Company Mortgages and Charges SECURITIES AND EXCHANGE COMMISSION OF PAKISTANSECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Table of Contents Page T. Introduction... 0. cee cece cece ee cee eects 3 2. Registration of mortgages and charges-.---.----..--...---.-.. 4 3. Modification of mortgages and charges 10 4. Rectification of mortgages and charges---- oul 5. Satisfaction of mortgages and charges... 13 6, Purther Information_.- This is @ guide only and should be read with the relevant legislation. COMPANY MORTGAGES AND CHARGESSECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Introduction Registered companies sometimes create a mortgage or charge that must be registered under the Companies Ordinance, 1984 and the companies must file particulars of the mortgage or charge, together with a copy of the Instrument creating or evidencing this, with the registrar of companies. This bocklet is a guide to help companies or any interested parties to file particulars of a mortgage or charge correctly and timely. The documents must be filed within 21 days after the creation of the mortgage or charge to ensure its security in the event of liquidation. An order of the Commission may be required to enable registration beyond the 21-day limit. Companies or other interested persons are also required to notify the Registrar when they pay off (or 'satisfy’) a registered mortgage or charge. This booklet explains how: The registration of charges is covered by Part VII of the Companies Ordinance, 1984. COMPANY MORTGAGES AND CHARGESSECURITIES AND EXCHANGE COMMISSION OF LAU CHAPTER 1 Registration of Mortgages and Charges 4. What are mortgages and charges? Acharge is security for the payment of a debt or other obligation that does not pass 'title of the property’ or any right to its possession to the person to whom the charge is given A mortgage is security for the payment of a debt or other obligation that passes ‘property’ but no right to possession to the person to whom the mortgage is given. 2. What mortgages and charges must be registered? Section 121 of the Companies Ordinance lists the following mortgages and charges to be registered under the Companies Ordinance, 1984: (a) a mortgage or charge for the purpose of securing any issue of debentures; or {A debenture is an instrument issued by a company as evidence of a debt or other obligation. If includes debenture stock, bonds and any ather securities ofa company, whether or nod it farms @ charge on the assets of the company.) (b) a mortgage or charge on uncalled share capital of the company; or (Unealled share capital is the balance owing for shares {hatare issued partly paid.) (ec) a mortgage or charge on any immovable property wherever situate, orany interest therein; or (d) a mortgage ar charge on any book debts of the company; or COMPANY MORTGAGES AND CHARGESSECURITIES AND EXCHANGE COMMISSION OF PAKI (Book debts are debts that in the ordinary course ofa company’s business are cammonily entered inits books. } (e) A mortgage or charge, not being a pledge, on any movable property of the company; or (f) A floating charge on the undertaking or property of the company, including stock-in-trade; ar (A floating charge is a charge that does not affect the assets charged until some event crystallises the charge, fixing it to a certain pointin time.) (a) ‘A mortgage or charge.on a ship or any share in a ship,or th) A mortgage or charge on goodwill, on a patent or license under patent, on a trade mark, or on a copyright or a license undera copyright; or (i) A mortgage or charge or other interest based on agreement for the issue of any instrument in the nature ofredeemable capital: or i a mortgage or charge or other interest based on a mushrika agreement: or (k) a mortgage or charge or other interest based on hire- purchase or leasing agreement for acquisition of fixed assets. 3. Which documents are required to be filed for registration of mortgage or charge? - The following documents are required to be filed for registration ofa mortgage or charge:- » Form 10 containing particulars of mortgages, charges etc. Certified copies of instruments creating the mortgage charge. « Affidavit that copies of the instruments are true Copies, « Bank challan of Rs.5,000/- being filing fee.SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN 4. How much does each registration cost? There is a fee of Rs. 5,000 for registering each Form 10, 11, 13-and 14 filed with the registrar concerned. Same fee is. applicable on filing of Modification of Particulars of Mortgage or charge on Form 16 or Memorandum of satisfaction ormartgage on charge on form 17 These forms are. available on our web site WWW.SeCp.gov.pk. 3, What do ‘instrument’ and 'evidence' mean in this chapter? An ‘instrument’ is usually a document evidencing creation of morigage or charge which should be in legible form but it-can also exist in electronic form. ‘Evidence’ means to provide proof of the existence of something. 6. Which form should | use? The form numbers in this table correspond ta the relevant sections of the Companies Ordinance, 1984 and rules contained in the Companies (General Provisions and Forms) Rules, 1985:- Form. Description Section Form No 10 | Particulars of mortgages, charges, ate. 424, 129 and 463 FormNo11 | Particulars of mortgage or charge subject | 122 and 463 to which property has been acquires. Form No 13 | Registration of entire series of debentures | redeemable capital 123, 124 and 463 Form No 44. | Particulars of an issue of redeemable capital {debentures in a series when more than one] 123 and section 463 issue in the series is made. Form No 16. | Particulars of modification of mortgage, charge, etc. 129(3) and 463 Form No 17. | Memarandurn of complete satisfaction of mortgage, charge, ete. iezand 46} = Select the correct form to send to the correct registration office, and follow any notes on the form itself. Act as quickly as possible: you have re) halite EL)SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN only 21days from the date of creation of the mortgage or charge to register the correct details. Send the instrument creating or evidencing the charge with the fon. if thereis.an instrument, as there usually willbe. Copy of the instrument Must be attested by notary public. Make sure the details on the form are correct and match the instrument. if registrar finds errors, the presenter must authorise their correction and, if necessary, deliver new forms within the 21-day time fimit. If necessary, registrar will return instruments and documents to the presenter named an the charge form itself. Piéase ensure this information is complete and accurate. Make sure the company name and number are correct. Make sure the creation date and description of the charge agree with the instrument. Make sure the amount secured accurately reflects what is stated in the Instrument Make sure the name of the chargee matches the instrument. (‘Chargee’ means the person to whom property is charged.) Make sure the short details of the property charged accurately reflect What is stated in the instrument. For mortgaged land it is desirable that you give the title number of the Property. Ensure that charging clauses are always inserted, including reference to fixed and floating charges. Sign and date the form. Complete the forms legibly using black ink or, preferably, type the form. Forms are scanned and reproduced electronically so that the public can inspect them. The Registrar may refuse documents that are not suitable: for scanning and reproduction. COMPANY MORTGAGES AND CHARGESSECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Please note If you omit or mis-state any detail in the documents registered, then you should apply to the Commission to correct it under section 131 ofthe Ordinance: Rectification of register of charges. a. What happens when the application for registration reaches Registrar concerned? If the document is acceptable, the registrar concerned tak letails from it to produce a certificate of registration and recard an entry on the register of charges, The regis! issues certificate of registration of mortgage or charge, and scans and records the particulars in the register. 9. What if registrar concerned has cause to query the application? Registrar will contact the presenter be corrected, it must be done within t y queries. If the form needs to time limit 10. What if the charge is not registered in time? If a charge is not registered in time administrator and any creditor of company. This means that the debt for which the charge was given will remain payable, butit will be unsecured Ifa company fails to de! it, then the company a lable toa fine, Ihe default continues, they any wh are liable to a da Can a charge be registered out of time? Only the Commission can grant an extension of time for eerie Mle Ruri ce wi e crit Bt Rt te The normal time limit is 21 days from the date of creation of the charge a1 What must I do if my company acquires property that is already charged? If the charge is of a type which the company would have had to register if it had created the charge itself, then itm otify the fact tha’ s acquired this property, To do this the compar mplete and send Form 11 the reg concemed, with a certified copy of any instrument that created or evidenced the charge.SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN This must be done within 21 days after the company completed the acquisition of the property. If the charged property is autside Pakistan and the charge was created outside Pakistan, the 27 days runs from date when the copy instrument could have been received in Pakistan in the normal course of post, assuming that it had been dispatched with due Diligence. Late delivery of the particulars of mortgage or charge is an offence. The company and every officer of it who is in default are liable toa fine. If the iligence: Late delivery of the particulars of mortgage or charge is an offence. The company and every officer of it who Is in default are liable to a fine, If the default continues, they are liable ta a daily default fine. 12. What rights has the chargee? ifthe company does not send us a charge for registration, then the chargee (the person to whom property is charged) - or some other interested person can register the required documents. In certain circumstances a charges ¢an appoint a receiver or manager, or ask the court to appoint a receiver or manager, over the properly charged - for example, if the company defaults in payment of the debt secured by the charge. The chargee must notify the appointment with the registrar concerned within 15 days using form 18. Registrar will then enter this in the register of charges On ceasing to act, a receiver or Manager must notify the registrar concerned within 30 days using Form 19. Registrar will then enter the fact in the register of charges. COMPANY MORTGAGES AND CHARGESSECURITIES AND EXCHANGE COMMISSION OF PAKISTAN CHAPTER 2 Modification of Mortgages and Charges. 1. What is modification in a mortgage ora charge? Modification is change in mortgage or chargesi.e., change in- + Amount of mortgage / charge (enhancement or reduction in amount). « Change in particulars of property (excluding or including certain property or asset}. » Variation in the rate of markup or interest. Extension of time for repayment on period of maturity (Rescheduling). » Change in other terms and conditions. 2. Which documents are required to be filed for modification in a mortgage or charge? The following documents are required to be filed for modification in amorigage or charge:- + Form 16 containing modification in mortgages, charges etc. » Certified copies of instruments creating the mortgage charge. + Affidavit that copies of the instruments are true copies. » Bank challan of Rs_5,000/- being filing fee. 3. Whether partial payment is treated as partial satisfaction or modification of a mortgage or charge? Partial payment is modification of a mortgage or charge and cannot be treated as satisfaction, The particulars of the modification are filed on Form 16, COMPANY MORTGAGES AND CHARGESSECURITIES AND EXCHANGE COMMISSION OF PAKISTAN CHAPTERS. Rectification of Mortgages and Charges A! What are the grounds of rectification of register of mortgages or charges? The following are grounds of rectification of register of mortgages or charges:- Omission to file charge within the prescribed period Failure to file modification of charge. Omission te intimate payment or satisfaction. Omission or mis-statement of particulars. 2. Whois empowered to order for rectification of register of mortgages or charges? The Commission is empowered to order for rectification of register of mortgages or charges. a Which documents should be enclosed with the petition for rectification to be filed before the Commission? The following. documents should be enclosed with the petition for rectification to be filed before the Commission.- « CopyofForm 10, 11, 13,16 0r17, as the case may be: » Copies of instruments relating to creation, modification, satisfaction etc. Copy of the resolution, ifany. Observation memorandum, if issued, of the registrar concerned. Affidavit verifying the contents of petition to be true. Bank challan on account of application fee of Rs.500,SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN 4. Which documents should be filed with the registrar concerned after passing of order by the Commission? The following documents should be filed with the registrar concerned after passing of order by the Commission:- . Copy of Form 10, 11, 13, 16.0r17, asthe case may be, » Copies of instruments relating to creation, modification, satisfaction etc. » Copy oforder ofthe Commission. » Affidavit that copies of the instruments are true copies, « Bankchallan of Rs.5,000/- being filing fee. COMPANY MORTGAGES AND CHARGESSECURITIES AND EXCHANGE COMMISSION OF PAKISTAN CHAPTER 4 Satisfaction of Mortgages and Charges ts What should | do when the charge is paid off (or ‘satisfied')? The company needs to inform registrar concerned that a charge has been jully satisfied. However, iLis obviously in the company’s awn interest that investors and lenders know that ail of the debt has been paid off. Therefare, it would be in the interest of the company if an NOC is abtained from mortgagee regarding payment of (or satisfaction of) the mortgage or charge 2. What if charged property ceases to be charged or to belong to the company? As with fully paid-off charges, the company need to inform registrar concerned that its property has been released fram a charge or that the property no longer belongs to the company, Itis obviously in the company's interest that potential investors and lenders should know, The company shaill file a memorandum of satisfaction of mortgage or charge on Form 17 with or without NOC obtained from the mortgagee. 3; Is therea fee for registering Form 17? Yes, achallan evidencing payment of filing fee of Rs. 5,000 is to be annexed with Form 17. COMPANY MORTGAGES AND CHARGESSECURITIES AND EXCHANGE COMMISSION OF PAKISTAN CHAPTER 5 Further information 15 What if! have a query about registration? Our CRO staff will willingly answer general queries but not legal points, which should be addressed in the first instance to a solicitor. The usual telephone number is: 054 9206306 or telephone number of the Company Registration Office concerned, given in the list at the end of this booklet. 2: Where do | get forms and guidance booklets? Statutory forms and quidance booklets are available, free of charge from registrar of companies. The quickest way to get them is through this website: www.seco,gov.pk, Forms can also be obtained from Stationers, accountants, solicitors and company practitioner, 3. How do | send informati nto the Registrar? You may deliver documents te the Registrar concerned by hand (personally or by mail or by courier), addressed to: If you send dacuments by post, please address them to one of the following Company Registration Offices (CROs) concerning your company: = The Additional Registrar of Companies, Company Registration Office. State Life Building, 7-Blue Area, Islamabad. Phone: 051-9208740, Fax 051-9208740 Email: croislamabad@secp.gov.pk = The Additional Registrar of Companies, Company Registration Office, 4th Floor, SLIC Building No.2, Karachi, Phone: 021-2415855, 2416778, Fax 021-2416788 Email: crokarachi@secp.gov.pk COMPANY MORTGAGES AND CHARGESSECURITIES AND EXCHANGE COMMISSION OF PAKIST, m TheAdditional Registrar of Companies, Company Registration Office, rd & 4th Ficors, Associated House, 7-Egerton Road, Lahore Phone: 042-9200274, Fax 042-9202044 Email: crolahore@secp.gov.pk a The Joint Registrar of Companies, Company Registration Office, 63-A, Nawa-i-Waqt Building, Abdali Road, Multan. Phone: 061-9200920 Fax 061-9200920 Email: cromul@mul.paknet.com.ok a The Deputy Registrar of Companies, Company Registration Office, 356-A, Al-Jamil Plaza, ist Floor, Peoples Colony, Small D Ground, Faisalabad. Phone: 041-8220284 Fax: 041-9220284 Email: crofsb@fsd_paknet.com.pk a The Joint Registrar of Companies, Campany Registration Office, 1st Floor, State Life Building, The Mall, Peshawar Cantt, Phone: 091-9213178, Fax 091-9213178 Email: cropshi@psh.paknet.com.pk = TheAsistant Registrar of Companies, Company Registration Office, 382/3, (| DBP House}, Shahrah-e-Hali, Quetta Cantt. Ph:08 1-844 136, Email: crogta@ata.paknet.com.pk | a The Assistant Registrar of Companies, ] Company Registration Office, B-30, Sindhi Muslim Housing Society, Airport Road, Sukkur. Ph: 071-30517 Email: croskr@hotmail.com Registrar concerned will acknowledge receipt of documents if delivered By him. Please note: Registrar concemed presently does not accept Pini Meyda tgs Ms lela) LSC amulet neeSECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Please note that particulars of mortgages or charges or modification or satisfaction thereof are required to be registered within 21 days. Merefiling within 21 days may cause certain difficulties leading to filing petition before the Commission for extension in time. lt would be advisable if the documents are filed much earlier so that these may be registered. Securities and Exchange Commission of Pakistan N.I.C BUILDING, JINNAH AVENUE, ISLAMABAD PAKISTAN Ph: 051-9207091- 4 Fax: 051-9204915 Website: www.secp.gov.pk E-mail: secoha@isb.paknet,com.pk COMPANY MORTGAGES AND CHARGES