, may lead to double taxation on the insurance business, in the context of foreign

reinsurance.

Imposition of sales tax on the reinsurance services would increase the cost of doing business for

insurance companies, which may reflect as an increase in the rates of insurance premiums, making

insurance more costly for the policyholders. As lowering the cost of business is the primary agenda of

the Government of Pakistan and as such, the imposition of sales tax on reinsurance services would be

working at odds with measures taken by the Government of Pakistan for ease of doing business in

Pakistan.

SRB vide letter SRB/TP/57/2016 dated April 26, 2020 advised the Company with the provisions of

Sindh Sales Tax Act, 2011 by issuing tax invoices, e-filing of tax returns and e-depositing the SST

invoice.

The aggregate amount of Rs. 2,573.889 million paid has been recorded as “receivables from SRB” in

the financial statements.Moreover, the Company has not recorded provision against the orders

passed by SRB in pursuance of Appellate Order dated February 01, 2016 in Appeal No. AT-02/2013

and order dated February 03, 2016 in Appeal No. AT-109/2015.

Further, if the matter is decided against the Company, the charge to accumulated profits would

amount to Rs. 14,042.042 million (approximately) pertaining to the years 2011 to 2020 excluding any

additional penalty or default surcharge. The pending legal proceeding may result in claims that the

Company is unlikely to be able to satisfy. Further, in that case, the overall equity may erode and turn

into negative and the Company would also face liquidity crunch and be unable to meet its solvency

requirements in addition to "going concern assumption" basis of accounting.


Page 92 of 154

Based on the legal opinion of the company’s legal advisor, management is confident that strong

grounds exist to contest the case and that the eventual resolution of the matter would be in favour

of the Company. Accordingly, no provision for sales tax liability for the years 2011 to 2020 has been

recorded in these financial statements.

Contingency related to income tax is presented below:

The status of orders passed under section 122 of the Income Tax Ordinance, 2001 is as follows:

S. no. Tax Year Tax Demand (Rupees) Status of the case

1 2010 20,748,022 CIRA has decided issues against Company which are pending in ATIR.

2 2011 97,770,680 Tax liability of Rs. 97,770,680 is arising due to unavailability of brought forward toss relating to TY 2010 due to assessment order passed for the aforesaid tax year.

3 2012 127,326,208

Tax liability of Rs. 127,326,208 is arising due to unavailability of loss of Rs. 212,481,202 relating to Tax Year 2010 and tax refund of Rs. 52,957,787 relating to Tax Year 2011, due to assessment orders passed for these tax years.

4 2013 9,342,660

Appeal effect order with regard to CIRA & ATIR orders are pending. Tax liability of Rs. 42,040,463 is arising due to unavailability of tax refunds of Rs. 1,025,968 and Rs. 41,014,495 relating to Tax Years 2010 and 2012 respectively, due to assessment orders passed for these tax years.

5 2014 412,724,772

This pertains to the non deduction of tax on commission and charge id Workers' Welfare Fund.It was clarified to ACIR that reinsurance commission is reimbursement of expenses and is not in the nature of Commission. It was further informed to ACIR that the so called commission expense was not in the nature of commission in terms of section 233 of the Ordinance. ACIR is of the view that since the Company, in terms of section 233 of the Ordinance, was under obligation to deduct tax on Commission paid and deposit the same, the Company failed to deduct/deposit tax, the default on its payments stands established. Hence, the action taken by disallowing the said expenses under section 21(c) of the Ordinance is found well within the pureview of law and calls for no question. Further, the Company contests against the charge of Worker Welfare Fund of Rs. 29,681,681. The Company contested that as the Company was established by the Government, hence, excluded from the definition of Industrial Establishment of the Worker Welfare Fund Ordinance, 1971.These matters are pending in ATIR.

6 2015 772,134

This pertains to the disallowance of exchange loss of Rs. 50,578,845 on the ground that it was notional in nature and a provision without considering that the loss is allowable as per provisions of the Ordinance. The Company is contesting the gross loss has been incurred due to following of the mercantile system therefore it is to be allowed and the Company's has relied on the judgement of the Tribunal reported as 2011 PTD 352 and unreported judgement in ITA no. 133 KB 2011.

7 2016 223,912,913 Loss on re-measurement of defined benefit obligations of Rs. 675,584,000 and Provision for compensated absences of Rs.


Page 93 of 154

60,868,000 was disallowed. The Company contends that loss is computed by a qualified actuary and is a determined liability. The above disallowance is found well by the ADCIR. The issue is pending in ATIR, however same issue have been decided in Company's favour in tax year 2015. Appeal effect given vide order dated April 6, 2017. Full bench had been formed due to a conflicting decision of Hon. Tribunal in respect of issue of Commission, however, hearing of main appeal had not been fixed yet.

8 2018 353,612,146

This pertains to the non deduction of tax on commission and the commission expense has been disallowed. It was clarified to ACIR that reinsurance commission is reimbursement of expenses and is not in the nature of Commission as also clarified by SECP. It was further informed to ACIR that the so called commission expense was not in the nature of commission in terms of section 233 of the Ordinance. It was further informed to ACIR that the issue is already decided by Tribunal in Company's favour in respect of Tax years 2008, 2009, 2011 and 2012, which were required to be followed as per section 124A of the Ordinance. ACIR does not agree with Company's view and disallowed Commission expense on the ground that the tax was not withheld on the amount by relying on the decision of Tribunal in the Company's own case in respect of Tax year 2014/15. The Company has filed an appeal before CIRA and the matter is still pending.

1,246,209,535

The status of orders passed under section 161 of the Income Tax Ordinance, 2001 is as follows:

S. no. Tax Year Tax Demand (Rupees) Status of the case

1 2014 260,214,169 Company received various notices in respect of non deducution of with holding tax on commission paid to ceding companies. CIRA has decided issue of Commission expense against Company and appeal is pending in ATIR. Full bench had been formed due to a conflicting decision of Hon. Tribunal in respect of issue of Commission, however, hearing of main appeal had not been fixed yet.

2 2015 39,541,845

3 2016 182,699,756

482,455,770

Grand Total

1,728,665,305

The above matters are pending before various forums. On the basis of the opinion of tax advisor, the Company

is confident that the eventual outcome will be in favour of the Company.

Contingency related to Federal Excise Duty is presented below:

S. no. Year Amount in Rupees Status of the case

1 2012 161,753,030 Federal Board of Revenue (FBR) has issued show-cause notices dated November 22, 2017, whereby the Company is required to explain as to why Federal Excise Duty (FED) on aggregate reinsurance premium revenue has not been paid in respect of tax periods from October 2012

2 2013 755,903,899


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3 2014 765,427,619 to September 2017. The Company has submitted its reply against show-cause challenging levy of FED on various legal grounds. Further, the Company also filed Constitutional Petition against show cause notices in the Honourable High Court of Sindh and the Honourable High Court of Sindh vide order dated January 29, 2019 has suspended the proceedings initiated through the above show-cause notice.

4 2015 835,030,670

5 2016 928,295,664

6 2017 626,968,181

4,073,379,063

This case is pending for finalization before the Honourable High Court of Sindh. The Company is confident that

outcome of the case will be in favour of Company in light of the 18th amendment in the Constitution of

Pakistan.

Action taken by the securities exchange:

Following are the details of non-compliances by the Company of PSX Regulations in the last three years.

Violation

of Clause Description PSX Letter dated Enforcement Action taken by PSX

5.6.4 The company failed to submit the

Notice of AGM for the year ended 2016,

twenty-one days prior to holding of

AGM. PSX vide letter dated 10-Aug-2017

sought explanation for the said non-

compliance.

10-Aug-2017 PSX vide letter dated 13-Sep-2017 strictly

advised the company that Notice of AGM

should be disseminated within the

specified time as required under the said

clause.

5.19. The non-compliance in the annual

report for the year ended 2016 with the

requirement of the Codes have been

pointed out by the Auditor in the Review

Report to the Members on Statement of

Compliance with the Code of Corporate

Governance and Public Sector

Companies (Corporate Governance)

Rules 2013 and Code of Corporate

Governance for Insurers, 2016.

16-Apr-2018 PSX vide letter dated 16-Apr-2018 sought

explanation for the said non-compliance

along with the steps taken by the company

to rectify the same.

5.6.4.(a) The company submitted the requisite

printed copies of annual account for the

year ended 2017 after lapse of 1 day.

PSX vide letter dated 24-May-2018

sought explanation for the said non-

compliance.

24-May-2018 PSX vide letter dated 6-Nov-2018 strictly

advised the company to be careful in

future.


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5.6.5 The company failed to immediately

intimate the Exchange regarding credit

of final cash dividend. PSX vide letter

dated 19-Jun-2019 sought explanation

for the said non-compliance.

19-Jun-2019 PSX vide letter dated 3-Jul-2019 advised

the company to remain careful in future.

5.6.4.(a) The company transmitted the annual

account for the year ended 2018 after

lapse of 1 day.

21-Jun-2019 PSX vide letter dated 21-Jun-2019 advised

the company to be careful in future.

5.6.4.(c) The company transmitted the quarterly

account for the period ended 30-Jun-

2018 after lapse of 1 day.


the company to remain careful in future.

5.6.4.(c) The company transmitted the quarterly

account for the period ended 30-Jun-

2019 after lapse of 6 days. PSX vide

letter dated 5-Sep-2019 sought

explanation for the said non-

compliance.

5-Sep-2019 PSX vide letter dated 24-Sep-2019

imposed penalty of Rs.30,000/- for such

noncompliance.

5.6.8. The company failed to transmit the

financial results for the year ended 31-

Dec-2019 within the specified time as

prescribed under form-3 of the

Correspondence Manual.

12-Aug-2020 PSX vide letter dated 12-Aug-2020 advised

the company to be careful in future.

5.6.4.(c) The company failed to transmit the

quarterly account for the period ended

31-Mar-2020 within the timeline.


the company to immediately transmit the

said account and submit the explanation

for the same. subsequently, the Company

transmitted the same & were advised to

remain careful in future.

Corporate

Briefing

Session

(CBS)

The company failed to conduct the CBS

for the financial year ending December

31, 2019.

11-Sep-2020

15-Sep-2020

PSX vide letters dated September 11,

2020 and September 15, 2020 advised

the company to make necessary

arrangement to conduct the CBS in light of

the guidelines notified by the Exchange

vide Notice dated March 19, 2020 and in

light of the SOPs issued by the

Government for preventing the spread of

Corona Virus.

5.6.9. (c) The company failed to transmit the

quarterly accounts for the periods

ended 30-Jun-2020 and September 30,

2020 in time as required under the PSX

Regulations. PSX vide letter dated 12-

Nov-2020 sought explanation for the

said non-compliance.

12-Nov-2020 In light of the explanation and considering

the ongoing pandemic situation, PSX vide

letter dated May 05, 2021 advised the

company to remain careful in future.


Page 96 of 154

5.19.1. (e) Failed to pay the annual listing fee for

the year ended 2020-21 within the

timeline. The delay in payment of ALF

attracts action under clause 5.19.1.(e) of

PSX Regulations. PSX vide letter dated

08-Dec-2020 sought explanation for the

said non-compliance.

08-Dec-2020 Keeping in view the reason communicated

by the company for late receipt of invoice

of ALF, the surcharge was waived.

5.6.9 The Company submitted the notice of

board meeting for the consideration of

quarterly accounts for the period ended

September 30, 2020, 6 days before the

Board Meeting instead of the

requirement of at least one week in

advance.

3-Mar-2021 PSX vide letter dated 3-Mar-2021 advised

the company that notice of board meeting

should be disseminated within the

specified time as required under the said

clause.

5.6.9. (b) Failed to submit the resolutions

adopted in the AGM held on May 24,

2021 as required under the PSX

Regulations.

27-May-2021 PSX vide letter dated 28-May-2021 sought

explanation for the said non-

compliance. Subsequently, the Company

posted the same at PUCARS on May 31,

2021.

8.2. OVERDUE LOANS

There are no overdue loans (local or foreign currency) on the Company and its existing Directors.

The substantial shareholders, i.e. sponsoring entities of the Company include Ministry of Commerce and State

Life Insurance Corporation Limited.

CIB report of Ministry of Commerce is not available while CIB reports of all the directors and other sponsors,

i.e. State Life Policy Holders’ Fund, are clean.



Page 97 of 154

9 UNDERWRITING ARRANGEMENT, COMMISSIONS, BROKERAGE AND OTHER EXPENSES

9.1. UNDERWRITING

Book Building Portion Habib Bank Limited has been mandated as the Book Runner to the Offer. The Book Runner has underwritten 60,000,000 Ordinary shares being offered for subscription through the book building representing 100% of the Offer as required under Regulation 7(6) of the PO Regulations, with the limitations in effect that the Book Runner shall only underwrite the default portion of the Book Building, if any, at the Strike Price determined through the Book Building process. General Public Portion The General Public Portion of the Offer shall not be underwritten in terms of Regulation 7(4) of the PO Regulations. In case of unsubscribed shares in the retail portion, the bidders in the book building process shall give an undertaking along with the application that they would subscribe to these shares and their remaining bid money would remain deposited / blocked till allotment of unsubscribed shares by the retail investors to them on a pro-rata basis.

9.2. BUY BACK / REPURCHASE AGREEMENT

THE BOOK RUNNER IN THE CAPACITY AS UNDERWRITER OF THE BOOK BUILDING PORTION HAS NOT

ENTERED INTO ANY BUY BACK / RE-PURCHASE AGREEMENT WITH THE COMPANY OR ANY OTHER PERSON

IN RESPECT OF THIS OFFER OF SHARES.

ALSO, NEITHER THE COMPANY NOR ANY OF ITS ASSOCIATES HAVE ENTERED INTO ANY BUY BACK / RE-

PURCHASE AGREEMENT WITH THE BOOK RUNNERS IN THE CAPACITY AS UNDERWRITER OR ITS

ASSOCIATES. THE COMPANY AND ITS ASSOCIATES SHALL NOT BUY BACK / RE-PURCHASE SHARES FROM THE

BOOK RUNNERS AND ITS ASSOCIATES TAKEN UP, IF ANY, BY IT IN CAPACITY AS THE BOOK RUNNER.

9.3. FEES AND EXPENSES FOR E- IPO SYSTEMS

Commission on application received through the e-IPO systems of PSX and CDC CES will be paid to PSX and CDC, which shall not be more than 0.8% of the total transaction value. PSX and CDC will share the fee with other participants of the e-IPO system at a ratio agreed amongst them.

9.4. COMMISSION OF THE BANKERS TO THE OFFER

Commission at the rate of 0.25% (inclusive of all taxes) of the amount collected on allotment in respect of

successful applicants will be paid by the Offeror to the Bankers to the Offer for services to be rendered by

them in connection with the Retail portion of the Offer.


Page 98 of 154

9.5. BROKERAGE

For this Offer, brokerage shall be paid to the TRE Certificate Holders of PSX at the rate of 1% of the value of

shares (including premium, if any) on successful applications for Book Building and General Public Portion. No

brokerage shall be payable in respect of shares taken up by the Successful Bidders pursuant to under

subscription of retail portion of the Offer.

9.6. ESTIMATED EXPENSES OF THE OFFER

The initial expenses of the Offer are estimated to be as follows:

Key Expenses to the Offer Rate Amount (PKR)

Success Fee of Lead Manager / Consultant to the offer & Book Runner*

0.30% of the total amount of SPO -

Commission to the TREC Holders of PSX* 1% of the total amount of SPO -

Commission to Bankers to the Offer* 0.25% of the retail portion -

e-IPO Facility Charges of Banks 300,000

PSX & CDC e-IPO charges 0.8% of the subscription received

through e-IPO -

PSX Service Charges 50,000

PSX Software Charges for Book Building 500,000

SECP Application & Processing Fees 200,000

CDC Transfer Charges* 0.16% of the total amount of SPO -

Ballotter Fees 350,000

Legal Counsel 1,000,000

Auditors’ charges for preparation of certificates 250,000

Marketing and Publication Expenses - Tentative 9,030,000

Printing and Stationery 3,306,450

Miscellaneous 3,000,000

*Actual amount will be determined based on the Offer Price



Page 99 of 154

10 MISCELLANEOUS INFORMATION

10.1. REGISTERED OFFICE

Registered Office Address: PRC Towers, 32-A, Lalazar Drive, M. T. Khan Road, P.O. Box: 4777, Karachi-74000, Pakistan. Phone: (92-21) 99202908-15 Fax: (92-21) 99202921-22 Email: [email protected] Website: www.pakre.org.pk 10.2. BANKERS OF THE COMPANY

1. National Bank of Pakistan

Registered Office Address: NBP, PNSC Building Branch, M.T Khan, Road, Lalazar, Karachi. Email: [email protected]

Website: www.nbp.com.pk

2. Bank Al Habib

Registered Office Address: Bank AL-Habib Ltd Karachi Main Branch I.I Chundrigar Road, Karachi. Phone: (+92 21) 111 786 110 Ext. 354 Email: [email protected]

Website: www.bankalhabib.com

3. Bank Alfalah

Registered Office Address: Main Branch, B.A Building, I.I Chundrigar Road, Karachi, Pakistan. Phone: (+92 21) 33122267 Email: [email protected]

Website: www.bankalfalah.com

4. Askari Bank Limited

Registered Office Address: Askari Bank Limited, Islamic Banking Services, Abdullah Haroon Road, Branch (0726), Karachi Phone: (+92 21) 32711500 Email: [email protected]

Website: www.askaribank.com

5. Meezan Bank Limited

Registered Office Address: Meezan Bank Limited, PNSC Branch, 37-A Lalazar Area, Off. M.T. Khan Road, Karachi. Phone: (+92-21) 35636241-44 (EXT: 2529) Email: [email protected]

Website: www.meezanbank.com


http://www.askaribank.com/

http://www.meezanbank.com/


Page 100 of 154

6. Dubai Islamic Bank Limited

Registered Office Address: Dubai Islamic Bank, Wajaha Banking, Clifton Branch. Phone: (+92-21) 35368670 Email: [email protected]

Website: www.dibpak.com 10.3. AUDITOR OF THE COMPANY

M/s. Grant Thornton Anjum Rehman Address: 1st & 3rd Floor, Modern Motors House, Beaumont Road, Karachi. Contact No.: (92-21) 3567 2951 (56) Email: [email protected] 10.4. LEGAL ADVISORS TO THE COMPANY

Ghazi & Magsi

Address: 1st Floor, Office No. 112 Clifton Centre, Kayaban-e-Roomi, Clifton, Karachi

Phone: +92-21-35822618-9

Email: [email protected]

10.5. LEGAL ADVISOR TO THE OFFER

HaiderMota & Co. Address: D-79, Block 5, Clifton, Karachi 75600, Pakistan Tel: +92 21 111 520 000 Fax: +92 21 35871054 Email: [email protected] Website: http://www.hmco.com.pk/ 10.6. REGISTRAR, TRANSFER AGENT AND BALLOTTER

CDC Share Registrar Services Limited Office: CDC House, 99 – B, Block ‘B’, S.M.C.H.S., Main Shahra-e-Faisal, Karachi-74400 UAN: 111-111-500 FAX: (92-21) 34326053 Email: [email protected] , [email protected]

10.7. LEAD MANAGER / CONSULTANT TO THE OFFER

Next Capital Limited Address: 2nd Floor, Imperial Court Building (New Block), Dr. Ziauddin Ahmed Road, Karachi 75530, Pakistan Phone: 111-639-825 Ext 131, 021-3522207 Fax: 021-35292623-21-48 Website: www.nextcapital.com.pk




http://www.hmco.com.pk/



http://www.nextcapital.com.pk/


Page 101 of 154

10.8. BOOK RUNNER

Habib Bank Limited Address: HBL Tower, Plot # G4, Block 7 Clifton, Karachi Phone: (+92) 213311 6560 Fax: (+92) 2135192307 Website: https://www.hbl.com/




Page 102 of 154

11 MATERIAL CONTRACTS

PAKRI is already a listed company and is required to disseminate all material, price sensitive information to

the market under the existing regulatory framework.

Loans to Employees:

The Company has provided loans to its employees, balance of which is PKR 79 million as of 31st December

2020. Loans to employees represent mark-up free loans are secured against retirement benefits of respective

employees including, where applicable, documents of assets for which the loan has been given.

11.1. INSPECTION OF DOCUMENTS AND CONTRACTS

All the Balance Sheets and Profit & Loss Accounts, Copies of the Memorandum and the Articles of Association, the Auditor’s Certificates, the Credit Rating Report, Clearance letter from PSX and the approval letters from SECP, and the copies of agreements referred to in this OFSD may be inspected during usual business hours on any working day at the registered office of the Lead Manager / Consultant from the date of publication of this OFSD until the closing of the Subscription Period.



Page 103 of 154

12 BOOK BUILDING PROCEDURE

12.1. BRIEF STRUCTURE

The Offer comprises of 60,000,000 Ordinary Shares of face value of PKR 10.00/- each which constitutes 20%

of the paid-up capital of the Company.

The Offer is being made through the Book Building process at a Floor Price which shall be at a premium to par.

Initially, 75% of the Offer i.e. 45,000,000 Ordinary Shares will be allotted to successful bidders and 25% of the

Offer i.e. 15,000,000 Ordinary Shares will be offered to retail investors. Unsubscribed shares, if any, of the

General Public portion will be allocated to successful bidders of the Book Building portion on a pro-rata basis.

The Offeror shall set the Floor Price after approval from PC Board and CCOP which is the lowest price an

investor can bid at. An order book of bids from investors is maintained by the Book Runner, which is then used

to determine the Strike Price through the “Dutch Auction Method”. The Floor Price will have a maximum Price

Band of 40% above which no bid shall be accepted.

Please note that the Offer price is the price finalized by the Offeror with the approval from the PC Board &

CCOP after completion of the Book Building process, at which the shares will be allocated to the Successful

Bidders.

The bidders shall give an undertaking along with the application that they would subscribe to the

unsubscribed shares, if any, by the retail investors and their remaining bid money would remain

deposited/blocked till allotment of unsubscribed shares of the retail portion, if any, to them on pro-rata

basis. In case the retail portion is fully subscribed, the bid money shall be unblocked within one (1) working

day or refunded within three (3) working days from the date of confirmation of shares subscribed in the

general public portion.

Within 3 working days from the close of the Bidding Period, a Supplement to the OFSD will be published in at

least all those newspapers in which the OFSD is published. The Supplement will contain information related

to the Strike Price, the Offer Price, commitment by the successful bidders for subscribing the undersubscribed

retail portion, category wise breakup of the successful bidders along with number of shares allocated to them,

dates of public subscription and such other information as specified by the Commission. Format of the

Supplement is given on page 4 of this OFSD.

12.2. TYPES OF BIDS AND PROCEDURE FOR MAKING A BID

Book Building is a process whereby investors bid for a specific number of shares at various prices. The Offeror

sets a Floor Price, which is the minimum / lowest price a Bidder can bid at. An order book of bids is maintained

by the Book Runner, which is then used to determine the Strike Price through the “Dutch Auction Method”.

Under the Dutch Auction Method, the Strike Price is determined by lowering the Bid Price to the extent that

the total number of shares offered through the Book Building process are subscribed.


Page 104 of 154

A bid by a Bidder can be a “Limit Bid”, or a “Step Bid”, each of which are explained below:

Limit Bid: Limit bid is at the Limit Price, which is the maximum price a Bidder is willing to pay for a specified

number of shares.

In such a case, a Bidder explicitly states a price at which he / she / it is willing to subscribe to a specific

number of shares. For instance, a Bidder may bid for 2 million shares at PKR 40.00 per share, based on

which the total Application Money would amount to PKR 80 million. In this case the Bid Amount will also

be PKR 80 million. Since the Bidder has placed a Limit Bid of PKR 40.00 per share, this indicates that he /

she / it is willing to subscribe the shares at a price up to PKR 40.00 per share. In case of individual bidder,

the Margin Money will be 100% i.e. PKR 80 million whereas in case of bidders being Institutional Investor,

the Margin Money shall be 25% of the Bid amount i.e. PKR 20 million.

Step Bid: A series of Limit Bids at increasing prices. The amount of any individual step shall not be less

than PKR 1,000,000.

Under this bidding strategy, Bidders place a number of Limit Bids at different increasing price levels. A

Bidder may, for instance, make a bid for 1.5 million shares at PKR 40.00 per share, 1 million shares at PKR

35.00 per share and 0.5 million shares at PKR 30.00 per share. Therefore, in essence the Bidder has placed

one Step Bid comprising of three Limit Bids at increasing prices. The Bid amount will be PKR 110 million.

In case of individual bidder, the Margin Money will be 100% i.e. PKR 110 million whereas in case of

bidders being Institutional Investor, the Margin Money shall be 25% of the Bid amount i.e. PKR 27.5

million.

RESTRICTIONS:

(i) AN ELIGIBLE INVESTOR SHALL NOT:

(a) BID BELOW THE FLOOR PRICE AND ABOVE THE UPPER LIMIT OF THE PRICE BAND;

(b) MAKE A BID FOR MORE THAN 10% OF THE SHARES ALLOCATED UNDER THE BOOK BUILDING

PORTION;

(c) MAKE A BID WITH A PRICE VARIATION OF MORE THAN 10% OF THE PREVAILING INDICATIVE

STRIKE PRICE AS PER REGULATION 10(2)(iii) OF THE PO REGULATIONS;

(d) MAKE CONSOLIDATED BID;

(e) MAKE MORE THAN ONE BID EITHER SEVERALLY OR JOINTLY;

(f) MAKE DOWNWARD REVISION BOTH IN TERMS OF BID PRICE AND BID VOLUME;

PROVIDED THAT INCASE OF UPWARD REVISION OF THE BID PRICE, THE NUMBER OF

SHARES BID FOR I.E. BID VOLUME MAY BE ADJUSTED ENSURING THAT THE BID AMOUNT

OR BID MONEY REMAINS THE SAME; AND

(g) WITHDRAW BID.


Page 105 of 154

(ii) RELATED EMPLOYEES OF THE OFFEROR, THE COMPANY, LEAD MANAGER / CONSULTANT TO THE

OFFER AND THE BOOK RUNNER SHALL NOT PARTICIPATE IN THE BIDDING PROCESS.

(iii) NO PERSON SHALL TAKE PART IN THE BOOK BUILDING PROCESS, DIRECTLY OR INDIRECTLY

SEVERALLY OR JOINTLY IN ANY MANNER OR ENGAGE IN ANY ACT OR PRACTICE WHICH CREATE A

FALSE AND MISLEADING APPEARANCE OF ACTIVE BIDDING FOR RAISING OR DEPRESSING STRIKE

PRICE IN THE BOOK BUILDING PROCESS.

(iv) AS PER REGULATION 7(8) OF THE PO REGULATION, THE ASSOCIATES OF THE OFFEROR AS

DISCLOSED IN THE OFSD SHALL NOT IN AGGREGATE MAKE BIDS IN EXCESS OF TEN (10) PER CENT

OF THE SHARES OFFERED THROUGH BOOK BUILDING.

(v) AS PER REGULATION 7(9) OF THE PO REGULATIONS, THE ASSOCIATES OF THE LEAD MANAGER /

CONSULTANT TO THE OFFER AND THE BOOK RUNNER SHALL NOT IN AGGREGATE MAKE BIDS FOR

SHARES IN EXCESS OF TEN (10) PERCENT OF THE BOOK BUILDING PORTION. PROVIDED THAT THIS

RESTRICTION SHALL NOT APPLY TO SUCH ASSOCIATES THAT ARE FINANCIAL INSTITUTIONS,

MUTUAL FUNDS AND INSURANCE COMPANIES.

Once the Bidding Period has lapsed and the book has been built, the, Strike Price shall be determined on the

basis of Dutch Auction Method.

Successful bidders shall be intimated, within one (1) working day of the closing of the Bidding Period, about

the Strike Price and the number of shares provisionally allotted to each of them. The bid money of bidders

who have undertaken to subscribe the unsubscribed retail portion shall remain deposited or blocked till

allotment of unsubscribed retail portion, if any, to them on pro-rata basis. Upon intimation by the Book

Runner of the final allocation, successful institutional bidders shall deposit their balance margin money within

(3) days of such intimation. Where a successful Bidder defaults in payment of shares allotted to him / her /

it, the Margin Money deposited by such Bidder shall be forfeited to the Book Runner.

As per regulation 9(16) of the PO Regulations, the successful bidders shall be issued after the end of the

public subscription. Shares to successful bidders shall be issued only in the form of book-entry through

credit in their respective CDS accounts (Investors Account or Sub-Account). All the bidders shall, therefore,

provide number of their CDS accounts in the bid application.

The Bidders must provide the bank account details in their bidding form, so that cash dividend can be credited

into their respective International Bank Account Number (IBAN).

12.3. MECHANISM FOR DETERMINATION OF STRIKE PRICE

1. At the close of the bidding period, the Strike Price shall be determined on the basis of Dutch Auction

Method by the System. Under this methodology, the Strike Price is determined by lowering the price to

the extent that the total number of shares issued under the Book Building process are subscribed.

2. The Order Book shall display the bid prices in a tabular form in descending order along with the number

of shares bid for and the cumulative number of shares at each price level.


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3. As per the regulation 9(12) of the PO Regulation, in case all the bids made above the Strike Price are

accommodated and shares are still available for allotment, such available shares will be allotted on

proportionate basis against the bids made at the Strike Price.

The mechanism for determination of the Strike Price can be understood by the following illustration:

1. Number of shares offered under the Book Building: 60,000,000 Ordinary Shares 2. Bidding Period: From DD/MM/20YY to DD/MM/20YY 3. Bidding Time: 9:00am – 5:00pm 4. Bidding Revision Time (Upward Revision only): 9:00am – 5:00pm on all days

FOR ILLUSTRATION PURPOSE ONLY

Bidder Price

(PKR/share) Quantity

Cumulative Number of Shares

Category of Order

Institution A 42.00 6,000,000 6,000,000 Limit Price

Institution B 41.75 5,850,000 11,850,000 Limit Price

HNWI A 41.50 4,000,000 15,850,000 Step Bid

Institution C 41.25 4,900,000 20,750,000 Limit Price

Institution D 41.00 4,800,000 25,550,000 Limit Price

HNWI B 40.50 2,900,000 28,450,000 Limit Price

HNWI A 40.25 2,800,000 31,250,000 Step Bid

Institution E 40.00 4,950,000 36,200,000 Limit Price

HNWI C 39.50 4,000,000 40,200,000 Limit Price

Institution F 39.25 4,600,000 44,800,000 Step Bid

Institution G 39.00 5,200,000 50,000,000 Limit Price

Institution H 38.75 4,300,000 54,300,000 Limit Price

Institution E 38.50 2,000,000 36,300,000 Limit Price

HNWI D 38.25 2,800,000 57,100,000 Step Bid

HNWI E 38.00 2,900,000 60,000,000 Limit Price

Institution F 36.00 1,000,000 61,000,000 Step Bid

HNWI D 33.00 300,000 61,300,000 Step Bid

HNWI F 30.00 200,000 61,500,000 Limit Price

Strike Price determined

through Dutch Auction

Method

Bid has been revised

upwards and placed at

PKR 40

Total shares

subscribed


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On the basis of the figures provided in the above illustration, according to the Dutch Auction Method, the Strike Price would be set at PKR 38.00 per share to sell the required quantity of 60,000,000 ordinary shares. At PKR 42.00 per share, investors are willing to buy 6,000,000 shares. Since 54,000,000 shares are still available, therefore the price will be set lower. At PKR 41.75 per share, investors are willing to buy 5,850,000 shares. Since 48,150,000 shares are still available, therefore the price will be set lower. At PKR 41.50 per share, investors are willing to buy 4,000,000 shares. Since 44,150,000 shares are still available, therefore the price will be set lower. At PKR 41.25 per share, investors are willing to buy 4,900,000 shares. Since 39,250,000 shares are still available, therefore the price will be set lower. At PKR 41.00 per share, investors are willing to buy 4,800,000 shares. Since 34,450,000 shares are still available, therefore the price will be set lower. At PKR 40.50 per share, investors are willing to buy 2,900,000 shares. Since 31,550,000 shares are still available, therefore the price will be set lower. At PKR 40.25 per share, investors are willing to buy 2,800,000 shares. Since 28,750,000 shares are still available, therefore the price will be set lower. At PKR 40.00 per share, investors are willing to buy 4,950,000 shares. Since 23,800,000 shares are still available, therefore the price will be set lower. At PKR 39.50 per share, investors are willing to buy 4,000,000 shares. Since 19,800,000 shares are still available, therefore the price will be set lower. At PKR 39.25 per share, investors are willing to buy 4,600,000 shares. Since 15,200,000 shares are still available, therefore the price will be set lower. At PKR 39.00 per share, investors are willing to buy 5,200,000 shares. Since 10,000,000 shares are still available, therefore the price will be set lower. At PKR 38.75 per share, investors are willing to buy 4,300,000 shares. Since 5,700,000 shares are still available, therefore the price will be set lower. At PKR 38.25 per share, investors are willing to buy 2,800,000 shares. Since 2,900,000 shares are still available, therefore the price will be set lower. At PKR 38.00 per share, investors are willing to buy 2,900,000 shares. Since after bidding for 2,900,000 shares at PKR 38.00 per share, no shares will be available therefore the Strike Price will be set at PKR 38.00 per share for the entire lot of 60,000,000 shares. The bidders who have placed bids at prices above the Strike Price (which in this illustration is PKR 38.00 per share), will become entitled for allotment of shares at the Strike Price and the differential would be refunded.


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In case all the bids made above the Strike Price are accommodated and shares are still available for allotment, such available shares shall be allotted against the bids made at the Strike Price on proportionate basis as per regulation 9(12) of the PO Regulations.

The Bidders who have made bids below the Strike Price shall not qualify for allotment of shares and the Book Runner shall intimate the respective banks for unblocking their Bid Money within one (1) working day of the close of the bidding period as per regulation 9(13) of the PO Regulation and the refunds, where required to such bidders shall be made within three (3) working days from the close of the bidding period.

Since this Offer is being made through 100% book building, as per regulation 7(4) of the PO Regulation, the Bidder shall be allowed to place bids for hundred (100%) percent of the Offer size and the strike price shall be the price at which hundred (100%) percent of the Offer size is subscribed. However, the successful bidders would be allotted and issued only seventy-five (75%) percent of the Offer size and the remaining twenty-five (25%) percent would be offered to the retail investor. The bidders shall give an undertaking along with the application that they would subscribe to the unsubscribed shares, if any, out of the retail portion of the Offer and their remaining bid money would remain deposited/ blocked till allotment of such unsubscribed shares to them on pro-rata basis. The bid money of bidders shall remain deposited or blocked till allotment of unsubscribed shares, if any, to them on pro rata basis as per regulation 9(15) of PO Regulation. In case retail portion of the Offer is fully subscribed, the bid money shall be unblocked within one (1) working day or refunded within three (3) working days of the closing of the public subscription. 12.4. TIMEFRAME FOR INTIMATION TO THE SUCCESSFUL BIDDERS AND MECHANISM FOR PAYMENT OF

THE BALANCE AMOUNT BY THE SUCCESSFUL BIDDERS

Successful bidders shall be intimated, within one (1) working day of the closing of the bidding period, the

Strike Price and the number of shares provisionally allotted to each of them. Upon intimation by the Book

Runner of the final allocation, successful institutional bidders shall deposit their balance margin money within

(3) days of such intimation. Where a successful Bidder defaults in payment of shares allotted to it, the Margin

Money deposited by such Bidder shall be forfeited to the Book Runner.

12.5. BOOK RUNNER

Habib Bank Limited (“HBL”) has been appointed by the Privatisation Commission as the Book Runner to this

Offer. Details of the book runner are stated below:

Address: HBL Tower, Plot # G4, Block 7 Clifton, Karachi Phone: (+92) 213311 6560 Fax: (+92) 2135192307 Website: https://www.hbl.com/

Roles and Responsibilities of the Book Runner

The Book Runner shall be responsible to: 1. ensure that necessary infrastructure and electronic system is available to accept bids and to conduct the

whole Book Building process in a fair, efficient and transparent manner;



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2. ensure blocking, where required, of bid and margin money of the Bidders in their respective accounts; 3. the Book Runner must be financially capable for honoring its commitments arising out of defaults by their

investors, if any; 4. use the software provided by the Designated Institution for the Book Building on such terms and

conditions as may be agreed through an agreement in writing; 5. ensure that the software used for Book Building is based on Dutch Auction Method for display of the order

book in descending order and determination of the strike price; 6. ensure that the bidders can access to the System and can revise their bids electronically using the user ID

and the password; 7. ensure that it has obtained list and Unique Identification Numbers (“UINs”) of the associates of the Offeror

and the Lead Manager / Consultant to the Offer; 8. ensure that names and UINs of all the persons mentioned under Part 12.28 are entered and capped in a

manner as prescribed in the PO Regulations before commencement of the Bidding Period; 9. ensure that no bid or bids exceeding ten per cent (10%), in aggregate, is or are made by the associated

companies and associated undertakings of the Offeror; 10. ensure that no bid in aggregate exceeding ten per cent (10%) is made by the associated companies and

associated undertakings of the Lead Manager / Consultant to the Offer and the Book Runner; 11. enter into an underwriting agreement with the Offeror with respect to underwriting of the Book Building

portion for covering the default risk; 12. establish bid collection centers at least in Islamabad, all the provincial capitals, Azad Kashmir and Gilgit/

Baltistan; 13. maintain record of all the bids received; and 14. ensure that all the Bids received in the Bid Collection Centers are entered into the Book Building System

within the prescribed time. The Book Runner have established bid collection centers at the following addresses (direct & fax numbers in all centers).

BID COLLECTION CENTERS

The Book Runner has established bid collection centers at the following addresses:

Karachi

Contact Officer:

Direct No.:

Mobile No.:

PABX No.:

Fax No.:

Email:

Postal Address:

Lahore Quetta

Contact Officer:

Mobile No.:

Direct No.:

Email:

Postal Address:

Islamabad Peshawar

Contact Officer:


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PABX No.:

Direct:

Fax No:

Email:

Postal Address:

Azad Kashmir Gilgit / Baltistan

Contact Officer:

Mobile No.:

Direct:

Email:

Postal Address:

12.6. LEAD MANAGER/ CONSULTANT TO THE OFFER

Next Capital Limited (“NCL”) has been appointed by the Privatisation Commission as the Lead Manager/ Consultant to this Offer.

12.7. INTEREST OF LEAD MANAGER/ CONSULTANT TO THE OFFER AND BOOK RUNNER OTHER THAN THEIR ROLE AS LEAD MANAGER / CONSULTANT TO THE OFFER AND BOOK RUNNER

The Lead Manager/ Consultant to the Offer and Book Runner are deemed to be interested to the extent of

fees payable to them by the Offeror for the services of Lead Manager/ Consultant and Book Runner to the

Offer. The Lead Manager / Consultant and Book Runner have no other interest in any property or profits of

the Company.

12.8. ROLES AND RESPONSIBILITIES OF THE DESIGNATED INSTITUTION

PSX being provider of the Book Building System (Designated Institution), shall ensure that Book Building

System shall smoothly perform following functions:

1. Record name, UIN, National Tax Number (NTN), postal and email addresses; land line and cell numbers,

bank account number and branch address; and Investor Account Number or Sub-Account Number of the

bidder with participant account number;

2. Provide a mechanism for registration of the bidders before commencement of the bidding period till 03:00

p.m. on the last day of the Bidding Period and require the investors to provide at least such information

as mentioned above;

3. Generate bidders’ Internet Protocol (IPs) address and keep record of all IP addresses from where the bids

are placed;

4. Record the number of shares bid for, the Bid Price, type of the bid i.e. Limit Bid or Step Bid, date and time

of the entry of the bid;

5. Display the bids revised upward, and date and time of upward revision;

6. Neither allow withdrawal of Bid nor accept the bids placed at a Bid Price that is below the Floor Price or

above 10% of the Indicative Strike Price at any point of time or above the upper limit of the Price Band;


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7. Display live the total number of shares offered for sale, the Floor Price, Price Band, total number of bids

received, total number of shares bid for and indicative Strike Price;

8. Build an order book showing demand for the shares at various price levels in a descending order along

with the accumulated number of shares bid for and percentage of total shares offered under the Book

Building Portion;

9. Discover the strike price at the close of the Bidding Period;

10. Generate alerts for the Bidders via Short Message Service (SMS) through cell phones and emails upon

entry of the bid, at the time of upward revision of the bid, and upon discovery of the strike price; and

11. Ensure that system must provide the bidders the option to upward revise their bids online or through the

Book Runner during the period permitted under the PO Regulations.

PSX shall ensure that:

─ identity of the bidder is not displayed; and ─ no bid is entered into the System after closing of the Bidding Period.

12.9. OPENING AND CLOSING OF THE REGISTRATION PERIOD

The Registration period shall be for Five (5) working days i.e. DD/MM/20YY to DD/MM/20YY from 9:00 AM to

5:00 PM and from 9:00 AM to 3:00 PM on DD/MM/20YY.

REGISTRATION PERIOD

DD/MM/20YY 9:00am to 5:00pm





12.10. OPENING AND CLOSING OF THE BIDDING PERIOD

The Bidding Period shall be for Two (2) working days i.e. DD/MM/20YY and DD/MM/20YY. The bidding will

commence at 09:00 am and shall close at 05:00 pm on both days.

BIDDING PROCESS STARTS ON DD/MM/20YY (9:00 AM to 5:00 PM)

BIDDING PROCESS ENDS ON DD/MM/20YY (9:00 AM to 5:00 PM)

12.11. ELIGIBILITY TO PARTICIPATE IN BIDDING

Eligible Investors who can place their bids in the Book Building process include local and foreign Individual and

Institutional Investors whose Bid Amount is not less than PKR 1,000,000/- (Rupees One Million only).


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12.12. INFORMATION FOR BIDDERS

1. The Offer for Sale Document has been duly cleared by PSX and approved by SECP as detailed in Part 1.1

and 1.2.

2. The OFSD, Registration Forms, the Bidding Forms and Bid Revision Forms can be obtained from the

Registered Office of the Company, Next Capital Limited and the designated Bid Collection Centers. OFSD,

Registration Forms, Bidding Forms and Bid Revision Forms can also be downloaded from the following

websites of the Lead Manager / Consultant to the Offer, Book Runner and the Company:

http://www.nextcapital.com.pk, https://www.hbl.com/, http://www.pakre.org.pk/

3. Eligible Investors who are interested in subscribing to the Ordinary Shares should approach the Book

Runner at the addresses provided in Part 10.8 for registration for submitting their Bids.

4. THE REGISTRATION FORMS SHOULD BE SUBMITTED ON THE PRESCRIBED FORMAT AT THE ADDRESSES

PROVIDED IN PART 12.5. FOR DETAILS ON THE PROCEDURE OF REGISTRATION PLEASE REFER TO PART

12.14.

5. THE BIDS SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM IN PERSON, THROUGH FAX

NUMBERS GIVEN IN PART 10.8 OR THROUGH THE ONLINE SYSTEM USING THE USER ID AND PASSWORD

ISSUED AT THE TIME OF REGISTRATION OF ELIGIBLE INVESTOR.

6. REGISTERED INVESTORS CAN PLACE AND REVISE THEIR BIDS UPWARDS BY ACCESSING THE PSX ONLINE

PORTAL FOR BOOK BUILDING BY USING THE USER ID AND PASSWORD COMMUNICATED TO THEM VIA

EMAIL BY PSX.

7. EACH ELIGIBLE INVESTOR SHALL ONLY SUBMIT A SINGLE PAY ORDER, DEMAND DRAFT OR EVIDENCE OF

ONLINE TRANSFER OF MONEY ALONG WITH THE REGISTRATION FORM. IT MAY ALSO BE NOTED THAT

ONLY A SINGLE PAY ORDER, DEMAND DRAFT OR EVIDENCE OF ONLINE TRANSFER OF MONEY SHALL BE

ACCEPTED BY THE BOOK RUNNER ALONG WITH EACH ADDITIONAL PAYMENT FORM.

8. ELIGIBLE INVESTORS WHO ARE ACCOUNT HOLDERS OF HABIB BANK LIMITED (THE BANKER TO THE BOOK

BUILDING PORTION OF THE OFFER) CAN USE THE ONLINE TRANSFER FACILITY PROVIDED BY HABIB BANK

LIMITED TO DEPOSIT THEIR BID MONEY TO THE BOOK BUILDING ACCOUNT OPENED AT HABIB BANK

LIMITED.

12.13. BIDDERS REGISTRATION FORM AND PROCEDURE FOR REGISTRATION

1. A standardized Registration Form has been prescribed by the Offeror. The Registration Form shall be

submitted, duly filled in, at the Bid Collection Centers in person on addresses given in Part 12.5 on the

standard Registration Form. The Registration Form shall be serially numbered at the bid collection centers

and date and time stamped at the time of collection of the same from the Bidders.

http://www.nextcapital.com.pk/


http://www.pakre.org.pk/


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2. Upon completion and submission of the Registration Form, the Bidders are deemed to have authorized

the Offeror to make necessary changes in the OFSD as would be required for finalizing and publishing the

Supplement to the OFSD in the newspapers in which OFSD was published and filing the Supplement with

the PSX and the SECP, without prior or subsequent notice of such changes to the Bidders.

3. The registration procedure under the Book Building process is outlined below:

─ The Registration period shall be for Five (5) working days i.e. DD/MM/20YY to DD/MM/20YY from

9:00 AM to 5:00 PM (during working days) and from 9:00 AM to 3:00 PM on DD/MM/20YY.

─ The Registration Form shall be issued in duplicate signed by the Bidder and countersigned by the

Book Runner, with the first copy for the Book Runner and the second copy for the Bidder.

─ The Registration Form shall be duly filled in and signed in duplicate and shall be submitted at the Bid

Collection Centers in person, through representative or through fax on addresses and numbers given

in paragraph 10.8.

─ Upon registration of the bidders in the System, PSX shall assign and communicate the User ID and

Password to the Bidders via email on the email address provided by them in the Registration Form.

─ The Book Runner may reject any bid for reasons to be recorded in writing provided the reason of

rejection is disclosed to such bidder. Decision of the Book Runners shall not be challengeable by the

Bidder or its associates.

─ Bid Amount / Margin Money shall be deposited along with the Registration Form through demand

draft, pay order or online transfer through Bidder’s bank account only. In case of Online Transfer, the

Bidders are requested to submit a bank receipt evidencing transfer of the bid money into the

Offeror’s designated bank account. Please note that cash must not be deposited either directly or

through online transfer in the Offeror’s designated bank account.

─ The pay order shall be made in favor of “PAKRI BOOK BUILDING ACCOUNT ”. For online transfer the

payment shall be made into account no, 00427992080003 being maintained at Habib Bank Limited

– State Life Branch. Please note that online transfer facility shall only be allowed to the account

holders of Habib Bank Limited.

─ Please note that third party instruments will not be accepted for Margin Money.

o In case of intra city payment instruments, the bidders shall ensure that the payment instruments

are made “Payable at any Branch”. Intra city payment instruments that are not made “Payable

at any Branch” will not be accepted.


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─ The Book Runners shall collect an amount of 100% of the Application Money as Margin Money in

respect of bids placed by Individual Investors.

─ The Book Runners shall collect an amount of not less than 25% of the Application Money as Margin

Money in respect of bids placed by Institutional Investors.

─ The Bidder shall provide a valid email address in the Registration Form so that the relevant ID and

password can be emailed to them upon registration.

─ The Bidders can use the User ID and Password to independently place and upward revise their bids

online.

─ The successful Bidders shall be issued shares only in the form of book-entry to be credited in their

respective CDS accounts. All the bidders shall, therefore, provide their CDS account numbers in the

bid application and Registration form.

─ The successful Bidders shall be paid cash dividend, if any announced by the Company, only through direct credit in their respective International Bank Account Number (IBAN). All the Bidders, therefore, must provide their IBANs in the Bid Application and Registration Forms.

12.14. PROCEDURE FOR BIDDING

1. A standardized Bidding Form has been prescribed by the Offeror.

2. Registered Investors can submit their bids in person or through representatives at the Bid Collection

Centers during the bidding dates or can place their bids online at https://bkb.psx.com.pk using the user

ID and Password received by them over email upon registration with the Book Runner.

3. The bidding procedure under the Book Building process is outlined below:

─ Bids can be placed either at the “Limit Price” or as a “Step Bid”. The minimum size of a Limit Bid by

an Eligible Investor shall not be less than PKR 1,000,000/- (Rupees One Million) and in case of a Step

Bid, the amount of any step shall also not be less than PKR 1,000,000/- (Rupees One Million).

─ The investors may place their bids through any of the Bid Collection Centers established pursuant to

the requirements of sub-regulation 10 of regulation 8 of the PO Regulations. Please see Part 12.5 for

addresses and contact detail of persons at the Bid Collection Centers.

─ The persons at the Bid Collection Centers shall vet the bid applications and accept only such bid

applications that are duly filled in and supported by pay order, demand draft or a bank receipt

evidencing transfer of the bid money into the Offeror’s designated bank account.

https://bkb.psx.com.pk/


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─ On receipt of bid application in accordance with PO Regulations, the Book Runner shall enter Bid into

the System and issue to the Bidder an electronic receipt bearing name of the Book Runner, name of

the bidding center, date and time.

─ The bidding shall commence from 09:00 a.m. and close at 05:00 p.m. on all days of the Bidding Period.

The bids shall be collected and entered into the system by the Book Runner till 05:00 p.m. on the last

day of the bidding period.

─ The Bidders shall have the right;

o to revise their bids upwards any time either manually through the Bid Collection Centers or

electronically through direct access to the system till 05:00 p.m. on the last day of the Bidding

Period.

─ The Bidders shall NOT make downward revision both in terms of Bid Price and Bid Volume provided that in case of upward revision of the Bid Price, the number of shares Bid for i.e. Bid Volume may be adjusted ensuring that the bid amount or bid money remains the same.

─ The Bidders shall not withdraw the Bids.

─ The Book Runner shall collect full amount of the Bid Amount as Margin Money in respect of bids placed by the individual investors and not less than twenty-five percent (25%) of the Bid Amount as Margin Money in respect of bids placed by the Institutional Investors.

─ The Book runner may waive the margin requirement for institutional investors at its own discretion;

─ Payment of Margin Money shall be accepted only through demand draft, pay order or online transfer

and third-party payment instruments shall not be accepted.

─ The Book Runner may reject any bid for reasons to be recorded in writing provided the reason of

rejection is disclosed to such bidder. The decision of the Book Runner shall not be challengeable by

the Bidder or its associates.

─ PSX shall, through the system, display live throughout the bidding period an order book in descending

order showing demand for shares at various prices and the accumulated number of shares bid for

along with percentage of the total shares issued (the “Order Book”). The Order Book should also

show the bids revised upward. The Order Book shall be accessible through websites of PSX.

─ At the close of the Bidding Period, the Strike Price shall be determined on the basis of the Dutch

Auction Method.

─ Once the Strike Price is determined, all those Bidders whose bids are found successful shall become

entitled for allotment of shares.


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─ The Bidders who have made bids at prices above the Strike Price shall be allotted shares at the Strike

Price and the differential shall be refunded.

─ In case all the bids made above the Strike Price are accommodated and shares are still available for

allotment, such available shares will be allotted against the bids made at the Strike Price on

proportionate basis as per regulation 9(12) of the PO Regulations. The procedure for allotment of

shares to successful Bidders is mentioned in Part 12.21 of the OFSD.

─ The Bidders who have made bids below the Strike Price shall not qualify for allotment of any Ordinary

Shares and the Book Runner shall intimate their respective banks for unblocking, where required,

their Bid Money within one (1) working day of the close of the bidding period; and in case of refund,

the refunds to such bidders shall be made within three (3) working days from the close of the bidding

period.

─ Successful bidders shall be intimated, within one (1) working day of the closing of the bidding period,

the Strike Price and the number of shares provisionally allotted to each of them. The successful

bidders shall be intimated by the Book Runner of their final allocation after subscription of the retail

portion of the Offer.

─ In case the retail portion of the Offer is not fully subscribed, the unsubscribed shares shall be allotted

to the successful bidders on a pro rata basis.

─ In case the retail portion of the Offer is oversubscribed, the allotment shall be made in the manner

given in Part 12.24.

─ Upon intimation by the Book Runner of final allocation, successful institutional bidders shall deposit

their balance margin within (3) days of such intimation. Where a successful Bidder defaults in

payment of shares allotted to it, the Margin Money deposited by such Bidder shall be forfeited to

the Book Runner.

─ Final allotment of shares out of the Book Building Portion shall be made after receipt of full

subscription money from the successful Bidders; however, shares to such Bidders shall be credited

at the time of credit of shares out of the retail portion.

─ The successful Bidders shall be issued shares only in Book Entry Form to be credited in their

respective CDS accounts. All the bidders shall, therefore, provide their CDC account numbers in the

Registration Form.

─ The Designated Institution shall continue to display on its website, the data pertaining to the Book

Building and determination of the Strike Price for a period of at least three (3) working days after

closure of the Bidding Period.


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─ The Book-Runner shall ensure that subscription money received against the bids accepted shall not

be released to the Offeror by the Banker to the Book Building Portion until:

o credit of all shares allotted to retail investors; and

o issuance of NOC by the PSX.

12.15. PAYMENT FOR BOOK BUILDING PORTION

The Offeror has opened a bank account for collection of applications’ money related to Book Building Portion.

The Bidders shall draw a demand draft, pay order favoring “PAKRI BOOK BUILDING ACCOUNT” or online

transfer of the bid money into the Book Building account no. 00427992080003 maintained at Habib Bank

Limited and submit the demand draft, pay order or bank receipt at the designated Bid Collection Centers

either in person or through facsimile along with a duly filled in Registration Form.

For online transfer, the payment shall be made into the Account 00427992080003 being maintained at Habib

Bank Limited - State Life Branch with the Account Title “PAKRI BOOK BUILDING ACCOUNT”. Please note that

online transfer facility shall only be allowed for account holders of Habib Bank Limited.

CASH MUST NOT BE SUBMITTED WITH THE BIDDING FORM/REGISTRATION FORM AT THE BID COLLECTION

CENTER NOR DEPOSITED DIRECTLY OR VIA ONLINE TRANSFER IN THE OFFEROR’S DEISGNATED BANK

ACCOUNTS. BID AMOUNT MUST BE PAID THROUGH PAY ORDER, BANK DRAFT OR ONLINE TRANSFER DRAWN

/ TRANSFER IN FAVOR OF “PAKRI BOOK BUILDING ACCOUNT ” IN A MANNER ACCEPTABLE TO THE BOOK

RUNNER. PLEASE NOTE THAT THIRD PARTY PAYMENT INSTRUMENTS WILL NOT BE ACCEPTED.

The Collection Bank shall keep and maintain the bid money in the said account. Once the shares allocated

under the retail portion have been credited, the Lead Manager / Consultant to the Offer, after obtaining NOC

from PSX, may request in writing to the Collection Bank for transfer of the money of successful and accepted

applications to the Offeror’s account(s).

12.16. PAYMENT PROCEDURE:

The payment procedures for a Limit Bid or a Step Bid are explained below:

PAYMENT FOR LIMIT BID

If investors are placing their bids as a Limit Bid, then they shall deposit the Margin Money based on the number

of shares they are bidding for at their stated bid price.

For instance, if an investor is applying for 2 million shares at a price of PKR 40.00 per share, then the total

Application Money would amount to PKR 80 million. In such a case, (i) Individual Investor shall deposit PKR 80

million in the Book Building account as the bid amount which is 100% of PKR 80 million; and (ii) Institutional


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Investor shall deposit at least PKR 20 million in the Book Building account as the Margin Money which is 25%

of PKR 80 million.

PAYMENT FOR STEP BID

If an investor is placing a Step Bid which is a series of Limit Bids at increasing prices, then he/she/it shall deposit

the Margin Money / bid money based on the total number of shares he/she/it is bidding for at his/her/its

stated bid prices.

Under this bidding strategy, Bidders place a number of Limit Bids at different increasing price levels. A Bidder

may, for instance, if the investor bids for 1.50 million shares at PKR 40 per share, 1.00 million shares at PKR

35 per share and 0.50 million shares at PKR 30 per share, then in essence the investor has placed one Step Bid

comprising three limit bids at increasing prices. The Application Money would amount to PKR 110 million,

which is the sum of the products of the number of shares bid for and the bid price of each limit bid. In such a

case, (i) Individual Investors shall deposit PKR 110 million in the Book Building Account as Margin Money which

is 100% of PKR 110 million and (ii) Institutional Investors shall deposit at least PKR 27.5 million in the Book

Building Account as Margin Money which is 25% of PKR 110 million.

12.17. PAYMENT BY FOREIGN INVESTORS

Pursuant to the Foreign Exchange Regulation Act, 1947 read with the Foreign Exchange Manual issued from time to time (the “Manual”), all shares of Pakistani incorporated companies owned by non-resident investors are required to be registered with the State Bank of Pakistan (“SBP”) on a fully repatriable basis as to dividends and disinvestment proceeds. In relation to the foregoing, SBP has issued general permission under paragraph 6 (with specific reference to sub para (B) (I)) of Chapter 20 of the Manual, which permits registration of the shares subscribed/purchased by non-resident investors on a fully repatriable basis as to dividends and disinvestment proceeds (subject to satisfaction of prescribed formalities) provided that:

a) the underlying issue price or the purchase price (as applicable) is paid in foreign exchange through normal banking channel by remittance from abroad or out of foreign currency account maintained by the subscriber/purchaser in Pakistan; and

b) the purchase price (whether negotiated privately or otherwise) is not less than the price quoted on the PSX.

For the purposes of the foregoing, the non-resident investors may be classified in the following categories (“Non-Resident Investors”):

I. A Pakistan national resident outside Pakistan; II. A person who holds dual nationality including Pakistan nationality, whether living in or outside

Pakistan; III. A foreign national, whether living in or outside Pakistan; and IV. A firm (including a partnership) or trust or mutual fund registered and functioning outside Pakistan,

excluding entities owned or controlled by a foreign government,


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Non Resident Investors who wish to bid for the shares of the Company being offered via book building will be required to remit the subscription amount through an Authorized Dealer (a scheduled bank in Pakistan authorized to deal in foreign exchange by the SBP) directly to the book building accounts opened by the Company as given in Part 12.15 of this OFSD. However, those Non Residents Investors who wish to subscribe to the shares of the Company out of the general public portion (retail portion) may contact any of the Bankers to the Offer for taking instructions regarding payment of subscription amounts against shares offered to general public / retail investors. List of Bankers to the Offer for the general public / retail portion is available on page 1 of this OFSD. The shares issued to Non-Resident Investors shall be intimated by the Company to the designated Authorized Dealer, along with the documents prescribed in the Manual within 30 days of issue. Non-Residents Investors who are covered under paragraph 6(A) of Chapter 20 of the Manual do not require SBP’s approval to invest in the shares being offered in terms of this OFSD. Furthermore, under paragraph 7 (vii) of Chapter 20 of the Manual, the Authorized Dealer shall allow repatriation of dividends, net of applicable taxes and proceeds on sale of listed shares (i.e. divestment proceeds) not exceeding the market value less brokerage/commission on satisfaction of prescribed formalities. Payments made by Non-Resident Investors shall be supported by proof of receipt of foreign currency through

normal banking channels. Such proof shall be submitted along with the application by the Non-Resident

Investors as part of the prescribed formalities.

12.18. PROCEDURE FOR REJECTION OF BIDS

In terms of regulation 9(7) of the PO Regulations, the Book Runner may reject any Bid placed by a Bidder for

reasons to be recorded in writing provided the reason of rejection is disclosed to such Bidder. Decision of the

Book Runner shall not be challengeable by the Bidder.

12.19. TIME FRAME FOR UPWARD REVISION OF BIDS BY THE BIDDERS

The registered investors may revise their Bids upwards any time either manually through the Bid Collection

Centers or electronically through direct access to the system till 05:00 p.m. on the last day of the Bidding

Period.

An investor will not be allowed to place or revise a bid with a price variation of more than 10% of the prevailing

indicative strike price.

NO DOWNWARD REVISION BOTH IN TERMS OF BID PRICE AND BID VOLUME IS ALLOWED PROVIDED THAT

IN CASE OF UPWARD REVISION OF THE BID PRICE, THE NUMBER OF SHARES BID FOR I.E. BID VOLUME MAY

BE ADJUSTED ENSURING THAT THE BID AMOUNT OR BID MONEY REMAINS THE SAME. HOWEVER, NO

WITHDRAWAL OF BID IS ALLOWED.

12.20. PROCEDURE FOR WITHDRAWAL OF OFFER

1. In accordance with regulation 8(16) of the PO Regulations, in case the Offeror does not receive bids for

the number of shares allocated under the Book Building Portion at the Floor Price, the Offer shall be


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cancelled and the same shall be immediately intimated to the Commission and PSX and the Margin Money

shall be refunded to the bidders immediately but not later than three (3) working days of the closing of

the Bidding Period.

2. In accordance with regulation 8(17) of the PO Regulations, the Book Building process will be considered

as cancelled if the total number of bids received is less than forty (40).

12.21. BASIS OF ALLOTMENT OF SHARES

Bidders shall be allowed to place bids for one hundred percent (100%) of the Offer size and the Strike Price

shall be the price at which one hundred percent (100%) of the Offer is subscribed via the Dutch Auction

Method.

After the closure of the bidding period the Offer Price shall be determined by PC Board and CCOP, at which

successful bidders shall be eligible for allotment and transfer of shares.

Once the Strike Price is determined, all those Bidders whose bids have been found successful shall be

provisionally allotted 75% of the Offer size i.e. 45,000,000 Ordinary Shares.

In order to be a successful Bidder in the Book Building process, the bid price would either be higher than the

strike price or at the strike price.

For allocation of shares via Book Building, priority shall be given to the bids placed at the highest price. The

bidders, who have made bids at prices above the Strike Price, will be provisionally allocated 75% of the shares

successfully bid for, at the Strike Price. The differential between the bid price and Strike Price, would be

refunded based on the total number of shares bid for.

Bidders who had placed Bids at the Strike Price will be provisionally allotted seventy-five (75%) of the shares

successfully bid for, at the Strike Price, on proportionate basis.

Bids made below the Strike Price shall not qualify for allotment of shares and their Margin Money will be

refunded.

Final allotment of shares to the successful bidders would be determined after determination of the public

response to the Retail Portion of the Offer.

In the event the retail portion is undersubscribed, the unsubscribed portion would be allotted to the successful

bidders, on a pro-rata basis as per regulation 11(5) of the PO Regulations. Excess funds, if any, would be

refunded to the bidders after allotment of the unsubscribed shares.

Final allotment of shares out of the Book Building portion shall be made after subscription of the retail portion

and receipt of full subscription money from the successful Bidders; however, shares to such Bidders shall be

issued simultaneously with issuance of shares to retail investors, in the form of book-entry to be credited in


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their respective CDS accounts. All the Bidders shall, therefore, provide number of their respective CDS

accounts in the Bid application as required under regulation 9(16) of the PO Regulations.

12.22. REFUND OF MARGIN MONEY

The Bidders who have made bids below the Strike Price shall not qualify for allotment of securities and the

Book Runner shall intimate their respective banks for unblocking, where required, their Bid Money within one

(1) working day of the close of the bidding period as required under regulation 9(13) of the PO Regulations;

and in case of refund, the refunds to such bidders shall be made within three (3) working days from the close

of the Bidding Period.

The bid money of Bidders who have undertaken to subscribe the unsubscribed retail portion shall remain

deposited or blocked till allotment of unsubscribed retail portion, if any, to them on pro-rata basis.

12.23. PUBLICATION OF SUPPLEMENT TO THE OFSD

In accordance with the regulation 11(1) of the PO Regulations, within three (3) working days of the closing of

the Bidding Period, the Supplement to the OFSD shall be published at least in all those newspapers in which

the OFSD was earlier published and also disseminated through PSX.

The Supplement will contain information related to the Strike Price, the Offer Price, commitment by the

successful bidders for subscribing the undersubscribed retail portion, category wise breakup of the successful

bidders along with number of shares allocated to them, dates of public subscription and such other

information as specified by the Commission.

Public subscription for the shares shall be held at any date(s) within thirty days (30) of the publication of

the OFSD but not earlier than seven (7) days of such publication.

12.24. MINIMUM AMOUNT OF APPLICATION AND BASIS FOR ALLOTMENT OF SHARES OUT OF THE RETAIL PORTION OF THE OFFER

The basis and conditions for allotment of shares out of the Retail Portion of the Offer shall be as follows:

1. Application for shares must be made for 500 shares or in multiples of 500 shares only. Applications which are neither for 500 shares nor for multiples of 500 shares shall be rejected.

2. The minimum amount of application for subscription of 500 shares is the Issue / Offer Price x 500 shares.

3. Application for shares below the minimum amount shall not be entertained. 4. SUBMISSION OF FALSE AND FICTITIOUS APPLICATIONS IS PROHIBITED AND SUCH APPLICATIONS’

MONEY MAY BE FORFEITED BY SECP UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015 5. If the shares offered to the general public are sufficient to accommodate all applications, all

applications shall be accommodated. 6. In case retail portion of the Offer, remains unsubscribed, the unsubscribed shares shall be allotted to

successful bidders at the strike price on pro-rata basis.


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7. If the shares applied for by the general public are in excess of the shares allocated to them, the distribution shall be made by computer balloting, in the presence of the representative(s) of PSX in the following manner:

If all applications for 500 shares can be accommodated, then all such applications shall be accommodated first. If all applications for 500 shares cannot be accommodated, then balloting will be conducted among applications for 500 shares only.

If all applications for 500 shares have been accommodated and shares are still available for allotment, then all applications for 1,000 shares shall be accommodated. If all applications for 1,000 shares cannot be accommodated, then balloting will be conducted among applications for 1,000 shares only.

If all applications for 500 shares and 1,000 shares have been accommodated and shares are still available for allotment, then all applications for 1,500 shares shall be accommodated. If all applications for 1,500 shares cannot be accommodated, then balloting will be conducted among applications for 1,500 shares only.

If all applications for 500 shares, 1,000 shares and 1,500 shares have been accommodated and shares are still available for allotment, then all applications for 2,000 shares shall be accommodated. If all applications for 2,000 shares cannot be accommodated, then balloting will be conducted among applications for 2,000 shares only.

After the allotment in the above-mentioned manner, the balance shares, if any, shall be allotted in the following manner:

o If the remaining shares are sufficient to accommodate each application for over 2,000

shares, then 2,000 shares shall be allotted to each applicant and remaining shares shall be allotted on pro-rata basis.

o If the remaining shares are not sufficient to accommodate all the remaining applications for over 2,000 shares, then balloting shall be conducted for allocation of 2,000 shares to each successful applicant.

8. If the Offer is over-subscribed in terms of amount only then the allotment of shares shall be made in

the following manner:

First preference will be given to the applicants who applied for 500 shares;

Next preference will be given to the applicants who applied for 1,000 shares;

Next preference will be given to the applicants who applied for 1,500 shares; and

Next preference will be given to the applicants who applied for 2,000 shares.

After allotment of the above, the balance shares, if any, shall be allotted on a pro-rata basis to the applicants who applied for more than 2,000 shares.

9. Allotment of shares will be subject to scrutiny of applications for subscription of shares. 10. Applications which do not meet the above requirements or application which are incomplete will be

rejected. 12.25. TEN PERCENT (10%) PRICE VARIATION

An investor will not be allowed to place or upward revise a bid with a price variation of more than ten percent

(10%) of the prevailing Indicative Strike Price subject to Floor Price i.e. Bid Price must not be below the Floor


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Price and must not exceed 40% of the Floor Price which is the upper limit of the Floor Price. Please note that

the indicative Strike Price may not be constant and may keep on changing during the bidding period.

Therefore, the 10% range will also change with the indicative Strike Price.

For Example, if the Floor Price is PKR 30.0 per share and indicative Strike Price at any given point in time during

the bidding period is PKR 35.0 per share, registered bidders may place or revise their bids from PKR 35.0 per

share to PKR 38.5 per share. If at any given point in time during the bidding period, the indicative Strike Price

changes from PKR 35 per share to PKR 38 per share, the registered bidders may place or upward revise their

bids from PKR 38 per share to PKR 41.80 per share.

Please note that the 10% range on the lower side cannot go below the Floor Price and cannot exceed the

upper cap of 40% of the floor price. The price range of 10% applicable at any given point in time during the

bidding period will also be displayed on the bid screen available at the website of PSX.

12.26. RESTRICTION ON DOWNWARD REVISION OR WITHDRAWAL OF BIDS BY THE BIDDER

Under regulation (10)(2)(vi) of the PO Regulations the Bidders shall not make downward revision both in terms

of Bid Price and Bid Volume provided that in case of upward revision of the Bid Price, the number of shares

Bid for i.e. Bid Volume may be adjusted ensuring that the bid amount or bid money remains the same.

Under regulation (10)(2)(vii) of the PO Regulations the Bidders shall not be allowed to withdraw Bids.

12.27. ASSOCIATED COMPANIES AND UNDERTAKINGS OF THE OFFEROR

As required under regulation 7(8) of the PO Regulations, the Associated Companies and Associated Undertakings of the Offeror cannot in aggregate make bids for shares in excess of 10% of the Book Building Portion. However, the Offeror will obtain relaxation from this regulation from SECP. 12.28. RELATED EMPLOYEES

Related Employees of the Offeror (Privatisation Commission)

S. No Name Designation

1 Muhammad Shamim Khan Director General

2 Nauman Afzal Tariq Senior Consultant

Related Employees of the Company (Pakistan Reinsurance Company Limited)


1 Jamil Ahmed Chief Financial Officer

2 Shams-ud-Din Company Secretary


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Related employees of the Lead Manager / Consultant to the Offer (Next Capital Limited)


1 Mr. Muhammad Najam Ali Chief Executive Officer

2 Dr. Ali Akhtar Ali MD, Capital Markets

3 Mr. Saim Shahid AVP, Investment Banking and Advisory

4 Mr. Syed Qamber Ali AVP, Investment Banking and Advisory

5 Mr. Syed Danish Alam Senior Associate, Investment Banking and Advisory

6 Mr. Muhammad Anas Choudhry Analyst, Investment Banking and Advisory

Related employees of the Book Runner (Habib Bank Limited)


1 Mr. Imaad Uddin Head – Advisory and ECM, Investment Banking

2 Ms. Humaira Asad Senior Associate – Advisory and ECM, Investment Banking

3 Mr. Muhammad Fakhar Associate – Advisory and ECM, Investment Banking

4 Ms. Zeenat Sattar Analyst – Advisory and ECM, Investment Banking

Note:

1. As per regulation 7(9) of the PO Regulations, the associates of the Lead Manager/ Consultant to the Offer

and the Book Runner shall not in aggregate make bids in excess of ten (10%) percent of the shares offered

through Book Building. Provided that it shall not apply to such associates of the Lead Manager/ Consultant

to the Offer and the Book Runner that are Financial Institutions, Mutual Funds and Insurance Companies.

2. As required under regulation 20(10) of the PO Regulations, Related Employees of the Offeror, the Lead

Manager/ Consultant to the Offer and the Book Runner shall not participate in the bidding for shares.



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13 APPLICATION AND ALLOTMENT INSTRUCTIONS FOR RETAIL PORTION

13.1. ELIGIBLE INVESTORS Eligible Investors include: a) Pakistani citizens resident in or outside Pakistan or persons holding dual nationalities including

Pakistani nationality; b) Foreign nationals whether living in or outside Pakistan; c) Companies, bodies corporate or other legal entities incorporated or established in or outside Pakistan

(to the extent permitted by their constitutive documents and existing regulations, as the case may be);

d) Mutual Funds, Provident / pension / gratuity funds / trusts, (subject to the terms of the Trust Deed

and existing regulations); and e) Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan. 13.2. OPENING AND CLOSING OF SUBSCRIPTION LIST The subscription list will open at the commencement of the banking hours on DD/MM/YYYY and close at the end of banking hours on DD/MM/YYYY. 13.3. COPIES OF THE OFSD Copies of the OFSD and applications forms can be obtained from PSX, the Bankers to the Offer and their Branches, the Lead Manager/ Consultant to the Offer, Book Runner and the registered office of Pakistan Reinsurance Company Limited. The OFSD and the Application Forms can also be downloaded from the following websites: http://nextcapital.com.pk/, https://www.hbl.com/, www.psx.com.pk and https://eipo.cdcaccess.com.pk/ Shares against the successful and accepted applications shall be issued in the Book Entry Form only and will be credited into the Applicants CDS Account mentioned in the Application. The applicants, therefore, must provide detail of their CDS Account (investors Account or Sub-Account) in the Shares Subscription Form. Investors who do not have CDS account may visit www.cdcpakistan.com for information and details. For further guidance and queries regarding opening of CDS account, investors may contact CDC at phone Number: 0800 – 23275 (CDCPL) and e-mail: [email protected]. NAMES(S) AND ADDRESS (ES) MUST BE WRITTEN IN FULL BLOCK LETTERS, IN ENGLISH AND SHOULD NOT BE ABBREVIATED. ALL APPLICATIONS MUST BEAR THE NAME AND SIGNATURE CORRESPONDING WITH THE ONE RECORDED WITH THE APPLICANT’S BANKER. IN CASE OF DIFFERENCE OF SIGNATURE WITH THE BANK AND COMPUTERIZED NATIONAL IDENTITY CARD (CNIC) OR THE NATIONAL IDENTITY CARD FOR OVERSEAS PAKISTANI (NICOP) OR PASSPORT, BOTH THE SIGNATURES SHOULD BE AFFIXED ON THE APPLICATION FORM.

http://nextcapital.com.pk/


https://eipo.cdcaccess.com.pk/public/index.xhtml


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13.4. E-IPO SYSTEM e-IPO refers to electronic submission of applications for subscription of securities offered in an IPO. The following systems are available for e-IPOs:

1. PSX’s e-IPO System (PES): In order to facilitate investors, PSX has developed an e-IPO System (“PES”) through which electronic applications can be filed for subscription of securities offered to the general public. PES can be accessed through the web link (https://eipo.psx.com.pk). Investors can register themselves online at any time 24/7. On behalf of an investors, registration can also be done by:


the Bank with whom the investor has a bank account. An e-IPO application can be filed by an investor during the public subscription period which shall close at midnight on DD/MM/YYYY. On behalf of investors, e-IPO applications can also be filed by:


the Bank with whom the investor has a bank account. Subscription money can paid by the investor through 1LINK or NIFT. On behalf of investors, subscription money can also be paid by:


the Bank with whom the investor has a bank account. In case of queries regarding PES, investors may contact Mr. Farrukh Shahzad at phone number: 111-001-122 or (021)-35274401-10, and email: [email protected]

2. Centralized e-IPO System (CES): CES can be accessed through the web link (www.cdceipo.com). Payment of subscription money can be made through 1LINK’s member banks available for CES.

For making application though CES, investors must be registered with CES. Registration can be done under a self-registration process by filling the CES registration form, which is available 24/7 all throughout the year.

In addition to the above, investors/sub-account holder(s) can request their respective TREC Holders who are Participants in Central Depository System (CDS) to make electronic subscription on their behalf for subscription of securities of a specific company by authorizing (adding the details of) their respective Participant(s) in CES. Consequently, authorized Participants will electronically subscribe on behalf of their sub-account holder(s) in securities offered through Initial Public Offerings and will also be able to make payment against such electronic subscriptions through all the available channels mentioned on CES only after receiving the subscription amount from the sub-account holder(s). To enable this feature, the CDS Participant may request CDC to activate his ID on the CES portal.

https://eipo.psx.com.pk/



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For queries regarding CES, investors may contact CDC at phone number: 0800 – 23275 (CDCPL) and e-mail: [email protected] or contact Mr. Owais Anwer at Phone 021-111-111-500 Ext 500 and email: [email protected].

3. E-IPO Facilities by Bankers to the Issue

Currently, United Bank Limited (UBL) is providing e-IPO facilities to their respective accountholders. UBL account holders can use UBL Net Banking to submit their application via link http://www.ubldirect.com/corporate/ebank.

Account holders of UBL can submit their applications through the above mentioned link 24 hours a day during the subscription period which will close at midnight on XXX.

13.5. APPLICATIONS MADE BY INDIVIDUAL INVESTORS

a. In case of individual investors, an attested photocopy of CNIC (in case of Resident Pakistanis) / NICOP or Passport (in case of Non-Resident Pakistanis) as the case may be, should be enclosed and the number of CNIC / NICOP / Passport should be written against the name of the applicant. Copy of these documents can be attested by any Federal / Provincial Government Gazette Officer, Councilor, Oath Commissioner or Head Master of High School or bank manager in the country of applicant’s residence.

b. Original CNIC / NICOP / Passport, along with one attested photocopy, must be produced for verification to the Banker to the Issue and the applicant’s banker (if different from the Banker to the Issue) at the time of presenting the application. The attested photocopy will, after verification, be retained by the bank branch along with the application.

13.6. APPLICATIONS MADE BY INSTITUTIONAL INVESTORS

a. Applications made by companies, corporate bodies, mutual funds, provident / pension / gratuity funds / trusts and other legal entities must be accompanied by an attested photocopy of their Memorandum and Articles of Association or equivalent instrument / document. Where applications are made by virtue of Power of Attorney, the same should also be submitted along with the application. Any Federal / Provincial Government Gazette Officer, Councilor, Bank Manager, Oath Commissioner and Head Master of High School or bank manager in the country of applicant’s residence can attest copies of such documents.

b. Attested photocopies of the documents mentioned in 8.7 (i) must be produced for verification to the Banker to the Issue and the applicant’s banker (if different from the Banker to the Issue) at the time of presenting the application. The attested copies, will after verification, be retained by the bank branch along with the application.

13.7. ADDITIONAL INSTRUCTIONS FOR INVESTORS

a. Only one application will be accepted against each account, however, in case of joint account, one application may be submitted in the name of each joint account holder.





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b. Joint application in name of more than two persons will not be accepted. In case of joint application each applicant must sign the application, form and submit copies of their CNICs / NICOP / Passports. The securities will be credited to the CDS account mentioned on the face of the form and where any amount is refundable, in whole or in part, the same will be refunded by cheque or other means by post, or through the bank where the application was submitted, to the person named first on the application form, without interest, profit, or return. Please note that application will be considered as a single application for the purpose of allotment of securities.

c. Subscription money must be paid by cheque drawn on applicant’s own bank account or pay order / bank draft payable to one of the Bankers to the Offer in favor of “PAKRI Offer for Sale” and crossed “A/C PAYEE ONLY”.

d. For the application made through pay order / bank draft, it would be permissible for a Banker to the Offer to deduct the bank charges while making refund of subscription money to unsuccessful applicants through pay order / bank draft individually for each application.

e. The applicant should have at least one bank account with any of the commercial banks. The applicants not having a bank account at all (non-account holders) are not allowed to submit application for subscription of securities.

f. Applications are not to be made by minors and / or persons of unsound mind.

g. Applicants should ensure that the bank branch, to which the application is submitted, completes the relevant portion of the application form.

h. Applicants should retain the bottom portion of their application forms as provisional acknowledgment of submission of their applications. This should not be construed as an acceptance of the application or a guarantee that the applicant will be allotted the number of securities for which the application has been made.

i. Making of any false statements in the application or willfully embodying incorrect information therein shall make the application fictitious and the applicant or the bank shall be liable for legal action.

j. Banker to the Offer are prohibited to recover any charges from the subscribers for collecting subscription applications. Hence, the applicants are advised not to pay any extra charges to the Bankers to the Offer.

k. It would be permissible for a Banker to the Offer to refund subscription money to unsuccessful applicants having an account in its bank by crediting such account instead of remitting the same by cheque, pay order or bank draft. Applicants should, therefore, not fail to give their bank account numbers.

l. Submission of false and fictitious applications is prohibited, and such Application Money may be forfeited under section 87(8) of Securities Act, 2015.


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13.8. ADDITIONAL INSTRUCTIONS FOR FOREIGN / NON-RESIDENT INVESTORS

a. In case of Foreign investors who are not individuals, applications must be accompanied with a letter on applicant’s letterhead stating the legal status of the applicant, place of incorporation and operations and line of business. A copy of Memorandum of Association or equivalent document should also be enclosed, if available. Where applications are made by virtue of Power of Attorney, the same must be lodged with the applications. Copies of these documents can be attested by the Bank Manager in the country of applicant’s residence.

b. Foreign / Non-resident investors should follow the payment instructions given in Part 12.17 of the OFSD.

13.9. FACILITIES AVAILABLE TO FOREIGN/NON-RESIDENT PAKISTANI INVESTORS Pursuant to the Foreign Exchange Regulation Act, 1947 read with the Foreign Exchange Manual issued from time to time (the “Manual”), all shares of Pakistani incorporated companies owned by non-resident investors are required to be registered with the State Bank of Pakistan (“SBP”) on a fully repatriable basis as to dividends and disinvestment proceeds. In relation to the foregoing, SBP has issued general permission under paragraph 6 (with specific reference to sub para (B) (I)) of Chapter 20 of the Manual, which permits registration of the shares subscribed/purchased by non-resident investors on a fully repatriable basis as to dividends and disinvestment proceeds (subject to satisfaction of prescribed formalities) provided that:

a) the underlying issue price or the purchase price (as applicable) is paid in foreign exchange through normal banking channel by remittance from abroad or out of foreign currency account maintained by the subscriber/purchaser in Pakistan; and

b) the purchase price (whether negotiated privately or otherwise) is not less than the price quoted on the PSX.

For the purposes of the foregoing, the non-resident investors may be classified in the following categories (“Non-Resident Investors”):

V. A Pakistan national resident outside Pakistan; VI. A person who holds dual nationality including Pakistan nationality, whether living in or outside

Pakistan; VII. A foreign national, whether living in or outside Pakistan; and

VIII. A firm (including a partnership) or trust or mutual fund registered and functioning outside Pakistan, excluding entities owned or controlled by a foreign government,

Non Resident Investors who wish to bid for the shares of the Company being offered via book building will be required to remit the subscription amount through an Authorized Dealer (a scheduled bank in Pakistan authorized to deal in foreign exchange by the SBP) directly to the book building accounts opened by the


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Company as given in Part 12.15 of this OFSD. However, those Non Residents Investors who wish to subscribe to the shares of the Company out of the general public portion (retail portion) may contact any of the Bankers to the Offer for taking instructions regarding payment of subscription amounts against shares offered to general public / retail investors. List of Bankers to the Offer for the general public / retail portion is available on page 1 of this OFSD. The shares issued to Non-Resident Investors shall be intimated by the Company to the designated Authorized Dealer, along with the documents prescribed in the Manual within 30 days of issue. Non-Residents Investors who are covered under paragraph 6(A) of Chapter 20 of the Manual do not require SBP’s approval to invest in the shares being offered in terms of this OFSD. Furthermore, under paragraph 7 (vii) of Chapter 20 of the Manual, the Authorized Dealer shall allow repatriation of dividends, net of applicable taxes and proceeds on sale of listed shares (i.e. divestment proceeds) not exceeding the market value less brokerage/commission on satisfaction of prescribed formalities. Payments made by Non-Resident Investors shall be supported by proof of receipt of foreign currency through

normal banking channels. Such proof shall be submitted along with the application by the Non-Resident

Investors as part of the prescribed formalities.

13.10. CODE OF OCCUPATIONS

Code Occupation Code Occupation

01 Business 06 Professional

02 Business Executive 07 Student

03 Service 08 Agriculturist

04 Housewife 09 Industrialist

05 Household 10 Other

13.11. NATIONALITY CODE

Code Name of Country Code Name of Country

001 U.S.A. 006 Bangladesh

002 U.K. 007 China

003 U.A.E. 008 Bahrain

004 K.S.A. 009 Other

005 Oman

13.12. MINIMUM AMOUNT OF APPLICATION AND BASIS OF ALLOTMENT OF SHARES The basis and conditions of allotment shall be as follows:

1. Application for shares must be made for 500 shares or in multiples of 500 shares only. Applications

which are neither for 500 shares nor for multiples of 500 shares shall be rejected. 2. The minimum amount of application for subscription of 500 shares is the Issue Price x 500 shares. 3. Application for shares below the minimum amount shall not be entertained. 4. SUBMISSION OF FALSE AND FICTITIOUS APPLICATIONS IS PROHIBITED AND SUCH APPLICATIONS’

MONEY MAY BE FORFEITED UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015.


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5. If the shares offered to the general public are sufficient to accommodate all applications, all applications shall be accommodated.

6. If the shares applied for by the general public are in excess of the shares allocated to them, the distribution shall be made by computer balloting, in the presence of the representative(s) of PSX in the following manner:

If all applications for 500 shares can be accommodated, then all such applications shall be accommodated first. If all applications for 500 shares cannot be accommodated, then balloting will be conducted among applications for 500 shares only.

If all applications for 500 shares have been accommodated and shares are still available for allotment, then all applications for 1,000 shares shall be accommodated. If all applications for 1,000 shares cannot be accommodated, then balloting will be conducted among applications for 1,000 shares only.

If all applications for 500 shares and 1,000 shares have been accommodated and shares are still available for allotment, then all applications for 1,500 shares shall be accommodated. If all applications for 1,500 shares cannot be accommodated, then balloting will be conducted among applications for 1,500 shares only.

If all applications for 500 shares, 1,000 shares and 1,500 shares have been accommodated and shares are still available for allotment, then all applications for 2,000 shares shall be accommodated. If all applications for 2,000 shares cannot be accommodated, then balloting will be conducted among applications for 2,000 shares only.

After the allotment in the above-mentioned manner, the balance shares, if any, shall be allotted in the following manner:

o If the remaining shares are sufficient to accommodate each application for over 2,000 shares,

then 2,000 shares shall be allotted to each applicant and remaining shares shall be allotted on pro-rata basis.

o If the remaining shares are not sufficient to accommodate all the remaining applications for over 2,000 shares, then balloting shall be conducted for allocation of 2,000 shares to each successful applicant.

7. If the Issue is over-subscribed in terms of amount only, then allotment of shares shall be made in the

following manner:

First preference will be given to the applicants who applied for 500 shares;

Next preference will be given to the applicants who applied for 1,000 shares; Next preference will be given to the applicants who applied for 1,500 shares;

Next preference will be given to the applicants who applied for 2,000 shares; and then

After allotment of the above, the balance shares, if any, shall be allotted on pro rata basis to the applicants who applied for more than 2,000 shares.

8. Allotment of shares will be subject to scrutiny of applications for subscription of shares. 9. Applications, which do not meet the above requirements, or application which are incomplete, will be

rejected.

13.13. BASIS OF ALLOTMENT

The basis and conditions of transfer of shares to the General Public shall be as follows:


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1. The minimum value of application will be calculated as Issue Price 500 shares. Application for amount below the minimum value shall not be entertained.

2. Application for shares must be made for 500 shares or in multiple of 500 shares only. Applications which are neither for 500 shares nor for multiples of 500 shares shall be rejected.

3. Allotment / Transfer of shares to successful applicants shall be made in accordance with the allotment criteria / instructions disclosed in the Prospectus.

4. Allotment of shares shall be subject to scrutiny of applications in accordance with the criteria disclosed in the Prospectus and / or the instructions by the Securities & Exchange Commission of Pakistan.

5. Applications, which do not meet the above requirements, or applications which are incomplete will be rejected. The applicants are, therefore, required to fill in all data fields in the Application Form.

6. The Company will credit shares in the CDS Accounts of the successful applicants.

13.14. REFUND OF MONEY TO UNSUCCESSFUL APPLICANTS As per the regulation 11(4) of the PO Regulations, within ten (10) working days of the close of public subscription period the shares shall be allotted and issued against the accepted and successful applications and the subscription money of the unsuccessful applicants shall be unblocked / refunded. As per sub-Section (2) of Section 68 of the Companies Act, if refund as required under sub-Section (1) of Section 68 of the Companies Act is not made within the time specified hereinabove, the Offeror shall be jointly and severally liable to repay that money with surcharge at the rate of two percent (2%) for every month or part thereof from the expiration of the fifteenth day and, in addition, shall be liable to a penalty of level 3 up to PKR 100 million on the standard scale as defined in Section 479 of the Companies Act. Provided that the Offeror shall not be liable if it proves that the default in making the refund was not on its own account and was not due to any misconduct or negligence on its part. In case retail portion of the Offer remains unsubscribed, the unsubscribed shares shall be allotted to successful bidders at the strike price determined in the book building process on pro-rata basis. 13.15. CREDIT OF SHARES Within ten (10) working days of the closing of public subscription period, the shares shall be allotted and credited against the accepted and successful applications and the subscription money of the unsuccessful applicants shall be unblocked/refunded, as required under regulation 11(4) of the PO Regulations. Shares will be credited only in the book-entry form and will be credited into the respective CDS Accounts of the successful applicants. Therefore, the applicants must provide their CDS Account Number in the Shares Subscription Applicant. If the Company defaults in complying with the above requirements, it shall pay PSX a penalty of PKR 5,000 per day for every day during which the default continues. PSX may also notify the fact of such default and name of the Company by notice and also by publication in its ready-board quotation of the Stock Exchange. Name of the Company will also be notified to the TRE Certificate Holders of the PSX and placed on the website of the PSX. 13.16. TRANSFER OF SHARES The shares shall be transferred in accordance with the provisions of Section 74 of the Companies Act read with Section 75 thereof and the Central Depositories Act, 1997 and the CDCPL Regulations.


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13.17. BANKERS TO THE OFFER

1. Allied Bank Limited 2. Bank AL Habib Limited 3. Faysal Bank Limited 4. Habib Bank Limited 5. Habib Metropolitan Bank Limited 6. MCB Bank Limited 7. United Bank Limited

13.18. INTEREST OF SHAREHOLDERS None of the holders of the issued shares of the Company have any special or other interest in the property or profits of the Company other than as holders of the Ordinary shares in the capital of the Company. Certain shareholders who are also the Directors of the Company have interest in receiving remuneration for their role as Directors and CEO. 13.19. ELIGIBILITY FOR DIVIDEND The ordinary shares offered shall rank pari-passu with the existing shares in all matters of the Company, including the right to such bonus or right issues, and dividend as may be declared by the Company subsequent to the date of issue of such shares. 13.20. DEDUCTION OF ZAKAT Income Distribution will be subject to deduction of Zakat at source, pursuant to the provisions of Zakat and Ushr Ordinance, 1980. (XVIII of 1980) as may be applicable from time to time except where the Ordinance does not apply to any shareholder or where such shareholder is otherwise exempt or has claimed exemption from payment/ deduction of Zakat in terms of and as provided in that Ordinance 13.21. CAPITAL GAINS Capital gains derived from the sale of listed securities are taxable in the following manner under Section 37A of Income Tax Ordinance, 2001, which may be revised by the Government through Finance Act, Statutory Regulatory Order(s), Finance Amendment Act, or any other applicable law notified by the relevant Government bodies from time to time.

Applicable Capital Gain Tax Rate 12.5% (Filer) 25% (Non-filer)

13.22. WITHHOLDING TAX ON DIVIDENDS Dividend distribution to shareholders will be subject to withholding tax under Section 150 of the Income Tax Ordinance, 2001 as specified in Part III Division I of the First Schedule of the said ordinance or any time to time amendments therein. In terms of the provision of Section 8 of the said ordinance, said deduction at source, shall be deemed to be full and final liability in respect of such profits in case of individuals only.

Withholding Tax on Dividends 15% (Filer) 30% (Non-filer)


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13.23. TAX ON BONUS SHARES As per Section 236M of the Income Tax Ordinance 2001, amended vide Finance Act 2018-19, tax on issue of bonus shares has been abolished, hence issuance of bonus shares will not be subject to tax from July 1, 2018 onwards. 13.24. INCOME TAX The income of the Company is subject to Income Tax under the Income Tax Ordinance, 2001. 13.25. DISCLOSURE OF DEFERRED TAXATION Deferred tax is accounted for using the balance sheet liability method, in respect of temporary differences arising at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that the future taxable profits will be available against which the assets may be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recognized. Unrecognized deferred tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the periods when the asset is utilized or the liability is settled, based on the tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited to the profit and loss account except in the case of items credited or charged to equity in which case it is included in equity. The balance of deferred tax liability (net) as of December 31, 2020 was PKR ~117 million. 13.26. SALES TAX The Company’s stance on sales tax is that it is not applicable on the Company due to its business model,

however, a legal case is pending regarding applicability of sales tax, details of which are provided in the Part

8.1 above.

13.27. SALES TAX ON SALE/PURCHASE OF SHARES Under the Constitution of Pakistan and Articles 49 of the 7th NFC Award, the Government of Sindh, Government of Punjab, Government of Khyber Pakhtunkhwa and Government of Baluchistan have promulgated the Sindh Sales Tax on Services Act, 2011, Punjab Sales Tax on Services Act, 2012, Khyber Pakhtunkhwa Sales Tax on services through Khyber Pakhtunkhwa Finance Act, 2013 and the Baluchistan Sales Tax on services Act, 2015 respectively. The Sindh Revenue Board, the Punjab Revenue Authority, and the Khyber Pakhtunkhwa Revenue Authority and the Baluchistan Revenue Authority administer and regulate the levy and collection of the Sindh Sales Tax (“SST”), Punjab Sales Tax (“PST”), Khyber Pakhtunkhwa Sales Tax


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(“KST”) and Baluchistan Sales Tax (“BST”) respectively on the taxable services provided or rendered in Sindh, Punjab or Khyber Pakhtunkhwa provinces respectively. The value of taxable services for the purpose of levy of sales tax is the gross commission charged from clients in respect of purchase or sale of shares in a Stock Exchange. The above-mentioned Acts levy a sales tax on Brokerage at the rate of 13% in Sindh, 16% in Punjab and in Baluchistan and Khyber Pakhtunkhwa the rate is 15%. Sales tax charged under the aforementioned Acts is withheld at source under statutory requirements.



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14 SIGNATORIES TO THE OFSD

For and on behalf of the Offeror, -SD-

Muhammad Shamim Khan Director General Privatisation Commission Signed by the above in the presence of witnesses: Witness 1 -sd- _______________________ Name: Nauman Afzal Tariq CNIC: 42301-5388092-3

Witness 2 -sd- _____________________ Name: Ashfaq Ahmed CNIC: 17101-3774528-7

Dated: May 25, 2021


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For and on behalf of Pakistan Reinsurance Company Limited,

____________________ Name: Mumtaz Ali Rajper Chairman

____________________ Name: Dr. Faiz Illahi Memon Acting Chief Executive Officer

____________________ Name: Musleh ud Din Director

____________________ Name: Dr. Kausar Ali Zaidi Director

Signed by the above in the presence of witnesses: Witness 1 _________________ Naeem Iqbal / Salman Ali 42201-9901857-1/ 34603-4012755-1

Witness 2 _________________ Babar Saleem / Jafar Ali 42201-8981446-7 / 37302-0496327-9

Dated: June 12, 2021


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15 MEMORANDUM OF ASSOCIATION


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16 BIDDING FORMS

REGISTRATION FORM

Pakistan Reinsurance Company

Limited

Book Runner

Tick One KHI LHR ISB PSH QUT BLT/GLT AZK

Registration Dates Month DD, 2021 to Month DD, 2021

Bidding Dates Month DD, 2021 to Month DD, 2021

Bidding Form No.

SECONDARY PUBLIC OFFERING OF ORDINARY SHARES OF PAKISTAN REINSURANCE COMPANY LIMITED THROUGH BOOK BUILDING PROCESS AT A FLOOR PRICE WHICH HAS BEEN NOTIFIED THROUGH AN ANNOUNCEMENT ON PSX ON DD/MM/2021

PLEASE FILL THE FORM IN BLOCK LETTERS. PLEASE PROVIDE ACCURATE DETAILS TO AVOID ANY INCONVENIENCE.

ELIGIBLE INVESTORS MUST SUBMIT ONLY ONE PAYORDER ALONG WITH THE REGISTRATION FORM.

Name CNIC #

NTN*

Address

Cell #

Land Line #

E-mail Fax #

PLEASE TICK THE APPROPRIATE BOX Nationality (If other than Pakistani) Local Institutional Investor Resident

Foreign Institutional Investor Non Resident

Individual Investor Foreigner

*INVESTORS ARE ENCOURAGED TO DISCLOSE THEIR NTN NUMBERS TO FACILITATE THE COMPANY TO CHECK STATUS OF THE SHAREHOLDERS AS TAX RETURN FILER OR NON-FILER FROM THE ACTIVE TAXPAYERS LIST (ATL) AVAILABLE ON THE WEBSITE OF FBR. PLEASE NOTE THAT REDUCED TAX RATE OF 15% APPLIES TO FILERS INSTEAD OF 30% FOR NON-FILERS ON PAYMENT OF CASH DIVIDEND DECLARED, IF ANY, BY THE COMPANIES. Payment Details: Payments to be made in favor of “PAKRI BOOK BUILDING ACCOUNT”

Amount in Figures Instrument #

Instrument Date Margin %age

Banker’s Name, Address & Branch

CDC Details for Sub A/C & House A/C

CDC Participant Name CDC Participant ID

Sub A/C No. House A/C No.

CDC Details for Investor A/C

CDC Investor Service A/C ID CDC Investor A/C No.

I/WE UNDERTAKE TO SUBSCRIBE TO SHARES UNSUBSCRIBED IN THE RETAIL PORTION WHICH ARE ALLOCATED TO ME/US ON A PRO-RATA BASIS. I/WE ALSO UNDERTAKE THAT MY BID MONEY SHALL REMAIN DEPOSITED OR BOOKED TILL ALLOTMENT OF UNSUBSCRIBED SHARES IN THE RETAIL PORTION. I DECLARE THAT I have read all the term and conditions stated in the Offer for Sale Document and the Instructions Page of the Bidding Form. The same terms and conditions would be applicable on the Registration Form. Signature of Bidder: _____________________________


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DUPLICATE REGISTRATION FORM

Pakistan Reinsurance Company

Limited

Book Runner


Registration Dates Month DD, 2021 to Month DD, 2021


Bidding Form No.


PLEASE FILL THE FORM IN BLOCK LETTERS. PLEASE PROVIDE ACCURATE DETAILS TO AVOID ANY INCONVENIENCE.

ELIGIBLE INVESTORS MUST SUBMIT ONLY ONE PAYORDER ALONG WITH THE REGISTRATION FORM.

Name CNIC #

NTN*

Address

Cell #

Land Line #

E-mail Fax #

PLEASE TICK THE APPROPRIATE BOX Nationality (If other than Pakistani) Local Institutional Investor Resident

Foreign Institutional Investor Non Resident

Individual Investor Foreigner

*INVESTORS ARE ENCOURAGED TO DISCLOSE THEIR NTN NUMBERS TO FACILITATE THE COMPANY TO CHECK STATUS OF THE SHAREHOLDERS AS TAX RETURN FILER OR NON-FILER FROM THE ACTIVE TAXPAYERS LIST (ATL) AVAILABLE ON THE WEBSITE OF FBR. PLEASE NOTE THAT REDUCED TAX RATE OF 15% APPLIES TO FILERS INSTEAD OF 30% FOR NON-FILERS ON PAYMENT OF CASH DIVIDEND DECLARED, IF ANY, BY THE COMPANIES.

Payment Details: Payments to be made in favor of “PAKRI BOOK BUILDING ACCOUNT”

Amount in Figures Instrument #

Instrument Date Margin %age


CDC Details for Sub A/C & House A/C

CDC Participant Name CDC Participant ID

Sub A/C No. House A/C No.

CDC Details for Investor A/C

CDC Investor Service A/C ID CDC Investor A/C No.

I/WE UNDERTAKE TO SUBSCRIBE TO SHARES UNSUBSCRIBED IN THE RETAIL PORTION WHICH ARE ALLOCATED TO ME/US ON A PRO-RATA BASIS. I/WE ALSO UNDERTAKE THAT MY BID MONEY SHALL REMAIN DEPOSITED OR BOOKED TILL ALLOTMENT OF UNSUBSCRIBED SHARES IN THE RETAIL PORTION. I DECLARE THAT I have read all the term and conditions stated in the Offer for Sale Document and the Instructions Page of the Bidding Form. The same terms and conditions would be applicable on the Duplicate Registration Form. Signature of Bidder: _____________________________


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BIDDING FORM


Book Runner



Bidding Form No.


PLEASE FILL THE FORM IN BLOCK LETTERS. PLEASE MAKE SURE TO PROVIDE ACCURATE DETAILS TO AVOID ANY INCONVENIENCE

Name

PLEASE TICK THE APPROPRIATE BOX

Local Institutional Investor

Foreign Institutional Investor

Individual Investor

Address

Cell #

Resident

Nationality

(If other than Pakistani)

Land Line #

Non-Resident

Foreigner

Fax # E-mail: CNIC #

NTN* *INVESTORS ARE ENCOURAGED TO DISCLOSE THEIR NTN NUMBERS TO FACILITATE THE COMPANY TO CHECK STATUS OF THE SHAREHOLDERS AS TAX RETURN FILER OR NON-FILER FROM THE ACTIVE TAXPAYERS LIST (ATL) AVAILABLE ON THE WEBSITE OF FBR. PLEASE NOTE THAT REDUCED TAX RATE OF 15% APPLIES TO FILERS INSTEAD OF 30% FOR NON-FILERS ON PAYMENT OF CASH DIVIDEND DECLARED, IF ANY, BY THE COMPANIES.

Dividend Mandate: Mark tick [ ] in the appropriate boxes Yes [ ] No [ ] In case the Applicant intends that if Shares applied for are issued to him/it and the dividend declared by the Company, if any, is credited directly in his/it bank account, instead of issued of dividend warrants, then please fill in the following boxes:

Title of Account

Account Number

Bank Name

Branch Name & Address

Privatisation Commission, Government of Pakistan 4th Floor, Kohsar Block, Pak Secretariat, Constitution Avenue, Islamabad, Pakistan Dear Sir, On the basis of Offer for Sale Document of Pakistan Reinsurance Company Limited for the Secondary Public Offering of Ordinary Shares, I/we hereby bid for subscription of Shares of the scheme as under:

Bid Details

No. of Shares Bid Price Per Share Total Amount

Bid Option (Please tick) (In Figures) (In Figures) (In Figures)

Limit Order

Step Order:

Option (1)

Option (2)

Option (3)

Option (4)

Total (Shares and Price)

Important Instructions: 1) Bids should be placed for a minimum amount of PKR 1,000,000/-. It should also be noted that no. of shares bid for should be rounded and fractional shares will

not be acceptable. Please ensure that after rounding the number of shares multiplied by your bid price, is at least PKR 1,000,000/-. 2) Eligible Investors who want to place a Step Bid, must ensure that each step amounts to at least PKR 1,000,000/- and the aggregate amount of Step Bid should be

at least PKR 1,000,000/-. 3) Any Bid received below the Floor Price will not be accepted by the Book Runner. 4) An investor shall not make downward revision both in terms of Bid Price and Bid Volume; Provided that in case of upward revision of the Bid Price, the number

of shares Bid for i.e. Bid Volume may be adjusted ensuring that the bid amount or bid money remains the same. 5) An investor shall not make a bid with price variation of more than 10% of the prevailing indicative strike price subject to 40%

maximum Price Band i.e. the strike price must not exceed 40% upper limit of floor price. Signature of Bidder: ___________________________


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In terms of the Listing of Companies and Securities Regulations of the Pakistan Stock Exchange (“PSX”), I/we am/are eligible to bid in this Secondary Public Offering of Ordinary Shares. The amount payable on bidding is remitted herewith which is the applicable margin amount. I/We agree to pay the balance amount of application money, if any, upon successful allocation of shares. In case no shares are allotted to me/us you are hereby authorized to return to me/us by demand draft/pay order application money, within three (3) working days of the close of the bidding period. I/We agree that this is a binding agreement to accept the number of shares as may be allocated to me/us subject to the terms of the Offer for Sale Document, the bidding form and other applicable laws. I/ we undertake that I/we will sign all such other documents and do all such acts, if necessary, on my/our part to enable me/us to be allocated/allotted/transferred the shares and to pay for the same. I/we authorize you to place my/our name(s) on the register of the members of the Company as holder(s) of the shares that will be allocated/allotted/transferred to me/us and to register my/our address as given below. I/ We noted that the Book Runner is entitled, in its absolute discretion to accept or reject this Bidding Application for reason(s) to be recorded in writing and the reason(s) should be disclosed to us forthwith. I/We have no objection if there are necessary changes made in the Offer for Sale Document for filling of the same with the Securities and Exchange Commission of Pakistan (“SECP”). I understand that the Issuer, the Book Runner, SECP and the Stock Exchange reserve the right of legal action against me under the law, if I submit a fictitious bid and/or the instrument deposited by me for margin money is bounced. I DECLARE THAT: i) I AM/WE ARE NATIONAL(S) AND RESIDENT(S) OF PAKISTAN; ii) FORIEGNER; iii) I AM/WE ARE NOT MINOR(S); iv) I/ WE HAVE NOT MADE NOR HAVE I/WE INSTRUCTED ANY OTHER PERSON(S)/INSTITUTION(S) TO MAKE ANY OTHER APPLICATION(S) IN MY/OUR NAME(S) OR IN THE NAME OF ANY OTHER PERSON ON MY/OUR BEHALF OR IN ANY FICTITOUS NAME, IN CASE OF ANY INFORMATION GIVEN HEREIN BEING INCORRECT I/WE UNDERSTAND THAT I/WE SHALL NOT BE ENTITLED FOR ALLOCATION/ALLOTMENT/TRANSFER OF SHARES. Important Instructions:

1) Bids shall only be entered for those Eligible Investors who have submitted a duly filled Registration Form as prescribed by the Book Runner.

2) Bid money / margin money shall be deposited through demand draft, pay order in favor of “PAKRI BOOK BUILDING ACCOUNT” and evidence shall be submitted

to the book runner. For online transfer facility (pay order or demand draft may be deposited at any branch of Habib Bank Limited and evidence to be submitted to

the Book Runner), the payment shall be made into A/C # 00427992080003 being maintained at Habib Bank Limited with the Account Title “PAKRI BOOK

BUILDING ACCOUNT”.

3) For deposit of margin money, only Pay Orders, Demand Drafts, or online transfer will be accepted. Each eligible investor shall only submit a single pay order,

demand draft or evidence of online transfer of money along with the Registration Form. It may also be noted that only a single pay order, demand draft or

evidence of online transfer of money shall be accepted by the Book Runner along with each Additional Payment Form.

4) In case of intercity instruments, only Pay Orders “payable at any branch” will be accepted. For the purpose of expediting the clearing of the instruments it is

highly recommended that the Pay Order should be made from online branches of the respective banks.

5) Eligible Investors can register themselves till 3:00 pm on the last day of Book Building after which no new investors shall be registered.

6) Investors can only upward revise their bids online. Please visit www.bkb.psx.com.pk to access online. Username and password will be emailed to you on email

address provided in the form. Please ensure that you provide correct email address. Online access will be available for upward bid revisions during the bidding

period from 9:00 am to 5:00 pm on the last day of bidding. An investor will not be allowed to place or upward revise a bid with a price variation of more than 10%

of the prevailing indicative strike price subject to a maximum price band of 40% of the floor price. However, the bidder shall not make downward revision both

in terms of bid price and bid volume; provided that in case of upward revision of the bid price, the number of shares bid for i.e. bid volume may be adjusted

ensuring that the bid amount or bid money remains the same. No withdrawal of bid shall be allowed.

Yours Faithfully, Signature of Bidder: ___________________________________

To be filled in by the Book Runner:

Time of Receipt Date Location Amount Pay Order No. / Demand Draft No.

Stamp

http://www.bkb.psx.com.pk/


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ADDITIONAL PAYMENT FORM


Book Runner



Bidding Form No.



Name CNIC # Cell #

NTN Land Line #

Client ID: (ID generated and e-mailed at the time of bid placement)

Resident

Nationality (If other than Pakistani)

Non-Resident

Foreigner

Additional Payment Details

Payments to be made in favor of “PAKRI BOOK BUILDING ACCOUNT”

Amount in Figures

Instrument # Instrument

Date

Margin %age


1. It may be noted that only a single pay order, demand draft or evidence of online transfer of money shall be accepted by the Book Runner along with each Additional Payment Form.

2. I DECLARE THAT I have read all the conditions in the Offer for Sale Document and the Instructions Page of the Bidding Form. The

same terms and conditions would be applicable on the Additional Payment Form. Signature of Bidder: _______________________________

To be filled in by the Book Runner:

Time of Receipt

Date Location Amount Pay Order No. / Demand Draft No.

Stamp


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BID REVISION FORM


Book Runner



Bidding Form No.



Name PLEASE TICK THE APPROPRIATE BOX

Local Institutional Investor

Foreign Institutional Investor

Individual Investor

Address

Cell #

Resident

Nationality

(If other than Pakistani)

Land Line #

Non-Resident

Foreigner

Fax # E-mail: CNIC #

NTN* *INVESTORS ARE ENCOURAGED TO DISCLOSE THEIR NTN NUMBERS TO FACILITATE THE COMPANY TO CHECK STATUS OF THE SHAREHOLDERS AS TAX RETURN FILER OR NON-FILER FROM THE ACTIVE TAXPAYERS LIST (ATL) AVAILABLE ON THE WEBSITE OF FBR. PLEASE NOTE THAT REDUCED TAX RATE OF 15% APPLIES TO FILERS INSTEAD OF 30% FOR NON-FILERS ON PAYMENT OF CASH DIVIDEND DECLARED, IF ANY, BY THE COMPANIES.

Dividend Mandate: Mark tick [ ] in the appropriate boxes Yes [ ] No [ ] In case the Applicant intends that if Shares applied for are issued to him/it and the dividend declared by the Company, if any, is credited directly in his/it bank account, instead of issued of dividend warrants, then please fill in the following boxes:

Title of Account

Account Number

Bank Name


Privatisation Commission, Government of Pakistan 4th Floor, Kohsar Block, Pak Secretariat, Constitution Avenue, Islamabad, Pakistan Dear Sir, On the basis of Offer for Sale Document of Pakistan Reinsurance Company Limited for the Secondary Public Offering of Ordinary Shares, I/we hereby bid for subscription of Shares of the scheme as under:

Bid Details

No. of Shares Bid Price Per Share Total Amount

Bid Option (Please tick) (In Figures) (In Figures) (In Figures)

Limit Order

Step Order:

Option (1)

Option (2)

Option (3)

Option (4)

Total (Shares and Price)

Important Instructions: 1) Bids should be placed for a minimum amount of PKR 1,000,000/-. It should also be noted that no. of shares bid for should be rounded and fractional shares will

not be acceptable. Please ensure that after rounding the number of shares multiplied by your bid price, is at least PKR 1,000,000/-. 2) Eligible Investors who want to place a Step Bid, must ensure that each step amounts to at least PKR 1,000,000/- and the aggregate amount of Step Bid should be

at least PKR 1,000,000/-. 3) Any Bid received below the Floor Price will not be accepted by the Book Runner. 4) An investor shall not make downward revision both in terms of Bid Price and Bid Volume; Provided that in case of upward revision of the Bid Price, the number

of shares Bid for i.e. Bid Volume may be adjusted ensuring that the bid amount or bid money remains the same. 5) An investor shall not make a bid with price variation of more than 10% of the prevailing indicative strike price subject to 40%

maximum Price Band i.e. the strike price must not exceed 40% upper limit of floor price. Signature of Bidder: ___________________________


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17 APPLICATION FORM

APPLICATION AND ALLOTMENT INSTRUCTIONS

1. ELIGIBLE INVESTORS INCLUDE

Yes No

a) b)

4) ALL DETAILS MUST BE WRITTEN IN B L O C K - L E T T E R S IN THE SPACES PROVIDED, LEGIBLY IN BLACK PEN

― ―

a)

b)

― ―

Identity Number

(CNIC/ Passport/ Registration No.)

SUB ACCOUNT NUMBER


a) Name in FULL (as per CNIC)

Please Tick

Father's/Husband's Name (as per CNIC)

Identity Number

(NTN*)

Fo

r B

rok

ers

Non Muslim

1) I/We apply for the following number of Shares at Issue Price for the value indicated below: Banker's Stamp

I/We declare that: i) I am/We are national(s) of ____________________________________________________________________________; ii) I am/We are not minor(s); iii) I/We have not made nor have I/we instructed any other person(s)/institution(s) to make

any other application(s) in my/our name(s) or in the name of any other person on my/our behalf or in any fictitious name; iv) I/We agree to abide by the instructions provided with this application and in case of any information given herein being incorrect I/we understand

that I/we shall not be entitled to the allotment of Shares if successful rather the application money shall be liable to confiscation if this declaration proves to be incorrect at any time.

OR

b) Name in Full (as per CNIC)

Country of Residence

Muslim

HOUSE A/C NO.

CDC INVESTOR ACCOUNT SERVICES IDCDC INVESTOR ACCOUNT

NO.

CDC PARTICIPANT / ACCOUNT HOLDER ID

No. of Shares Applied For

As per Section 72 of Companies Act, 2017, the Shares shall be credited in book-entry form only. Therefore, Shares of PAKRI shall only be trasferred in scrip-less

form in the CDS of CDCPL. (Refer to instruction No.4 on the reverse hereof)

IMPORTANT: (i) This slip must be retained by the Applicant ii) Please read instructions provided with this application

Date of ReceiptSignature & Rubber Stamp of

Receiving Bank

-----------------------------------------------------------------------------------------------------------------------------

Bankers to the Offer's Provisional acknowledgement of application for Shares of Pakistan Reinsurance Company Limited

Received from Mr/Ms/Mrs. _______________________________________________________________________________ application for _____________________________________ shares.

Name of Bank Branch Code Application Serial No.

INVESTMENT IN SECURITIES IS A HIGHLY RISKY BUSINESS. INVESTORS ARE, THEREFORE, ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THE OFFER FOR SALE DOCUMENT ESPECIALLY THE RISK

FACTORS BEFORE MAKING ANY INVESTMENT DECISION.

OR

SUBSCRIPTION DATE

From XX, 2020 to XX, 2020 during

banking hours

Broker’s Stamp & Code

PSX

Code

Amount Payable in PKR

Do you want to avail CDC’s facility of IPO

FACILITATION ACCOUNT

In order to enable the Company to credit the cash dividend directly in applicant’s bank account, please fill in the following boxes:

Bank Name

Title of Account

International Bank Account Number (IBAN)

*INVESTORS ARE ENCOURAGED TO DISCLOSE THEIR NTN NUMBERS TO FACILITATE THE ISSUER TO CHECK STATUS OF THE SECURITIES HOLDERS AS TAX RETURN FILER OR NON FILER FROM THE ACTIVE TAXPAYERS LIST (ATL) AVAILABLE ON THE WEBSITE OF FBR. TAX RATES ARE MENTIONED IN THE OFFER FOR SALE DOCUMENT

Nationality Code

SUBMISSION OF FALSE AND FICTITIOUS APPLICATIONS IS AN OFFENCE UNDER SECTION 87(7) OF THE SECURITIES ACT, 2015 AND SUCH APPLICATIONS' MONEY MAY BE FOREFIETED UNDER

SECTION 87(8) OF THE SECURITIES ACT, 2015

Cheque / Demand Draft / Pay Order No.

2) I/We agree to accept the same or any smaller number of Shares that may be allotted to me/us upon the terms as stated in the Offer for Sale Document. I/We authorize you to credit the Shares to me/us pursuant to this

application and if no Shares or a smaller number of Shares are allotted to me/us you are hereby authorized to return to me/us by cheque or other means my/our application money for the amount of Shares not credited to

me/us.

The Privatisation Commission,

Government of Pakistan

4th Floor, Kohsar Block, Pak

Secretariat, Constitution Avenue,

Islamabad, Pakistan

Identity Number

(CNIC/ Passport/ Registration No.)

Application Serial No.

Full Address including Email Address

Phone No. including Mobile No.

No

5) FOR JOINT HOLDER, IF ANY

Bank Name

APPLICATION FOR SUBSCRIPTION OF SHARES

PAKISTAN REINSURANCE COMPANY LIMITED (PAKRI)

Corporate Business Letter enclosed

Branch Code

Fo

r B

an

ke

rs

Bank

Code

SPECIMEN SIGNATURE(S) NAME OF THE APPLICANT IN BLOCK LETTERS (AS PER CNIC)

Signature of the Applicant

as per the Bank account

SPECIMEN SIGNATURE(S) OF THE APPLICANT

3) DECLARATION

Signature(s)

Yours faithfully,

Please Tick

International Bank Account Number

(IBAN)

Date of Issue of Passport

(DD-MM-YYYY)

Additional Information - For Non-Resident Pakistanis and Foreign Investors Only

Place of Issue of Passport

Bank’s Authorized Signatory

Bank’s Rubber Stamp

Occupation

Code

(TO BE FILLED IN BY THE APPLICANT’S BANKER)

7) It is certified that the above-mentioned applicant(s) is/are maintaining account number as mentioned above at this bank branch and applicant's particulars and signature(s) are correct and verified as per the bank's record and their

CNIC/Passport. It is further certified that only one application has been made in the name of the above account holder through this branch. We also confirm that the original CNIC/Passport has been seen by us.

Note: In case the subscription money is paid through a bank other than the Bankers to the Offer (through pay order or bank draft), this certification shall be provided by the manager of the bank where the applicant

maintains his/her bank account.

Branch Name and Address

Yes

6) DIVIDEND MANDATE (MANDATORY): Mark tick () in the appropriate boxes Yes ( ) No ( )

Mr. Ms. Mrs Co.

Resident 01

Non-resident 02

For Pakistanis

Mr. Ms. Mrs Co.


Page 154 of 154

a. Pakistani citizens resident in or outside Pakistan or Persons holding dual nationalities including Pakistani nationality;

b. Foreign Nationals whether living in or outside Pakistan;

c. Companies, bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the extent permitted by their constitutive documents and existing regulations, as the case may be);

d. Mutual Funds, Provident / pension / gratuity funds / trusts, (subject to the terms of the Trust Deed and existing regulations); and

e. Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan. 2. COPIES OF THE OFFER FOR SALE DOCUMENT

Copies of the OFSD and application form can be obtained from the registered office of, the Lead Manager / Consultant to the Offer and the Bankers to the Offer. The OFSD and the Application Form can also be downloaded from the websites: www.psx.com.pk, http://nextcapital.com.pk/, https://www.hbl.com/ and https://eipo.cdcaccess.com.pk/

3. The applicants are required to complete the relevant sections of the application in order to get the Shares in scrip-less form. In accordance with provisions of the Central Depositories Act, 1997 and the CDC Regulations, credit of such Shares is allowed ONLY in the applicant’s own CDC Account “OR in CDC’s IPO Facilitation Account (IPO Facilitation Account is an Investor Account opened by CDC under its Regulations for the purpose of crediting and holding of Securities on behalf of individual Pakistani investors who have subscribed to such Securities offered by an Issuer/Offeror).

4. NAME(S) AND ADDRESSES MUST BE WRITTEN IN FULL BLOCK LETTERS, IN ENGLISH AND SHOULD NOT BE ABBREVIATED. 5. ALL APPLICATIONS MUST BEAR THE NAME AND SIGNATURE CORRESPONDING WITH THAT RECORDED WITH THE APPLICANT’S BANKER. IN CASE OF DIFFERENCE OF SIGNATURE WITH THE BANK AND COMPUTERIZED NATIONAL IDENTITY

CARD (CNIC) OR NATIONAL IDENTITY CARD FOR OVERSEAS PAKISTANIS (NICOP) OR PASSPORT, BOTH THE SIGNATURES SHOULD BE AFFIXED ON THE APPLICATION FORM. 6. APPLICATIONS MADE BY INDIVIDUAL INVESTORS

i. In case of individual investors, a photocopy of the CNIC (in case of resident Pakistanis) / NICOP or Passport (in case of non-resident Pakistanis) as the case may be, should be enclosed and the number of CNIC/ NICOP / Passport should be written against the name of the applicant.

ii. Original CNIC/NICOP/Passport, along with a photocopy, must be produced for verification to the Banker to the Offer and the applicant’s banker (if different from the Banker to the Offer) at the time of presenting an application. The photocopy will, after verification, be retained by the branch along with the application.

7. APPLICATIONS MADE BY INSTITUTIONAL INVESTORS i. Applications made by companies, corporate bodies, mutual funds, provident / pension / gratuity funds / trusts and other legal entities must be accompanied by a photocopy of their memorandum and articles of association or

equivalent instrument / document. Where applications are made by virtue of power of attorney, the same should also be submitted along with the application. ii. Photocopies of the documents mentioned in 7(i) must be produced for verification to the Banker to the Offer and the applicant’s banker (if different from the Banker to the Offer) at the time of presenting the application. The attested

copies, will after verification, be retained by the bank branch along with the application. 8. ADDITIONAL INSTRUCTIONS FOR INVESTORS

i. Only one application will be accepted against each applicant, however, in case of joint account, one application may be submitted in the name of each joint account holder. ii. Joint application in the name of more than two persons will not be accepted. In case of joint application, each applicant must sign the application form and submit attested copies of their CNICs/NICOPs/Passport. The Shares will be

credited to the CDS account mentioned on the face of the form OR in CDC’s IPO Facilitation Account and where any amount is refundable, in whole or in part, the same will be refunded by cheque or other means by post, or through the bank where the application was submitted, to the person named first on the application form, without interest, profit or return. Please note that joint application will be considered as a single application for the purpose of allotment of securities.

iii. Subscription money must be paid by cheque drawn on applicant’s own bank account or pay order/bank draft payable to one of the Bankers to the Offer in favor of A/C “PAKRI Offer for Sale” and crossed “A/C PAYEE ONLY”. iv. For the application made through pay order/bank draft, it would be permissible for a Banker to the Offer to deduct the bank charges while making refund of subscription money to unsuccessful applicants through pay order/bank draft

individually for each application. v. The applicant should have at least one bank account with any of the commercial banks. The applicants not having a bank account at all (non-account holders) are not allowed to submit application for subscription of securities.

vi. Applications are not to be made by minors and/or persons of unsound mind. vii. Applicants should ensure that the bank branch, to which the application is submitted, completes the relevant portion of the application form.

viii. Applicants should retain the bottom portion of their application forms as provisional acknowledgement of submission of their applications. This should not be construed as an acceptance of the application or a guarantee that the applicant will be allotted the number of Shares for which the application has been made.

ix. Making of any false statements in the application or willfully embodying incorrect information therein shall make the application fictitious and the applicant or the bank shall be liable for legal action. x. Bankers to the Offer are prohibited to recover any charges from the subscribers for collecting subscription applications. Hence, the applicants are advised not to pay any extra charges to the Bankers to the Offer.

xi. It would be permissible for a Banker to the Offer to refund subscription money to unsuccessful applicants having an account in its bank by crediting such account instead of remitting the same by cheque, pay order or bank draft. Applicants should, therefore, not fail to give their bank account numbers.

xii. Submission of false and fictitious applications is prohibited, and such applications’ money may be forfeited under section 87(8) of the Securities Act, 2015.

9. ADDITIONAL INSTRUCTIONS FOR FOREIGN / NON-RESIDENT INVESTORS

i. In case of foreign investors who are not individuals, applications must be accompanied with a letter on applicant’s letterhead stating the legal status of the applicant, place of incorporation and operations and line of business. A copy of memorandum of association or an equivalent document should also be enclosed, if available. Where applications are made by virtue of Power of Attorney, the same must be lodged with the application. Copies of these documents can be attested by the bank manager in the country of applicant’s residence.

ii. Foreign / Non-resident applicants should follow payment instructions given in Part 12.17 of the OFSD. 10. BASIS OF ALLOTMENT

The basis and conditions of transfer of Shares to the General Public shall be as follows: i. The minimum value of application for subscription is Issue Price x 500 Shares. Application for amount below the minimum value shall not be entertained.

ii. Application for Shares must be made for 500 Shares or in multiple thereof only. Applications, which are neither for 500 Shares nor for multiple thereof, shall be rejected. iii. Allotment / transfer of Shares to successful applicants shall be made in accordance with the allotment criteria / instructions disclosed in the OFSD. iv. Allotment of Shares shall be subject to scrutiny of applications in accordance with the criteria disclosed in the OFSD and / or the instructions by the Securities & Exchange Commission of Pakistan. v. Applications, which do not meet the above requirements, or applications which are incomplete will be rejected. The applicants are, therefore, required to fill in all data fields in the application form.

vi. The Offeror will credit the respective CDS accounts of the successful applicants. 11. CODE OF BANKERS TO THE OFFER

Code No. Name of Banks Code No. Bank

01 Allied Bank Limited 05 Habib Metropolitan Bank Limited

02 Bank AL Habib Limited 06 MCB Bank Limited

03 Faysal Bank Limited 07 United Bank Limited

04 Habib Bank Limited

12. CODE OF OCCUPATIONS

Code No. Occupation Code No. Occupation

01 Business 06 Professional

02 Business Executive 07 Student

03 Service 08 Agriculturist

04 Housewife 09 Industrialist

05 Household 10 Others

13. PUBLIC SUBSCRIPTION THROUGH e-IPO

e-IPO is submission of application for subscription of securities electronically through internet, Automated Teller Machines (ATM) and mobile phones. In order to facilitate the public during IPOs/ SPOs, SECP has introduced the concept of e-IPO. The following two systems are available for e-IPOs: (i) Centralized e-IPO System (CES): The Central Depository Company of Pakistan Limited (CDC) has developed a Centralized e-IPO System (CES) through which applications for subscription of securities offered to the general public can be made electronically. CES has been made available in this IPO and can be accessed through the web link www.cdceipo.com. Payment of subscription money can be made through 1LINK’s member banks available for CES, list of which is available on above website. For making application though CES, investors must be registered with CES. Registration with CES is free of cost and a self-registration process by filling the CES registration form, which is available 24/7 all around the year. Investors who have valid Computerized National Identity Card (CNIC), bank account with any of the commercial bank, email address, mobile phone number and CDS Account (Investor Account or sub Account) OR CDC’s IPO Facilitation Account may register themselves with CES. Investors who do not have CDS account may visit www.cdcpakistan.com for information and details. For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at phone Number: 0800 – 23275 (CDCPL) and e-mail: [email protected]. (ii) e-IPO facilities by Bankers to the Offer: In order to facilitate investors, United Bank Limited (“UBL”) is providing the facility of electronic submission of application (e‐IPO) to their account holders. United Bank Limited account holders can use UBL net banking to submit their application via link http://www.ubldirect.com/corporate/ebank. Further, please note that online applications can be submitted 24 hours a day during the subscription period which will close at midnight on DD/MM/YYYY.

14. NATIONALITY CODE

Code Name of Country Code Name of Country

001 U.S.A 006 Bangladesh

002 U.K 007 China

003 U.A.E 008 Bahrain

004 K.S.A 009 Other

005 Oman

For further queries you may contact: Habib Bank Limited: Mr. Imaad Uddin, +92 21 311 16507, [email protected]; Ms. Humaira Asad, +92 21 331 16527 , [email protected]

Next Capital Limited: Mr. Syed Qamber Ali, +92 213 5222207, [email protected]; Mr. Saim Shahid, +92 213 522207, [email protected]

http://www.psx.com.pk/

http://www.cdceipo.com/







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