Chapter 10: Investments

Question 1

1. Investment in Associated Company/Undertaking

Answer 1

Two or more companies or undertakings interconnected if:
Common management/control
One is a subsidiary of the other
Undertaking is a modaraba managed by the company
A person holds/control 20%+ voting power and is also involved in another company/undertaking

Question 2

Exceptions for Associated Companies

Answer 2

Directorship by government or financial institution nominations
Independent Director appointments
Shares owned by NIT, ICP, or government-controlled institutions
Shares registered in a central depository

Question 3

Conditions for Investment

Answer 3

Special Resolution required
Details: Nature, period, amount, and terms of investment
No variation without another Special Resolution

Question 4

Disclosure by Other Officers

Answer 4

Must disclose nature and extent of interest and obtain prior approval from directors

Question 4

Investments Held in Company’s Own Name

Answer 4

All investments must be held in the company’s name
Exceptions for qualification shares, subsidiary company members, or CDC registration

Question 4

Loans to Associated Companies

Answer 4

Written agreement specifying nature, purpose, period, rate of return, fees, repayment schedule, penalty clause, and security
Return on investment should meet or exceed the borrowing cost

Question 5

Disclosure of Interest by Directors

Answer 5

Timing: At first meeting where transaction is discussed or after becoming interested
General notice of ownerships and directorships valid till end of financial year

Question 6

Register for Investments Not in Own Name

Answer 6

Must include nature, value, and other identifying details
Open to inspection by members free of cost for 2 hours daily; others can inspect for a fee

Question 7

Related Party Transactions

Answer 7

Related parties include directors, their relatives, key managerial personnel, firms, private/public companies, or any company with significant influence
Transactions must follow board-approved policies and may require special resolution if majority of directors are interested

Question 7

Interested Director

Answer 7

Cannot vote or participate in discussions where interested
Exceptions: Private companies or indemnification for acting as surety

Question 8

Office of Profit

Answer 8

Remuneration over director’s fee must be disclosed
Contracts with related parties must be in accordance with board policies and disclosed in the director’s report