Karachi Stock Exchange (Guarantee) Limited’s Notice of Annual General Meeting

Karachi Stock Exchange (Guarantee) Limited’s Notice of Annual General Meeting

Karachi: Scheme of Arrangement

Paramount Spinning Mills Limited (“PSM”)

Gulshan Spinning Mills Limited (“GSM”)

Gulistan Spinning Mills Limited (“GTSM”)

Complete Scheme of Arrangement for Amalgamation available on.KSE Website.

Scheme of Arrangement

Notice of the Extraordinary General Meetings of Paramount spinning Mills Limited, Gulshan Spinning Mills Limited and Gulistan Spinning Mills Limited

Notice is hereby given for the purpose of calling extraordinary general meetings of Paramount Spinning Mills Limited (“PSM”), Gulshan Spinning Mills Limited (“GSM”) arid Gulistan Spinning Mills Limited (“GTSM”) for obtaining sanction of the Scheme of Arrangement for amalgamation dated 05.04.2011 (the Scheme of Arrangement”) of PSM, GSM and GTSM.

The purpose of this notice is:

(i) To inform that pursuant to the Order dated 30.5.2011 of the High Court of Sindhi at Karachi, passed in Civil Miscellaneous Application No, 161 of 2011 in Petition Judicial Miscellaneous No. 22 of 2011, an Extraordinary General Meeting of the members of PSM will be held at 2nd Floor, Finlay House. I. I. Chundrigar Road, Karachi, Pakistan, on Monday 1 August 2011 at 200 PM, to consider and, if thought fit, adopt and agree to the Scheme of Arrangement for the amalgamation GSM and GTSM and its members with and into PSM and its members;

(ii) To inform that pursuant to the Order dated 30.5.2011 of the High Court of Sindh at Karachi, passed in Civil Miscellaneous Application No. 161 of 2011 in Petition Judicial Miscellaneous No. 22 of 2011, an Extraordinary General Meeting of the members of GSM will be held at 2nd Floor, Finlay House, I. I. Chundrigar Road, Karachi Pakistan, on Monday 1 August 2011 at 300 PM, to consider and, If thought fit, adopt and agree to the Scheme of Arrangement for the amalgamation GSM and GTSM and its members with and into PSM and Its members;

(iii) To inform that pursuant to the Order dated 30.5.2011 of the High Court of Sindh at Karachi, passed in Civil Miscellaneous Application No. 161 of 2011 in Petition Judicial Miscellaneous No. 22 of 2011, an Extraordinary General Meeting of the members of GTSM will be held at 2nd Floor, Finlay House, I. I. Chundrigar Road, Karachi, Pakistan, on Monday 1 August 2011 at 10.30 AM, to consider and, it thought fit, adopt and agree to the Scheme of Arrangement for the amalgamation GSM and GTSM and its members with and into PSM and its members;

A copy of the Scheme of Arrangement for the amalgamation and a Statement under Section 286(1) of the Companies Ordinance, 1984 (‘Statement”) may be obtained from the office of PSM, GSM and GTSM at 2nd Floor, Finlay House, I. I. Chundrigar Road, Karachi, Pakistan during normal office hours on application prior to the meetings by the members, creditors and other persons determined as entitled to attend the meeting

As per the Order of the Hon’ble High Court of Sindh dated 30.5.2011 Mr. Tanveer Ahmed, the Chief Executive Officer of PSM GSM and GTSM will act as chairman of the meetings of the members of PSM. GSM and GTSM respectively and will report the results thereof to the Court.

The Scheme of arrangement will be subject to the subsequent approval of the Court.

By order of the Board,

For The Karachi Stock Exchange (Guarantee) Limited (KSE)

Paramount Spinning Mills Limited

Gulshan Spinning Mills Limited

Gulistan Spinning Mills Limited

Notes:

A. General

1. The Register of Members of PSM, GSM and GTSM will remain closed from 24-7-2011 to 1-08- 2011 (both days inclusive). Transfer received in order at the office of Share Registrar of PSM, GSM and GTSM i.e. Hameed Majeed Associates (Pvt.) Ltd., 5th Floor, Karachi Chambers, Hasrat Mohani Road, Karachi at the close of business on 23-07-2011 will be treated in time.

2. The recent annual/quarterly accounts, Memorandum and Articles of Association and other related information of PSM, GSM and GTSM as the case may be may be inspected during the business hours on any working day at the Registered Office of PSM, GSM and GTSM as the case may be from the date of publication of this notice till the conclusion of the General Meeting.

3. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote for him/her.

4. The instrument appointing a proxy, together with Power of Attorney, if any, under which it is signed or a notarially certified copy thereof, should be deposited, with the Company Secretary, PSM, OSM and GTSM as the case may be, 2nd Floor, Finlay House, I. I. Chundrigar Road, Karachi not less than 48 hours before the time of holding the meeting.

5. CDC Shareholders, entitled to attend and vote at this meeting, must bring with them their National identity Cards / Passport in original to prove his / her identity, and in case of Proxy must enclose an attested copy of his / her NIC or Passport. Representatives of corporate members should bring the usual documents required for such purpose.

6. If a member appoints more than one proxy, and more than one instrument of proxy is deposited by a member, all such instruments of proxy shall be rendered invalid.

Statement under Section 160(1)(b) of the Companies Ordinance, 1984 concerning the Special Business

Subject to the sanction of the High Court of Sindh at Karachi under the Scheme of Arrangement for Amalgamation, GSM and GTSM will be merged/amalgamated with and into PSM by transfer to and vesting In PSM the whole of undertakings and businesses of GSM and CTSM together with all the properties, assets, rights, liabilities, quotas and obligations of every kind and description as subsisting on July 1, 2010.

The merger/amalgamation of GSM and GTSM with and into PSM shall be effective by way of a Scheme of Arrangement for Amalgamation in accordance with the provisions of Sections 284 to 288 of the Companies Ordinance, 1984 and on the basis of the valuation calculated by M. Yousuf Adil Saleem and Co., Chartered Accountants, pursuant to their report dated April 1, 2011 and the swap ratio as recommended by the Board of Directors of PSM. For the purposes of the merger/amalgamation, (i) 1 ordinary share of Rs.10/-, each fully paid up of PSM shall be issued to the shareholders of GSM In exchange for every 1.1981 ordinary share of Rs.10/-, each fully paid up of GSM held by them and (ii) 1 ordinary share of Rs.10/-, each fully paid up of PSM shall be issued to the shareholders of GTSM in exchange for every 1.7677 ordinary share of Rs.10/-, each fully paid up of GTSM held by them.

The Scheme of Arrangement for Amalgamation is available for inspection to any person entitled to attend the Extra Ordinary General Meeting at the office of the Company Secretary of PSM, GSM and GTSM as the case may be free of cost during normal office hours. Copies of the Scheme of Arrangement for Amalgamation can also be obtained upon request by any person entitled to attend the Extra Ordinary General Meeting from the office of the Company Secretary of PSM, GSM and GTSM as the case may be situated at 2nd Floor, Finlay House, I.I. Chundrigar Road, Karachi, free of cost during normal office hours.

The directors of Gulshan Spinning Mills Limited, GTSM and PSM as holders of shares in those companies are interested in terms of the Scheme to such extent. The effect of the Scheme on the interests of these directors does not differ from its effect on the like interests of other members.

In view of the above, the Board of Directors of PSM have approved and recommended the merger/amalgamation of GSM and GTSM with and into PSM and the swap ratio on the basis of which the shares of the PSM will be issued to the shareholders of GSM and GTSM.

Statement under Section 286 of the Companies Ordinance, 1984 concerning the Special Business

The statement setting forth the terms of Scheme of Arrangement for Amalgamation and explanation of its effect including the interests of the directors of PSM and the effect of those interests and other ancillary information may be obtained upon request by any person entitled to attend the extra Ordinary General Meeting from the office of the Company Secretary of PSM, GSM and GTSM as the case may be situated at 2nd Floor, Finlay House, I. I. Chundrigar Road, Karachi, free of cost during normal office hours.

 

The aforesaid statement has also been sent along with the notice of the Extra Ordinary General Meeting to the members of PSM, GSM and GTSM.

Statement to the Members of the Paramount Spinning Mills Limited (“PSM”), Gulshan Spinning Mills Limited (“GSM”) and Gulistan Spinning Mills Limited (“GTSM”) Under Section 286 of the Companies Ordinance 1984

Pursuant to the Order dated 30.5.2011 of the High Court of Sindh at Karachi, passed in Civil Miscellaneous Application No. 161 of 2011 in Petition Judicial Miscellaneous No. 22 of 2011 under sections 284 and 287 of the Companies Ordinance, 1984, the Court has directed, inter Alia, that separate meetings of members of PSM, GSM and GTSM be convened for sanction of the Scheme of Arrangement for amalgamation of GSM and GTSM with and into PSM (the ‘Scheme of Arrangement). A copy of the Scheme of Arrangement dated 5.4.2011 is provided with this statement.

The notice published and annexed hereto is for the purpose of convening a meeting of the members of PSM. GSM and/or GTSM as the case may be, as directed by the Court, for the purpose of passing the following resolution for obtaining approval of the Scheme of Arrangement:

“RESOLVED THAT the Scheme of Arrangement for Amalgamation dated April 5, 2011 of Gulshan Spinning Mills Limited and Gulistan Spinning Mills Limited with and into Paramount Spinning Mills Limited and members of the said Companies, placed before the meeting for consideration and approval be and is hereby approved and adopted subject to sanction by the Honorable High Court of Sindh, at Karachi, in terms of the provisions of the Companies Ordinance, 1984.”

As required by section 284(2) of the Companies Ordinance, 1984, the above resolution has to be passed at the meeting convened under the Order of the Court, by a majority representing three-fourths in value of the Issued shares held by the Shareholders of PSM, OSM and GTSM. Present In person or by proxy, and voting at the respective meetings. The sanctioning of the Scheme of Arrangement and the making of other appropriate orders in connection therewith will be considered by the Court after the Scheme of Arrangement is approved as aforesaid.

The principal object of the Scheme of Arrangement is to effect the merger by way of amalgamation of GSM and GTSM with and into PSM with effect from 1.7.2010, or such other date as may be directed by the Court (the “Effective Date’), by transfer to and vesting in PSM the whole business and undertakings of GSM and GTSM, together with all their properties, assets, rights, liabilities and obligations of every description subsisting immediately preceding the Effective Date, without further act or deed or documents being required to be executed, registered or filed in respect of such transfer, vesting, and/ or assumption and to dissolve GSM and GTSM without going into winding up. The objects and benefits of the amalgamations as afore-stated are provided in detail in the Scheme of Arrangement.

Scheme of Arrangement

Under Sections 284 to 288 of the Companies Ordinance, 1984 Involving Paramount Spinning Mills Limited and Gulshan Spinning Mills Limited and Gulistan Spinning Mills Limited and Their respective members Recitals

WHEREAS it is proposed that the entire undertaking comprising of all of the Assets, Liabilities and Obligations of GSM and GTSM at the Effective Date shall stand transferred to and be vested in and assumed by PSM, and GSM and GTSM shall be dissolved without winding-up (capitalized terms defined below);

AND WHEREAS this Scheme, if sanctioned by the Court by an order passed in this behalf, is to be binding on PSM, GTSM and GSM and all shareholders of PSM, GTSM and GSM and all Creditors of PSM, GTSM and GSM and all employees, customers and contracting parties (capitalized terms defined below).

Benefits of This Scheme

Larger Equity Base

The arrangement would lead to an increased asset base and the size of the entity. This would in turn assist the management to have access to more external funds at competitive rates. The larger size of equity would provide greater comfort to potential creditors. Access to larger resources would, in turn improve growth prospects arid ability to undertake large assignments.

Synergies

The arrangement would give an opportunity to operate the business of the companies through one operations department and one accounts department and thus resulting in economies of scales.

Increase in Risk Absorption Capacity

The larger size of the merged company would increase its risk absorption capacity thus enhancing the capacity to manage the potential risks arising out of the adverse and uncertain operating environment. In the long run, this factor would provide greater stability as well as sustainability in operations.

Reduction in Administrative Costs

The arrangement would enable the merged entity to carry out its business through single operations, accounts, treasury and MIS department with one set of management and staff, thus resulting in substantial cost savings and economies of scales leading to enhanced profitability.

Single Corporate and Tax Reporting

The arrangement will make single corporate and tax reporting possible. It will entail elimination of maintenance of separate records for business operation, selling, purchasing, marketing, legal, administrative, and secretarial and other records under the various laws resulting in duplication of work and higher costs.

Integration

The arrangement will strengthen PSM’s activities by complete integration of cotton and garment; thereby giving room in future for expansion of weaving and yarn dyeing and consequently effecting economics of scale and improving the business now carried on by PSM and proposed to be carried on by it in the future.

NOW THEREFORE, this Scheme is presented as follows:

1. DEFINITIONS

1.1. In this Scheme, unless the subject or context otherwise requires, the following expression shall bear the meanings specified below;

“PSM” means Paramount Spinning Mills Limited, a public limited liability company incorporated in Pakistan under the Companies Ordinance 1984, listed on the Karachi Stock Exchange, and whose registered office is situated at Finlay House, 2~ Floor, 1.1 Chundrigar Road, Karachi, Pakistan;

“GSM” means Gulshan Spinning Mills Limited, a public limited liability company incorporated in Pakistan under the Companies Ordinan8e 1984, listed on the Karachi Stock Exchange, and whose registered office is situated at Finlay Rouse, 2r1 Floor, I.I. Chundrigar Road, Karachi, Pakistan;

“GTSM” means l3ulistan Spinning Mills Limited, a public limited liability company incorporated in Pakistan under the Companies Ordinance 1984, listed on the Karachi Stock Exchange, and whose registered office is situated at Finlay House, 2nd Floor. I.I Chundrigar Road, Karachi, Pakistan;

“Annexure A” is the annexure attached hereto that contains the summaries of: (i) annual audited accounts of PSM for the year ended June 30, 2010; and (ii) half-yearly reviewed accounts of PSM for the half-year ended December 31, 2010;

“Annexure B’ is the annexure attached hereto that lists the particulars of each of the secured creditors, along with the description of the assets charged in favour of such creditors, of PSM;

“Annexure C” is the annexure attached hereto that contains the summaries of (i) annual audited accounts of GSM for the year ended June 30, 2010; and (ii) half-yearly reviewed accounts of OSM for the half-year ended December 31,2010;

“Annexure D” is the annexure attached hereto that lists the particulars of each of the secured creditors, along with the description of the assets charged in favour of such creditors, of GSM;

“Annexure E” s the annexure attached hereto that contains the summaries of: (i) annual audited accounts of GTSM for the year ended June 30, 2010; and (ii) half-yearly reviewed accounts of GTSM for the halt-year ended December 31, 2010;

“Annexure F” is the annexure attached hereto that lists the particulars of each of the secured creditors, along with the description of the assets charged In favour of such creditors, of GTSM;

“Annexure G” is the annexure attached hereto being a valuation certificate dated 1/4/2011, from M. Yousuf kill Suborn and Co., Chartered Accountants, presenting the calculation of the GSM Swap Ratio (as defined in Article 10.1 below) for the purposes of the GSM Amalgamation (as defined in Article 2.1 (i) below);

“Annexure H” is the annexure attached hereto being a valuation certificate dated 1/4/2011, from M. Yousuf Adil Saleem, and Co., Chartered Accountants, presenting the calculation of the GTSM swap Ratio (as defined in Article 11.1 below) for the purposes of the GTSM Amalgamation (as defined in Article 2.1 (ii) below);

Assets” mean assets, properties and rights of every description and kind (whether present or future, actual or contingent, tangible or intangible) and includes properties held on trust and benefit of securities obtained from Customers, benefits, powers, rights, authorities, privileges, contracts, Government consents, sanctions and authorizations, including all registrations, licenses, permits, categories, entitlements, sanctions, permissions and benefits relating to the business, all trademarks, patents, copyrights, licenses, liberties, secret processes. know-how and confidential information. Without in any way limiting or prejudicing the generality of the foregoing, Assets shall include: (a) all properties, immovable and movable, real, corporeal or incorporeal, in possession or reversion, present or contingent of whatsoever nature and wheresoever situated belonging to a company; (b) all choses-in-action, instruments, decretal amounts, bank and other accounts, cash balances, reserve funds, revenue balances, investments, loans, advances, guarantees, deposits, prepayments, receivables, book debts, trade debts and all other rights and interest in and arising out of such property in the ownerships possession, power or control of a company, whether legal or beneficial, whether within or out of Pakistan, and all books of accounts, registers, records and all other documents of whatever nature relating thereto: (c) all the connections and facilities for telecommunications, electricity and other installations, owned by leased or licensed to a company; and (d) the Contingent Claims and proceeds realized from the Liquidation of the Contingent Claims;

“Clam” means claim, counter-claim, demand or cause of action and includes a Contingent Claim;

“Contract” means any contracts, agreements, deeds, instruments, letters or undertakings of every description, creating any obligations enforceable against the parties, Including any finance agreements;

“Court” means the High Court of Sindh at Karachi;

“Customer” means any person having entered into a transaction, arrangement or other dealing with the respective company;

“Contingent Claims” means any potential Claim that a company may have against any person prior to the Effective Date which may not be disclosed or reflected as part of their Assets on their books or records;

“Creditors of GSM” means the secured creditors of GSM, as particularized in Annexure “D” hereto:

“Creditors of GTSM” means the secured creditors of GTSM, as particularized in Annexure “F” hereto;

“Creditors of PSM” means the secured creditors of PSM, as particularized in Annexure “B” hereto;

Effective Date” is defined in Article 3.1 below;

“Existing’ means existing, outstanding or in force Immediately prior to the Effective Date:

“Liabilities and Obligations’ includes all borrowings, liabilities, duties, commitments and obligations of every description (whether present or future, actual or contingent) arising out of any Contract or otherwise whatsoever and the term “Liabilities” and ‘Obligations” are used interchangeably and/or in conjunction with each other;

“Liquidation” means the release, compromise, satisfaction, settlement or reduction to judgment of any Claim by a competent court of law;

“Ordinance’ means the Companies Ordinance 1984:

Scheme’ means this Scheme of Arrangement in its present form with any modification thereof or addition thereto approved or condition imposed by the Court;

Security” or “Securities” means interest, right or title in and to any and all mortgages or charges (whether legal or equitable), debentures, bill of exchange, promissory note, guarantee, lien, pledge (whether actual or constructive), hypothecation, assignment by way of security, right of set-off, undertaking or other means of securing payment or discharge of any liabilities and obligations;

“Unit A Assets” is defined in Article 6.12 (iv) below;

“Unit B Assets’ is defined in Article 7.12 (iv) below; and

“Unit C Assets” means all the Assets of PSM after the GSM Amalgamation and the GTSM Amalgamation respectively, but excluding the Unit A Assets and the Unit B Assets.

2. OBJECT OF THE SCHEME

2.1. The Principal object of the Scheme is to consecutively effect the following:

(i) Amalgamate GSM with and into PSM by transfer to and vesting In PSM of the whole of the undertaking of GSM and all of Assets and all of Liabilities and Obligations of GSM as of the Effective Date, against allotment of fully paid ordinary shares of PSM to the shareholders of GSM in lieu of the shares of GSM held by them and dissolve GSM without winding-up (hereinafter referred to as the “GSM Amalgamation”); and

(ii) Amalgamate GTSM with and into PSM by transfer to and vesting in PSM of the whole of the undertaking of GTSM and all of Assets and all of Liabilities and Obligations of GISM as of the Effective Date, against allotment of fully paid ordinary shares of PSM to the shareholders of GTSM in lieu of the shares of GTSM held by them and dissolve GTSM without winding-up (hereinafter referred to as the GTSM Amalgamation’).

2.2. It is clarified that although the above steps will take place consecutively, all of the steps will take place on the same date, being the Effective Date.

3. EFFECTIVE DATE

 

3.1. This Scheme shall become operative and bind PSM, GSM and GTSM as soon as a certified copy of an order of the Court under Section 284 of the Ordinance sanctioning the Scheme and making any necessary provisions under Section 287 of the Ordinance have been filed with the Registrar of Companies, Karachi (hereinafter referred to as the “Completion Date”). When the Scheme becomes operative on the Completion Date, the Amalgamation in accordance with the Scheme will be treated as having effect from the start of business on July 1, 2010 or at such other date as may be stated by the Court (hereinafter referred to as the “Effective Date”).

3.2. Accordingly, as from the Effective Date, until the Assets and undertakings of GSM and GTSM are actually transferred to and vested in PSM on the Completion Date, the business of GSM and GTSM will be deemed to have been carried for and on account and for the benefit of PSM. The reserves including un-appropriated profits/losses of GSM and GTSM as at the Effective Date shall constitute and be treated as reserves/losses of a corresponding nature in PSM and shall be accounted for on that basis in the books of account of PSM.

4. CAPITAL

4.1. The authorized share capital of PSM is Rs. 250,000,000/- (Pak Rupees Two Hundred Fifty Million only) divided into 25,000,000 ordinary shares of Rs. 10/- each, out of which 17,352,329 ordinary shares have been fully subscribed and paid-up.

4.2. The authorized share capital of 0GM is Rs. 250,000,000/- (Pak Rupees Two Hundred Fifty Million only) divided into 25,000,000 ordinary shares of Rs. 10/- each, out of which 22,225,038 shares have been fully subscribed and paid-up.

4.3. The authorized share capital of GTSM Is Rs. 150,000,000/- (Pak Rupees One Hundred Fifty Million only) divided into 15,000,000 ordinary shares of Rs. 10/- each, out of which 14,641,000 shares have been fully subscribed and paid-up.

4.4. Consequent upon the Scheme becoming effective, the authorized share capital of PSM of Rs. 260,000,000/-(Pak Rupees Two Hundred Fifty Million only) shall be merged and combined with the authorized share capital of: (a) GSM of Rs. 250,000,000/- (Pak Rupees Two Hundred Fifty Million only); and (b) GTSM of Rs. 150,000,000/- (Pak Rupees One Hundred Fifty Million only). As a result, the total authorized share capital of PSM shall stand increased to Rs. 650,000,000/- (Pak Rupees Six Hundred Fifty Million only) divided into 65,000,000 ordinary shares of the face value of Rs. 10/- each and accordingly the Memorandum and Articles of Association of PSM shall stand amended. Approval of the shareholders of PSM, GSM and GTSM to this Scheme shall also include and constitute an approval by way of special resolution from the shareholders of PSM, to the alteration of the Memorandum and Articles of Association of PSM for the increase of the authorized share capital to Rs. 650,000,000/- (Pak Rupees Six Hundred Fifty Million only) as required in terms of the Ordinance.

5. BOARD OF DIRECTORS

 

5.1. At present, the Board of Directors of PSM consists of the following:

PSM

Mr. Abdul Shakoor

Mr. Tanveer Ahmed

Mr. Naseer Ahmed

Mr. Umer Hayat Gill

Mr. Riaz Ahmed

Ms Rubina Rizvi

Mr. Sohail Maqssod

5.2. At present, the Board of Directors of GSM consists of the following:

GSM

Mr. Abdul Shakoor

Mr. Tanveer Ahmed

Mr. Naseer Ahmed

Mr. Umer Hayat Gill

Mr. Riaz Ahmed

Mr. Aziz Hussain

Mr. Sohail Maqsood

5.3. At present the Board of Directors of GTSM consists of the following:

GTSM

Mr. Abdul Shakoor

Mr. Tanveer Ahmed

Mr. Naseer Ahmed

Mr. Umer Hayat Gill

Mr. Riaz Ahmed

Mr. Sohail Maqsood

Mr. Mohammad Younus

5.4. The directors of PSM are expected to continue as directors after the execution of the Scheme subject to their ceasing to be directors in the meantime due to any reason(s) and appointments being made to the vacancies thus created. The directors of GSM and GTSM will cease to hold office as directors without any right to any compensation for loss of office.

6. GSM AMALGAMATION

6.1. General Description:

(i) At the Effective Date, GSM, as a going concern, shall be amalgamated with and vest in PSM upon the terms and conditions set forth in this Scheme.

(ii) PSM shall be able to carry out at the business of GSM and shall be entitled to all the rights and the benefits thereof.

(iii) GSM shall be dissolved, without winding up, on the date on which the shares of PSM are allotted to the shareholders of GSM in consideration of the GSM Amalgamation or on such later date as the Court by order may prescribe.

6.2. Transfer of the Assets:

Subject to the provisions of Article 6.12 (iv) below, at the Effective Date, all the Assets of GSM shall immediately without any conveyance or transfer and without any further act or deed be vested in and become the undertaking and Assets of PSM, which shall have, hold and enjoy the same in its own right as fully as the same were possessed, held and enjoyed by GSM prior to the GSM Amalgamation but transfer of Assets shall be subject to all mortgages, charges or other encumbrances subsisting thereon.

6.3. Transfer of Liabilities and Obligations:

At the Effective Date, all the Liabilities and Obligations of GSM shall immediately and without any further act or deed be assumed by and become the Liabilities and Obligations of PSM, which shall pay, undertake, satisfy, discharge and perform, when due, all of the Liabilities and Obligations.

6.4. PSM’s Right to Execute Deeds:

Deeds, assignments or similar instruments to evidence the aforesaid transfer of Assets and/or assumption of Liabilities may, if required, at any time be executed by officers of PSM authorized in this regard.

6.5. References to Assets and Liabilities and Obligations:

Any reference in this Scheme to Assets or Liabilities and Obligations of GSM s a reference to Assets or Liabilities and Obligations to which GSM is for the time being entitled or subject to (whether beneficially or n any fiduciary capacity) immediately preceding the Effective Date, wherever such Assets or Liabilities are situated or arise and whether or not capable of being transferred or assigned to or by GSM under any applicable law or instrument.

6.6. Assets held in Trust, etc:

Any Asset vested In GSM which immediately before the Effective Date was held by GSM as trustee or custodian In the form of any trust deed, settlement, covenant, agreement or will or as executor of the will, or administrator of the estate of a deceased person or as judicial trustee appointed by order of any court, or in any other fiduciary capacity, shall, on and from the Effective Date, be held by PSM in the same capacity upon the trusts, subject to the powers, provisions and Liabilities applicable thereto.

6.7. Contracts:

Every Contract to which GSM is a party shall have effect on and from the Effective Date as if:

(i) PSM had been a party thereto instead of GSM; and

(ii) For any reference (however worded and whether express or implied) to GSM therein shall stand substituted, as respects anything to be done on or after the Effective Date, to a reference to PSM.

6.8. Bank Accounts:

Any account(s) maintained by GSM with any Bank or Financial Institution shall, at the Effective Date, become account(s) between PSM and such Bank or Financial Institution, subject to the same conditions and Incidents as therefore, provided that nothing herein shall affect nay right of PSM to vary the conditions or incidents subject o which any account is kept.

6.9. Instructions:

Any existing instruction, order, direction, mandate, power of attorney, authority, undertaking or consent given to GSM in writing (whether or not in relation to an account) shall have effect, on and from the Effective Date, as if given to PSM.

6.10. Negotiable Instruments:

Any negotiable instrument or order for payment of money drawn on or given to, or accepted or endorsed by, GSM, or payable at any place of business of GSM, whether so drawn, given, accepted or endorsed before, on or after the Effective Date, shall have the same effect on and from the Effective Date, as if it had been drawn on, or given to, or accepted or endorsed by PSM or were payable at the same place of business of PSM.

6.11. Custody of Documents;

The custody of any document, record or goods held by GSM as bailee and duly recorded in their books that pass to GSM under any Contract of bailment relating to any such document, record or goods shall on that day become rights and obligations of PSM.

6.12. Securities:

(i) Any Security held immediately before the Effective Date by GSM or by a nominee or agent of or trustee for GSM, as security for the payment or discharge of any liability and obligation of a customer shall, an and from the Effective Date, be held by, or as the case may require, by that nominee, agent or trustee for PSM and be available to PSM (whether for its own benefit or, as the case may be, for the benefit of any other person) as security for the payment or discharge of that liability and obligation.

 

(ii) In relation to any Security vested in GSM in accordance with provisions of this Scheme and any liabilities and obligations thereby secured, PSM shall be entitled to the rights and priorities to which GCM would have been entitled if they had continued to hold the Security.

(iii) Any Security referred to in the foregoing provisions of this paragraph which extends to future advances or liabilities shall, on and from the Effective Date, be available to PSM (whether for its own benefit or as the case may be, for the benefit of any other person) as security for the payment or discharge of future advances and future liabilities to the same extent and in the same manner In all respects as future advances by or liabilities to, GSM or, as the case may be PSM were secured thereby immediately before that time.

(iv) Subject to the provisions of this Article and Articles 6.12 (v), (vi) and (vii) below, all Securities granted / created by GSM in favour of its Creditors will continue to remain operative and effective as Securities granted and created by PSM in favour of its own Creditors. To the extent that GSM has granted any pari passu charge over the Assets or any class of Assets of GSM in favour of the Creditors of GSM, upon the GSM Amalgamation, the same shall be treated as a pari passu charge over those specific Assets of GSM or the relevant class of Assets, as the case may be (the “unit A Assets”). It is clarified that pari passu charge holders of fixed assets of GSM will continue to have a charge over those speciflc fixed assets of GSM after the GSM Amalgamation, Similarly, the pari passu charge holders having charge over the current assets of GSM will continue to have a charge over those specific current assets of GSM after the GSM Amalgamation. Any charge or security interest granted to a Creditor by GSM over specific Unit A Assets will continue to remain restricted to such specific Unit A Assets upon the GSM Amalgamation.

(v) It is hereby clarified that after the GSM Amalgamation, the Unit A Assets will remain separate and distinct from, and shall not be treated as, the Unit B Assets and the Unit C Assets respectively.

(vi) It is hereby further clarified that upon the GSM Amalgamation, the Creditors of GSM holding charges over the Unit A Assets shall continue to hold charges over the said Unit A Assets and shall be separate and distinct from, and shall not be treated as, the Creditors holding charges over the Unit B Assets and the Unit C Assets respectively.

(vii) After the GSM Amalgamation, the Creditors holding charges over the Unit A Assets shall continue to maintain their ranking status Inter se as that maintained immediately prior to the GSM Amalgamation.

6.13. Legal Proceedings:

Where by virtue of this Scheme any right, Claim or Liability of GSM, becomes a right, Claim or liability of PSM on and from the Effective Date, PSM shall have the same rights, claims, powers and remedies (and in particular the same rights, Claims and powers as to taking or resisting legal proceedings or making or resisting applications to any authority) for ascertaining, perfecting or enforcing that right, Claim or Liability as if it had at all time been a right, Claim or Liability of PSM, and any legal proceedings or application to any authority existing or pending immediately before the Effective Date by or against GSM may be continued by or against PSM.

6.14. Judgments:

Any Judgment or award obtained by or against GSM and not fully satisfied before the Effective Date shall at that time, to the extent to which it is enforceable by or against GSM, become enforceable by or against PSM.

6.15. Evidence:

All books and other documents which would, before the Effective Date, have been evidenced in respect of any matter, for or against GSM shall be admissible in evidence in respect of the same matter for or against PSM.

6.16. Employees;

(i) All the employees of the GSM in service on the date immediately preceding the Effective Date, shall become the employees of PSM on such date without any break or interruption in service and upon terms and conditions not less favorable than those subsisting in GSM on the said date.

(ii) For Provident Fund, Gratuity Fund, Superannuation Fund and any other special fund or trusts created or existing for the benefit of the employees of GSM, if any, upon the Scheme becoming finally effective, PSM shall stand substituted for GSM for all purposes arid intents, whatsoever, relating to the administration or operation of such schemes or funds or in relation to the obligation to make contributions to the said funds in accordance with the provisions of such funds, It is the intent that all the rights, duties, powers and obligations of GSM in relation to such funds shall become those of PSM. It is clarified that the services of the employees of GSM will be treated as having been continued for the purpose of the aforesaid funds or provisions.

6.17 Clarification;

The provisions contained in Articles 6.4 to 6.16 above are without prejudice to the generality of any other provisions in this Scheme, but subject to any provisions in this Scheme to the contrary effect.

7. GTSM AMALGAMATION

7.1. General Description:

(i) At the Effective Date, GYSM as a going concern, shall be amalgamated with and vest in PSM upon the terms and conditions set forth in this Scheme.

(ii) PSM shall be able to carry out all the business of 01GM and shall be entitled to all the rights and the benefits thereof.

(iii), GTSM shall be dissolved, without winding up, on the date on which the shares of PSM are allotted to the shareholders of GTSM in consideration of the GTSM Amalgamation or on such later date as the Court by order may prescribe.

7.2. Transfer of the Assets;

Subject to the provisions of Article 7.12 (iv) below, at the Effective Date, all the Assets of GTSM shall immediately without any conveyance or transfer and without any further act or deed be vested in and become the undertaking and Assets of PSM, which shall have, hold and enjoy the same in its own right as fully as the same wore possessed, held and enjoyed by GTSM prior to the GTSM Amalgamation but transfer of Assets shall be subject to all mortgages, charges or other encumbrances subsisting thereon.

7.3. Transfer of Liabilities and Obligations:

At the Effective Date, all the Liabilities and Obligations of GTSM shall immediately and without any further actor deed be assumed by and become the Liabilities and Obligations of PSM, which shall pay, undertake, satisfy, discharge and perform, when due, all of the Liabilities and Obligations.

7.4. PSM’s Right to Execute Deeds:

Deeds; assignments or similar Instruments to evidence the aforesaid transfer of Assets and/or assumption of Liabilities may, if required, at any time be executed by officers of PSM authorized in this regard.

7.5. References to Assets and Liabilities and Obligations:

Any reference in this Scheme to Assets or Liabilities and Obligations of GTSM is a reference to Assets or Liabilities and Obligations to which GTSM is for the time being entitled or subject to (whether beneficially or in any fiduciary capacity) immediately preceding the Effective Date, wherever such Assets or Liabilities are situated or arise and whether or not capable of being transferred or assigned to or by GTSM under any applicable law or instrument.

7.6. Assets held in Trust, etc:

Any Asset vested in GTSM which Immediately before the Effective Date was held by GTSM as trustee or custodian in the form of any trust deed, settlement, covenant, agreements will or as executor of the will, or administrator of the estate of a deceased person or as judicial trustee appointed by order of any court, or in any other fiduciary capacity, shall, on and from the Effective Date, be held by PSM in the same capacity upon the trusts, subject to the powers, provisions and Liabilities applicable thereto.

7.7. Contracts:

Every Contract to which GTSM is a party shall have effect on and from the Effective Date as if:

(1) PSM had been a party thereto instead of GTSM; and

(ii) For any reference (however worded and whether express or implied) to GTSM therein shall stand substituted, as respects anything to be done on or after the Effective Date, to a reference to PSM.

7.8. Bank Accounts;

Any account(s) maintained by GTSM with any Bank or Financial Institution shall, at the Effective Date become account(s) between PSM and such Bank or Financial Institution, subject to the same conditions and incidents as therefore; provided that nothing herein shall affect any right of PSM to vary the conditions or incidents subject to which any account is kept.

7.9. Instructions

Any existing instruction, order, direction, mandate, power of attorney, authority, undertaking or consent given to GTSM in writing (whether or not in relation to an account) shall have effect, on and from the Effective Date, as if given to PSM.

7.10. Negotiable Instruments:

Any negotiable instrument or order for payment of money drawn on or given to, or accepted or endorsed by, GTSM, or payable at any place of business of GTSM, whether so drawn, given, accepted or endorsed before, on or after the Effective Date, shall have the same effect on and from the Effective Date, as if it had been drawn on, or given to, or accepted or endorsed by PSM. or were payable at the same place of business of PSM.

7.11. Custody of Documents:

The custody of any document, record or goods held by GTSM as bailee and duly recorded in their books that pass to GTSM under any Contract of bailment relating to any auth document, record or goods shall on that day become rights and obligations of PSM.

7.12. Securities:

(i) Any Security held immediately before the Effective Date by GTSM or by a nominee or agent of or trustee for GTSM, as security for the payment or discharge of any liability and obligation of a customer shall, on and from the Effective Date, be hold by, or as the case may require, by that nominee, agent or trustee for POM and be available to PSM (whether for its own benefit or, as the case may be for the benefit of any other person) as security for the payment or discharge of that liability and obligation.

(ii) In relation to any Security vested in GTSM in accordance with provisions of this Scheme and any liabilities and obligations thereby secured, PSM shall be entitled to the rights and priorities to which GTSM would have been entitled if they had continued to hold the Security.

(iii) Any Security referred to in the foregoing provisions of this paragraph which extends to future advances or liabilities shall, on and from the Effective Date be available to PSM (whether for its own benefit or as the case may be, for the benefit of any other person) as security for the payment or discharge of future advances and future liabilities to the same extent and in the same manner In all respects as future advances by or liabilities to. GTSM or, as the case may be, PSM were secured thereby immediately before that time.

(iv) Subject to the provisions of this Article and Articles 7.12 (v), (vi) and (vii) below, all Securities granted I created by GTSM in favour of Its Creditors will continue to remain operative and effective as Securities granted and created by PSM in favour of its own Creditors. To the extent that GTSM has granted any pari passu charge over the Assets or any class of Assets of GTSM in favour of the Creditors of GTSM upon the GTSM Amalgamation, the same shall be treated as a pan passu charge over those specific Assets of GTSM or the relevant class of Assets, as the case may be (the ~Unit B Assets”). It is clarified that pan passu charge holders of fixed assets of GTSM will continue to have a charge over those specific fixed assets of GTSM after the GTSM Amalgamation. Similarly, the pan passu charge holders having charge over the current assets of GTSM will continue to have a charge over those specific current assets of GTSM after the GTSM Amalgamation. Any charge or security interest granted to a Creditor by GISM over specific Unit B Assets will continue to remain restricted to such specific Unit B Assets upon the GTSM Amalgamation.

(v) It is hereby clarified that after the GTSM Amalgamation, the Unit B Assets will remain separate and distinct from, and shall not be treated as, the Unit A Assets and the Unit C Assets respectively.

(vi) It is hereby further clarified that upon the GTSM Amalgamation, the Creditors of GTSM holding charges over the Unit B Assets shall continue to hold charges over the said Unit B Assets and shall be separate and distinct from and shall not be treated as, the Creditors holding charges over the Unit A Assets and the Unit C Assets respectively.

(vii) After the GTSM Amalgamation, the Creditors holding charges over the Unit B Assets shall continue to maintain their ranking status inter se as that maintained immediately prior to the GTSM Amalgamation.

7.13. Legal Proceedings:

Where by virtue of this Scheme any right, Claim or Liability of GTSM, becomes a right, Claim or Liability of PSM on and from the Effective Date, PSM shall have the same rights claims, powers and remedies (and in particular the same rights, Claims and powers as to taking or resisting legal proceedings or making or resisting applications to any authority) for ascertaining, perfecting or enforcing that right, Claim or Liability as if it had at all times been a right, Claim or Liability of PSM, and any legal proceedings or application to any authority existing or pending immediately before the Effective Date by or against GTSM may be continued by or against PSM.

7.14. Judgments:

Any judgment or award obtained by or against GTSM and not fully satisfied before the Effective Date shall at that time, to the extent to which it is enforceable by or against GTSM, become enforceable by or against PSM.

7.15. Evidence:

All books and other documents which would, before the Effective Date, have been evidenced in respect of any matter, for or against GTSM shall be admissible in evidence in respect of the same matter for or against PSM.

7.16. Employees:

(1) All the employees of the GTSM in service on the date immediately preceding the Effective Date, shall become the employees of PSM on such date without any break or interruption in service and upon terms and conditions not less favorable than those subsisting in GTSM on the said date.

(2) For Provident Fund, Gratuity Fund, Superannuation Fund and any other special fund or trusts created or existing for the benefit of the employees of GTSM, if any, upon the Scheme becoming finally effective. PSM shall stand substituted for GTSM for all purposes and intents, whatsoever, relating to the administration or operation of such schemes or funds or in relation to the obligation to make contributions to the said funds in accordance with the provisions of such funds. It is the intent that all the rights, duties, powers and obligations of GTSM in relation to such funds shall become those of PSM. It is clarified that the services of the employees of GTSM will be treated as having been continued for the purpose of the aforesaid funds or provisions.

7.17. Clarification:

The provisions contained in Articles 7.4 to 7.16 above are without prejudice to the generality of any other provisions in this Scheme, but subject to any provisions in this Scheme to the contrary effect.

8. Certain Obligations and Representations

8.1. Upon the GSM Amalgamation and the GTSM Amalgamation, PSM shall take all necessary and expedient steps to properly and efficiently manage its entire business and affairs.

8.2. Upon the GSM Amalgamation and the GTSM Amalgamation, PSM shall operate and promote its entire business and affairs in the normal course.

8.3. As of the Effective Date, PSM shall undertake, pay, satisfy, discharge, perform and fulfill the Liabilities and Obligations, Contracts, engagements and commitments whatsoever of GSM and GTSM.

9. The Scheme’s Effect

9.1. The provisions of this Scheme shall be effective and binding by operation of law and shall become effective in terms of Article 3 above.

9.2. The execution of this Scheme shall not: (i) constitute any assignment, transfer, devolution, conveyance, alienation, parting with possession. or other disposition under any law for the time being in force; (ii) give rise to any forfeiture; (iii) invalidate or discharge any Contract or Security; and (iv) give rise to any right of first refusal or pre-emptive right that any person may have in respect of any investment made by such person in PSM.

9.3. As of the Effective Date, the terms of this Scheme shall be binding on PSM, GSM and GTSM and also on all the shareholders of PSM, GSM and GTSM and the Customers and the Creditors of each of PSM, GSM and GTSM and on any other person having any right or liability in relation to either of them.

10. Consideration for the GSM Amalgamation

10.1. As consideration for the GSM Amalgamation, PSM shall issue at par and allot 1 ordinary share of PSM credited as fully paid up for every 1.1981 shares of the face value of Rs. 10/-each of GSM to persons who on a day to be fixed by the directors of PSM after the Effective Date, are registered holders of the ordinary shares in GSM on the basis of swap ratio of 1 share of PSM for every 1,1981 shares of GSM held (the “GSM Swap Ratio”) and all entitlement of the registered holders of the ordinary shares of GSM shall be determined in the proportion aforesaid. Fractional shares shall not be issued. All fractions less than a share shall be consolidated into whole shares which shall be disposed by PSM as determined by the Board of Directors of PSM.

10.2. The GSM Swap Ratio has been determined on the basis of the annual audited accounts of PSM and GSM for the year ended June 30, 2010 and the recommendations of M. Yousuf Adil and Co., Chartered Accountants in terms of their valuation certificate dated 1/4/2011.

10.3. At least seven (7) days notice shall be given to the shareholders of GSM in the manner provided in the respective Articles of Association of GSM, of the date fixed by the directors of PSM by reference to which the registered holders of the ordinary shares of GSM are to be determined for entitlement to ordinary shares of PSM. Such notice shall also specify the date by which the shareholders of GSM holding share certificate of GSM respectively shall deliver to PSM for cancellation all share certificates representing ordinary shares in GSM held by them and such share certificates shall be delivered to PSM on or before that date.

10.4. The allotment of the ordinary shares of PSM shall be made by PSM within thirty (30) days from the date so notified. The share certificates for such shares shall be made ready for delivery as soon as practicable thereafter and notices of their readiness for their delivery shall be given to the shareholders of GSM in the manner provided in their respective Articles of Association. Share certificates not collected within the time specified in any such notice shall be sent by post in prepaid envelopes addressed to the persons entitled thereto at their respective registered addresses. In the case of joint shareholders, share certificates may be delivered to or may be sent to the address of that one of the joint holders whose name appears first in respect of such joint holding. PSM shall not be responsible for loss of the share certificate in such transmission.

10.5. The ordinary shares of PSM issued and allotted to the share holders of GSM shall, in all respect, rank pari passu with the existing ordinary shares of PSM and shall be entitled to all dividends declared after the Effective Date.

10.6. Upon the allotment of ordinary shares of PSM to the shareholders of GSM in the manner aforesaid, all share certificates representing the ordinary shares of GSM shall stand cancelled.

10.7. Subject to an order of the Court, GSM shall, without winding up, stand dissolved from the date on which all the ordinary shares of PSM to be allotted by PSM as above to the share holders of GSM have been so allotted.

11. Consideration for the GSM Amalgamation

11.1. As consideration for the GTSM Amalgamation, PSM shall issue at par and allot 1 ordinary share of PSM credited as fully paid up for every 1.7677 shares of the face value of Rs. 10/- each of GTSM to persons who on a day to be fixed by the directors of PSM after the Effective Date, are registered holders of the ordinary shares in GTSM on the basis of swap ratio of 1 share of PSM for every 1,7677 shares of GTSM held (the “GTSM Swap Ratio”) and all entitlement of the registered holders of the ordinary shares of GTSM shall be determined in the proportion aforesaid. Fractional shares shall not be issued. All fractions less than a share shall be consolidated into whole shores which shall be disposed by PSM as determined by the Board of Directors of PSM.

11.2. The GTSM Swap Ratio has been determined on the basis of the annual audited accounts of PSM and GTSM for the year ended June 30, 2010 and the recommendations of M. Yousuf Adil and Co., Chartered Accountants in terms of their valuation certificate dated 1/4/2011.

11.3. At least seven (7) days notice shall be given to the shareholders of GTSM in the manner provided in the respective Articles of Association of GTSM of the date fixed by the directors of PSM by reference to which the registered holders of the ordinary shares of GTSM are to be determined for entitlement to ordinary shares of PSM. Such notice shall also specify the date by which the shareholders of GTSM holding share certificate of GTSM respectively shall deliver to PSM for cancellation all share certificates representing ordinary shares in GTSM held by them and such share certificates shall be delivered to PSM on or before that date.

11.4. The allotment of the ordinary shares of PSM shall be made by PSM within thirty (30) days from the date so notified. The share certificates for such shares shall be made ready for delivery as soon as practicable thereafter and notices of their readiness for their delivery shall be given to the shareholders of GTSM in the manner provided in their respective Articles of Association. Share certificates not collected within the time specified in any such notice shall be sent by post in prepaid envelopes addressed to the persons entitled thereto at their respective registered addresses. In the case of joint shareholders, share certificates may be delivered to or may be sent to the address of that one of the joint holders whose name appears first in respect of such joint holding. PSM shall not be responsible for loss of the share certificate in such transmission.

11.5. The ordinary shares of PSM issued and allotted to the share holders of GTSM shall, in all respect, rank pari passu with the existing ordinary shares of PSM and shall be entitled to all dividends declared after the Effective Date.

11.6. Upon the allotment of ordinary shares of PSM to the shareholders of GTSM in the manner aforesaid, all share certificates representing the ordinary shares of GTSM shall stand cancelled.

11.7. Subject to an order of the Court. GTSM shall, without winding up, stand dissolved from the date on which all the ordinary shares of PSM to be allotted by PSM as above to the share holders of GTSM have been so allotted.

12. General

12.1. Modifications by the High Court:

This Scheme shall be subject to such modification of conditions, as the Court may deem expedient to impose. The Board of Directors of PSM, GSM and GTSM may consent to any modifications or additions to this Scheme or to any conditions which the Court may think fit. In case of any difficulty in implementation of any aspect of this Scheme clarifications directions and for approval may be obtained from the Court.

12.2. Headings:

Article headings are not to be considered part of this Scheme, but are solely for convenience of reference, and shall not affect the meaning or interpretation of this Scheme or any of its provisions.

12.3. Severability:

If any provision of this Scheme is found to be unlawful and unenforceable by a competent court of law, then to the fullest extent possible, all of the remaining provisions of the Scheme shall remain in full force and effect.

12.4. Costs and expenses:

All costs, charges and expenses of PSM, GSM and GTSM in respect of the preparation of this Scheme and carrying the same into effect shall be borne by PSM, GSM and GTSM equally.

For more information, contact:

Karachi Stock Exchange

Tel: +9221 111 001 122

Fax: +9221 3241 0825, +9221 3241 5136

Email: info@kse.com.pk

Web: www.kse.com.pk

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