Prospectus PART II !

PART II

2. SHARE CAPITAL AND RELEVENT INFORMATION

2.1 SHARE CAPITAL

AUTHORIZED		(RUPEES)
100,000,000 ordinary shares of Rs.10 each		1,000,000,000
ISSUED, SUBSCRIBED AND PAID UPs
Ordinary shares of Rs.10 each issued to:

SPONSORS

NO. OF ORDINARY SHARES

TOTAL VALUE (RUPEES)

Foreign
BCHIL Southern Company Limited P.O. 309, Grand Cayman Cayman Islands, British West Indies	40,178,346	401,783,460

Local
Sponsors, Directors & Associates	7,346,986	73,469,860
Sub total:	47,525,332	475,253,320

INSTITUTIONS

Foreign
Asea Brown Boveri Kraftwerke A. G. Kallstadter Strasse 1 P. O. Box 100351 D-6800 Mannheim 31 Germany	6,859,140	68,591,400

SEP Holdings Corp. Cayman Islands Brithih West Indies	7 ,63,121	76,301,210

Local
Cresent Investment Bank Limited (and Nominees) 6th Floor, SIDCO Avenue Centre Maulana Din Mohammad Rafi Road Karachi - 74200 Pakistan	15,505,020	155,050,200
First Capital Securities Corporation Ltd (and Nominees) 103-C/II, Gulberg III Lahore - 54660 Pakistan	5,168,400	51,684,000
Sub total:	35,162,681	351,626,810
Total Before Public Issue: .	82,688,013 =========	826,880,130 ==========

PRESENT ISSUE

Now offered at par for subscription in cash in full on application as follows:
GENERAL PUBLIC	10,480,000	104,800,000
EMPLOYEES	20,000	200,000
	10,500,000	105,000,000

TOTAL AFTER PRESENT ISSUE:
.

93,188,013
=========

931,880,130
==========

2.2	OPENING AND CLOSING OF SUBSCRIPTION LIST
	THE SUBSCRIPTION LIST WILL OPEN INSHA-ALLAH AT THE COMMENCEMENT OF BANKING HOURS ON MAY 21,1996 AND WILL CLOSE ON THE SAME DAY AT THE CLOSE OF BANKING HOURS.
2.3	MINIMUM AMOUNT OF APPLICATION
	Applications for shares must be for a minimum of 500 (five hundred) shares or exact multiple thereof. Application for shares below the face value of Rs. 5,000/- shall not be entertained. Fictitious and multiple applications are prohibited and such application money shall be liable to confiscation under Section 18-A of the Securities and Exchange Ordinance, 1969.
2.4	PREFERENTIAL ALLOCATIONS TO SUBSCRIBE
	Preferential allocation has been granted to the Employees to subscribe for 20,000 ordinary shares of Rs.1 0 each against full payment in cash at Rs.1 0 per share. This preferential allocation may be exercised during the period the subscription list is open for purposes of the present public issue of shares. No consideration has been given or promised to the company for the grant of this preferential allocation.
2.5	BASIS OF ALLOTMENT

(a)	Any part of the shares hereby offered to the Employees and not subscribed by
	them shall be offered to the general public.
(b)	Applications for shares below the total value of Rs. 5,000 shall not be entertained.
	After deducting shares subscribed by the Employees of the Company, the basis of allotment of shares of the general public shall be as follows:

(i)	If the shares to be issued to the general public is sufficient for the purpose, all
	applications shall be accommodated initially for a minimum allotment of shares of the face value of Rs. 5,000/-. If the capital applied for by such applicants is in excess of the capital offered to the general public, the distribution shall be made by balloting in the presence of a representative of the Stock Exchange where the shares are to be quoted.
(ii)	Any capital left unsubscribed after allotment as aforesaid, shall be allotted on a
	pro rata basis to applicants who apply for shares exceeding the total value of Rs.5,000/-.

2.6	REFUND OF MONEY TO UNSUCCESSFUL APPLICANTS.
	The Company shall take a decision within 10 days of the closure of subscription list as to what applications have been accepted or are successful and refund the money in case of unaccented or unsuccessful applications within 10 days of such decision as required under the provisions of Section 71 of the Companies Ordinance, 1984. As per sub-section (2) of Section 71 of the said Ordinance, if the refund required by sub-section (1) of Section 71 of the Ordinance, is not made within the time specified therein, the Directors of the company shall be jointly and severally liable to repay that money with surcharge at the rate of one and a half percent, for every month or part thereof from the expiration of the fifteenth day and, in addition, to a fine not exceeding rupees five thousand and in case of continuing offense to a further fine not exceeding one hundred Rupees for every day after the said fifteenth day on which the default continues.
2.7	MINIMUM SUBSCRIPTION FOR ALLOTMENT
	The minimum subscription on which the Directors shall proceed to allot shares is the full amount of the present issue of Rs.105,000,000 which in the opinion of the directors, must be raised in order to provide capital required for the company.
2.8	ISSUE OF SHARE CERTIFICATES
	The company shall dispatch share certificates to the allot tees within 30 days from the date of allotment through the bankers to the issue as per listing regulations of the Stock Exchange. If the company makes a default in compliance with the requirements of listing regulations, it shall pay to the stock exchange a penalty of Rs. 500/- per day during the period in which the default continues. The stock exchange may also notify the fact of such default and the name of the company by notice and also by publication in the ready-board quotation.
2.9	TRANSFER OF SHARES
	The Directors of the company shall not refuse to transfer any share unless the transfer deed is defective or invalid. Provided that the company shall within 30 days from the date on which the instrument of transfer was lodged with it, notify the defect of invalidity to the transferee who shall, after the removal of such defects or invalidity, be entitled to re-Iodge the transfer deed with the company.
2.10	PRINCIPAL PURPOSE FOR THE USE OF SUBSCRIPTION MONEY
	The net proceeds of the issue, will be used by the Company for capital expenditure and to augment the working capital requirements of the company.
2.11	SHARES ISSUED DURING PRECEDING TWO YEARS
	During the preceding two years the company has issued, for cash a total of 82,688,013 fully paid ordinary shares of Rs.10 per share, for a total value of Rs.826,880,130.
2.12	INTEREST OF SHAREHOLDERS
	The authorised share capital of the company is Rs. 1,000,000,000 divided into 100,000,000 ordinary shares of Rs. 10 each of which 82,688,013 shares of the aggregate face value of Rs.826,880,130 have been issued as fully paid ordinary shares . None of the shareholders of the Company has any special or other interest in the property or profits of the Company other than as ordinary shareholders in the Company. M/s Crescent Investment Bank Limited and First Capital Securities Corporation Limited are the shareholders of the company and are interested in underwriting commission as given in Clause 3.3 of this prospectus.
2.13	DIVIDEND POLICY
	The rights in respect of capital and dividend attached to each share would be the same. The company in its general meeting may declare dividend but no dividend shall exceed the amount recommended by the directors. The directors may from time to time pay to the members such interim dividend as appear to the directors to be justified by the profits of the company. No dividend shall be paid by the company otherwise than out of profits of the company of the year or any other undistributed profits. No unpaid dividend shall bear interest against the company. No dividend shall be declared or paid by a company for any financial year out of the profits of the company made from the sale or disposal of any immovable property or asset of a capital nature comprised in the undertaking.
2.14	ELIGIBILITY FOR DIVIDEND
	The Company shall, in this matter, follow the provisions of the Section 92(2) of the Companies Ordinance, 1984, which reads as under: "92(2) : The new shares issued by a Company shall rank pari passu with the existing shares in all matters including the right to such bonus or right issue and dividend as may be declared by the Company subsequent to the date of issue of such shares."
2.15	DEDUCTION OF ZAKAT
	Income distribution shall be subject to deduction of Zakat at source at the face value of the share under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).
2.16	WITHHOLDING TAX ON DIVIDEND
	Profit distribution to shareholders not a company will be subject to withholding tax @ 10% under Section 50 (6A) of the Income Tax Ordinance, 1979, and in terms of provision of Section 80-B of the said Ordinance, such deduction at source shall be deemed to be full and final liability in respect of such profits. However, under the Private Power Policy, the rate of withholding tax is 7.5%. Profit distribution to companies shall be taxable at inter corporate tax rate for dividend specified in Para-D of Part-V of the First Schedule to the said Ordinance.
2.17	EXEMPTION FROM GOVERNMENT TAXES
	i.	Exemption from Income Tax
		Under Clause (176) of the Second Schedule to the Income Tax Ordinance, 1979 the profits and gains derived by the Company are exempt from Income Tax.
	ii.	Exemption from Custom Duty and Sales Tax
		SRO. 279(1)/94 dated April 02, 1994 SRO. 410(1)/95 dated May 23, 1995, SRO. 416(1)/95 dated May 28, 1995, SRO. 584(1)/95 dated July 1, 1995 and SRO. 585(1)/95 dated July 1, 1995 exempt the Company from all import duties including Customs Duty, Sales Tax, Flood Relief Surcharge, etc., on the import of machinery, equipment and construction materials whether or not manufactured locally for setting up Power Generation Project under the Private Power Package of Incentives by Government of Pakistan. Some of these concessions have been withdrawn from those projects (captive power projects) who have not signed Implementation Agreements with Government of Pakistan. Since Southern Electric Power Company Limited (SEPCOL) has already signed the Implementation Agreement with the Government of Pakistan, such exemptions are available for its 117 MW Project.
	iii.	Exemption from Wealth Tax
		By virtue of clause (xiii) sub-section (1) of section 5 of the Wealth-tax Act, 1963, investment not exceeding Rupees one hundred thousand (Rs.1 00,000) in stocks or shares of a public company engaged in an industrial undertaking acquired otherwise than by purchase or transfer from a previous holder of such stocks or shares, is exempt from Wealth Tax for a period of two years commencing from the year in which the stocks or shares are issued for public subscription.
	iv.	Exemption from Turnover Tax
		By virtue of SRO.411 (I)/95 dated May 23, 1995 Southern Electric Power Company Limited (SEPCOL) being a power generation company is exempted from Turnover Tax of 0.5 percent.