“REIT” Incorporation & Licensing

Name Reservation

For the purposes of reserving the name, an application must be filed with the relevant Company Registration Office (“CRO”) of the Securities & Exchange Commission of Pakistan (“SECP”).

The following documents and details are required for the application to have the name reserved:

1. Three name recommendations;
2. Purpose behind the name
3. CNIC’s of the proposed directors.
4. Share distribution structure.
5. Address of the place where the business will be carried out by the company
6. Any other documents that the SECP regards as necessary

A No Objection Certification will be internally obtained by the CRO from the Specialized Companies Division-PRDD, subsequent to which they shall issue confirmation on the concerned name reservation.

In order to apply for the permission to form an NBFC, a valid name is required.

Application for the Grant of Permission to Form an NBFC

For the purposes of forming an NBFC an application must be filed with the SECP Specialized Companies Division-PRDD under Rule 4 of the Non-Banking Finance Companies (Establishment & Regulation) Rules, 2003 (“NBFC Rules”), on Form 1. It is pertinent to note that the fees to be paid for the relevant application to form an NBFC is Rs. 250,000/-.

The application must specify the number of Directors of the company; a minimum of two directors plus one third independent directors registered with the PICG.

It is necessary for at least one of the directors to have a minimum experience of five years in the particular type of business, provided that the minimum number of directors, including the Chief Executive Officer (CEO), is less than or equal to three. If however the number of the directors, including the CEO, exceeds three, at least two of the directors are required to satisfy the minimum requirement pertaining to the experience.

The application for such approval can take up to 6 months.

The SECP, along with the approval application, must be provided with certain documents, by the company, which include inter alia.

1. Flow chart which clearly illustrates the shareholding structure of the proposed company leading to ultimate beneficial owners.
2. Feasibility plan which comprises of 5 years financial and operating projections, organogram, SWOT analysis as well as the underlying assumptions.

Company Incorporation

It is necessary for the company to be incorporated during the validity period of the approval granted by the SECP. The following documents and information, inter alia, must be provided:

1. A correspondence address.
2. Details of all directors (including CNIC).
3. Shares that are to be allotted to each director or promoter.
4. At least 25% of the Paid-up capital must be provided by the Company to the Promoters of the Company.
5. The Companies’ promoters or majority shareholders and directors must deposit their shares with the Central Depository Company of Pakistan in an account marked as blocked if they exceed 2% of the total share capital.
6. The minimum equity requirement of the company is 30 million Rupees.

Grant of License   

Upon SECP granting the approval, the company, within 6 months of the approval, shall apply for the grant of an investment advisory license.

Fees of Rs. 500,000/- must be paid with the application for the grant of license.

The following documents and information that must be provided with the application are:

1. Certified Copy of Incorporation Certificate.
2. Certified Copy of Memorandum of Association of the Company.
3. Certified Copy of Articles of Association of the Company.
4. Details of Directors including their experience in the subject license activity.
5. Proof of depositing shares in the Central Depository Company of Pakistan.

Eligibility Requirements and REIT Management Services

According to Section 3 subsection (1) of the Real Estate Investment Trust Regulations, 2022 (“REIT Regulations, 2022”), the Promoters, Major Shareholders, Directors and Key Executives of an RMC must comply with the Fit and Proper Criteria (provided in Schedule VIII of the REIT Regulations, 2022). An individual’s fitness and propriety may be analyzed by considering, inter alia, the following:

1. Integrity and track record of such person.
2. Financial soundness of such a person.
3. Competence and capability of the person, and
4. Conflict of interest of such person with the business of the RMC.

According to Section 3 subsection (2) of the REIT Regulations, 2022, an RMC intending to undertake REIT Management Services shall have, prior to applying for license, a paid-up capital of not less than fifty (50) million rupees. The RMC shall also submit evidence of the paid-up capital of at least fifty (50) million rupees by the submission of the auditor’s certificate or latest audited financial statements which are not older than eight (8) months.

Grant of License to Carry Out Real Estate Investment Trust (“REIT”) Management Services

Fees for the application for license to undertake or carry out REIT Management Services is Rs. 1,000,000/-.

Application for the grant of license shall be submitted to the Commission in Form-II of the NBFC Rules, 2003, alongside a non-refundable processing fee as may be specified by the Commission by the notification in the official Gazette for each license.

The following information must be provided:

1. Date of incorporation as a limited company.
2. Authorized, subscribed and paid-up share capital of the company (sponsors’ equity indicated separately).
3. Names and addresses of directors and number of shares held by each of them.
4. Directors’ interest, direct or indirect, in any other company with details of such interest.
5. Details of persons or group controlling the company including major shareholders with number and value of shares held.
6. Names of holding, subsidiary and associated undertaking, if any
7. Details of qualified staff engaged.
8. A receipt of the processing fee for each license deposited.

Registration of REIT Scheme

According to the REIT Regulations, 2022, for the purposes of the registration of REIT Scheme, the following information/documents must be submitted to the Commission at least 10 working days prior to the issuance of units to the accredited investors:

1. Copy of registered Trust deed.
2. Copy of bank challan evidencing fee.
3. Number of units to be issued
4. Copy of information memorandum.
5. Copy of valuation report
6. Copy of SPV agreement, if any
7. Latest audited balance sheet and profit and loss statement of the RMC
8. Undertaking on non-judicial stamp that RMC is in compliance with these regulations, REIT Scheme is lawful, and all information shared with the Commission is accurate

If necessitated, the RMC shall provide any information/documents, mentioned above, to the trustee.