HISTORY

ABN AMRO was established in 1948 and was the first foreign bank to be
granted a license by the Government of Pakistan. With total assets of over
PKR 66.5 Billion, equity of PKR 4.5 Billion, and deposits of almost PKR 52
Billion, ABN AMRO is placed and well positioned as one of the larger
foreign banks in Pakistan. We have posted pre-tax profits of nearly PKR 2.2
Billion (December 31, 2005), and the ROE of almost 51% is amongst the
highest in its peer group. Over the last four years, ABN AMRO has
significantly enhanced its profile in Pakistan, and is comfortably ranked
amongst the top 3 foreign banks in the domestic market. The bank has
currently more than 10 branches all over Pakistan, including cities like
Karachi, Lahore, Islamabad, Faisalabad and Multan.

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 BANKING COMPANIES ORDAINACE ACT 1962
& BANKING COMPANIES RULES 1963

The banks in Pakistan are formed under the following act. It comprises about 95 sections
with subsections. Section 95 is stand repealed. The sections are divided as such:

Sections 1-6 contain general bank definitions and are generic.

Sections 7- 42 discuss business of the banking companies.
Sections 43A 43F discus transaction of banking business illegally by law
Sections 44-59 discuss suspension of business and winding up of banking
companies
Sections 60-82 contain special amendment
Sections 82A-82G contain Banking Mohstasib
Sections 83-95 contain miscellaneous sections like penalties, change of name by a
banking company, alteration of memorandum by a banking company

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 GUIDELINES FOR OPENING A NEW BANK BRANCH

Annexure-III to IBD Circular No. 02 of 2004

With the objective of promoting Islamic banking in Pakistan, the following Guidelines
for opening of Stand-alone branches for Banking by existing commercial banks have
been prepared by State Bank of Pakistan. The banks providing compliant products and
services are required to apply to the State Bank for issuance of a license under these
Guidelines.

LICENSING REQUIREMENTS FOR BANKING BRANCH (ES)

ELIGIBILITY CRITERIA
The eligibility of a bank to open banking branch(as) shall be considered by the State
Bank keeping in view, among others, the financial strength of the bank as evident from
its capital base(net capital free of actual and potential losses), adequacy of its capital
structure, record of earning capabilities, future earning prospects of the bank, managerial
capabilities, bank’s liquidity position, track record of the bank’s adherence to prudential
regulations, credit discipline, quality of customer services and the convenience and
The needs of the population of the area to be served by the proposed branch. In addition,
the following considerations will also be taken in the grant of the license:-
Banks having CAMELS rating of 1, 2 and 3 in the last ON-SITE inspection shall
be eligible for opening Banking Branches.
There should not be major adverse inspection findings against the bank.
The bank shall identify experienced and trained key staff to handle the IBB
operations.
PHYSICAL SET-UP
Every licensed branch of a bank shall carry a name, and shall invariably be required to
Prominently display the name of the branch as stipulated in the license.
Financing products pertaining to IBB operations. All documents (including ledgers,
registers, pay-in-slips, cheques, receipts, passbooks, etc.)

3
Used in the IBD and IBB(s) shall be appropriately marked, so as to easily distinguish the
documents pertaining to commercial banking. In order to efficiently utilize the existing
branch network, the bank may authorize some of its branches to sell the Islamic banking
deposit schemes. However, in such cases proper systems and control should be in place to
ensure that the fund transfer takes place on the same day to/from the IBB. The authorized
branches shall not, in any manner whatsoever, receive/pay interest on such services. The
authorized branches may charge a reasonable fee/commission on sale of such deposit
schemes under a policy to be approved by the Board of Directors or in case of branches
of foreign banks, their Head
PROCESSING FEE
A processing fee @ Rs. 25,000/- per branch applied in the Proposal/Plan has been fixed.
The banks while submitting the Proposal/Plan shall invariably enclose a cheque in the
name of State Bank of Pakistan as processing fee. The Proposal/Plan without the amount
of processing fee shall not be entertained. The processing fee will be non-refundable.

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 BRANCH LISENCING RULES AND POLICIES BY STATE
BANK PAKISTAN

The Branch Licensing Policy applicable with effect from 1st April 2001 to all scheduled
banks including branches of foreign banks operating within the territory of Pakistan has
been updated. The term bank wherever used hereunder shall mean and include banks
incorporated in Pakistan as well as all branches of foreign banks operating in Pakistan
under Section 27 of Banking Companies Ordinance, 1962.

ANUUAL BRANCH EXPANSION PLAN

Each bank has to submit to State Bank of Pakistan (SBP) for approval an Annual Branch
Expansion Plan (ABEP) at least 30 days before the commencement of each calendar year
(January-December) during which it plans to open branches. The plan indicates the
number of the new branches proposed to be opened in urban and rural areas, location of
each of the proposed branch and the area which it would serve, branches proposed to be
closed (if any), the number of existing branches incurring losses consecutively for the last
three years, arrangements for managerial and other staff members and information
technology access and linkage for the proposed branches and arrangements for housing
each of the proposed branch. State Bank then considers the Plan for new branches
keeping in view the need of the system and grant approval in principle for number of new
branch (es) that bank will be allowed to open during the given calendar year within 30
days from the date of receipt of ABEP complete in all respect. In case any ABEP of a
bank is not approved the SBP invariably intimates the same in writing to the bank within
30 days from the date of submission of duly completed ABEP to SBP.

ISSUE OF LICENCE FOR BRANCH OPENING

The license for individual branch opening is issued on receipt of formal application on
prescribed format under the provisions of Section 28 of the Banking Companies
Ordinance, 1962. The license is issued for opening of new place of business when

5
evidence is provided that adequate security arrangements are in place at the proposed
place of business and the Town Planning Regulations are not violated. Request for a new
branch in Azad Jammu and Kashmir (AJ&K) will have to be supported by the AJ&K
Government. The approval in principle granted under a particular ABEP shall lapse in
case bank fails to submit a formal application for issuance of license at least 30 days
before the expiry of that particular year. Similarly license issued under respective ABEP
shall expire where a bank fails to open the branch before 31st December of that year. The
license may be revoked in case it subsequently transpires that the bank had made material
mis-representation of facts or concealment of material information and the responsible
official(s) shall personally be liable for action under Section 83 of the Banking
Companies Ordinance, 1962.
ORDER FOR ATM INSLALLMENT
For the installation of Automated Teller Machines (ATMs), banks will follow the
instructions given below.

The banks are free to install ATMs within branch premises (on-site) as well as at offsite
places provided they inform State Bank of Pakistan in writing three days before that
ATM becomes operational.
Before extending the facility of cash & cheque deposits through ATMs to the
customers, banks must develop and put in place a well defined procedure,
including resolution of disputes in this regard and forward a copy of this to SBP
for information.
A suggested process for cash/cheque deposits in the ATMs and its ultimate credit
to the customer’s account is enclosed. The banks may, however, add more
steps/measures for cash/cheque deposits to further strengthen the process.
Banks shall ensure proper security at off-site ATMs to avoid any incidents of
snatching, robbery, dacoit etc.
Every banking company shall, within seven days after the close of each reporting
quarter, submit to Banking Policy Department of State Bank of Pakistan a
quarterly statement regarding installation of Automated Teller Machines
(ATMs), within and outside the premises for information and record.

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CAMNELS RATING
CAMELS rating of 1,2 and 3 in the last On-Site Inspection of the bank or a satisfactory
composite rating of the bank assigned under SBP’s Institutional Risk Assessment
Framework shall be the eligibility criteria for approval or otherwise of the ABEP. In
addition, the eligibility of a bank to open a new place of business is considered by the
State Bank keeping in view, among others, the financial strength of the bank as evident
from its net worth (net equity free of actual and potential losses), and adequacy of its
capital structure, record of earning capabilities, future earning prospects of the bank
managerial capabilities, bank’s liquidity position, track record of the bank’s adherence to
prudential regulations, credit disciplines, quality of customer’s services, staff
management relationship and the convenience and the needs of the population of the area
to be served by the proposed branch. Moreover, the following considerations are also
taken in the grant of license: -
The opening of branches in rural and under banked areas is e given preference.
Preference is also given to those branches, which are connected electronically,
provide utility bill receipt services and expedite delivery of home remittances.
In case of foreign banks, in addition to above, the performance of their existing
branches, level of commitment to the local market, sound international
reputation, provision of full range of banking services, new investment by their
H.O. etc, is a guiding factor for issuing fresh Licences.

PERMISSION TO CLOSE BRANCHES

Banks are free to close any of their existing branches operating at banked places, without
obtaining prior approval of State Bank of Pakistan. Banks are also free to close any of
their existing branches in un-banked area provided the area is not left without an alternate
arrangement for provision of banking services to the local community. It is hereby
clarified that while closing branches at un-banked places, Post Offices/UBL Post Office
Counters or other similar counters operating within a radius of 5 K.M. may not be treated
at par with the branches, as these are not a substitute for the branch. A place/area will
deem to be un-banked place if no branch of any other bank is operating within radius of 5

7
K.M. The closure of the branch should be intimated to the State Bank of Pakistan on the
prescribed Proforma within twenty one (21) days of the closure of the branch,
simultaneously surrendering the license of the branch to the State Bank. Any branch
closed down by the banks in violation of Branch Licensing Policy have to be reopened
and confirmation in this regard be submitted to SBP.
PERMISSION TO SHIFT BRANCHES
Banks are free to shift or relocate their banked area branches within the same
cities/towns/villages and on countrywide basis without SBP’s prior approval. However
Prior permission is required for shifting of branches from other places in the country to
five metropolitan areas i.e. Karachi, Islamabad-Rawalpindi, Lahore, Peshawar and
Faisalabad for which they will be required to submit their application on the prescribed
Proforma. NBP will, however, be required to obtain prior clearance from Accounts
Department, State Bank of Pakistan, before shifting of their branches conducting treasury
work. Intimation of shifting of a branch will be sent by the bank concerned to the State
Bank of Pakistan within 15 days from the date of its shifting on prescribed Proforma.
PERMISSION FOR SHIFTING BOOTHS
Banks can shift their permanent booths (other than Utility Bills Collection Booths)
within the same city/town/village without prior approval of SBP. However, for shifting
Utility Bills Collection Booths including shifting into branch premises, banks will be
required to obtain prior approval of SBP provided such shifting may not attract public
complaints. However, license of a booth shifted into branch premises shall stand
cancelled if SBP allows such shifting. In such a case the bank will open a separate
counter in the said branch for collection of utility bills. In all cases of shifting of booths,
intimation should be given to SBP within 15 days from the date of shifting.

BRANCH NAMING

Every licensed branch of a scheduled bank shall carry a name and invariably be required
to prominently display outside the branch.

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PROCESSING FEES

A processing fee @ Rs.25, 000/- per branch applied in Annual Branch Expansion Plan
(ABEP) has been fixed with effect from Annual Branch Expansion Plan (ABEP) for
2003. The banks while submitting their ABEP shall invariably enclose a cheque in the
name of State Bank of Pakistan as processing fee. The ABEP without the amount of
processing fee shall not be entertained. The processing fee will be non-refundable.
PENALTY
Banks shall render themselves liable to pay fine as provided in BPRD Circular No.21
dated the 9th June, 1999 for non-compliance/violation of any of the provisions of the
Branch Licensing Policy in addition to the penalty mentioned above.

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 PHASE 1 BRANCH LISENCING UNDER SECTION 27

According to section 27 of banking ordinance Act, 1962

“(1) No individual or association or body of individuals, not being a company, shall carry
on banking business in Pakistan and, save as hereinafter provided, no company shall
carry on banking business in Pakistan unless it holds a license issued in that behalf by the
State Bank; and any such license may be issued subject to such conditions as the State
Bank may think fit to impose.
(2) Every banking company in existence on the commencement of this Ordinance, before
the expiry of six months from such commencement, and every other company before
commencing banking business in Pakistan, shall apply in writing to the State Bank for a
license under this section: Provided that nothing in sub-section (1) shall be deemed to
prohibit a banking company in existence on the commencement of this Ordinance from
carrying on banking business until it is granted a license in pursuance of this section or is
by notice in writing informed by the State Bank that a license cannot be granted to it:
Provided further that the State Bank shall not give a notice as a foresaid to a banking
company in existence on the commencement of this Ordinance before the expiry of the
period of two years in the case of banking companies incorporated in Pakistan and of six
months in the case of banking companies incorporated outside Pakistan referred to in
sub-section (1) of section 13 or of such further period as the State Bank may under the
proviso to that sub-section think fit to allow.
(3) Before granting any license under this section, the State Bank may require to be
satisfied by an inspection of the books of the company or otherwise that all or any of the
following conditions are fulfilled, namely:-
(a) That the company is or will be in a position to pay its present or future depositors in
full as their claims accrue;
(b) that the affairs of the company are not being or are not likely to be conducted in a
manner detrimental to the interests of its present or future depositors;
(c) that in the case of a company incorporated outside Pakistan, the Government or law of
the country in which it is incorporated provides the same facilities to banking companies

10
registered in Pakistan as the Government or law of Pakistan grants to banking companies
incorporated outside Pakistan and that the company complies with all the provisions of
this Ordinance applicable to banking companies incorporated outside Pakistan.
(4) The State Bank may cancel a license granted to a banking company under this section,
—
(i) If the company ceases to carry on banking business in Pakistan; or
(ii) If the company at any time fails to comply with any of the conditions imposed upon it
under sub-section (1); or
(iii) If at any time, any of the conditions referred to in sub-section (3) ceases to be
fulfilled:
Provided that before canceling a license under clause (ii) or clause (iii) of this subsection
on the ground that the banking company has failed to comply with or has failed or ceased
to fulfill any of the conditions referred to therein, the State Bank, unless it is of opinion
that the delay will be prejudicial to the interest of the company’s depositors or the public,
Shall grant to the company on such terms as it may specify, an opportunity of taking the
necessary steps for complying with or fulfilling such condition.
(5) £ Any banking company aggrieved by the decision of the State Bank canceling a
license under this section may, within thirty days from the date on which such decision is
communicated to it apply for review to the Central Board of the State Bank.
(6) ££ The decision of the State Bank subject to the result of review shall be final.
27A PROHIBITION OF ADVERTISING FOR DEPOSITS AND

COLLECTION
“Notwithstanding anything contained in any other law for the time being in force, no
company, firm or person, not being a banking company or a corporation or authority
established by the Federal Government or a company duly authorized in this behalf by
the Controller of Capital Issues or the Corporate law Authority or the Registrar.”

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STEP WISE PROCESS TO OPEN A BANK BRANCH AT WAH CANTT

The following application or form will be filled and retuned to SBP. If the application is
approved, the bank is eligible to open its branches in any part 9which it requires0 of
Pakistan, held approved by SBP.

Address:
Date:
The Director,
Banking Control Department,
State Bank of Pakistan
Central Directorate,
Karachi
Subject: Application to open a new branch of an existing bank in Pakistan
Sir,
Respectfully, we apply for a license to carry on our business to open a new bank branch
at WAH Cantt under section 27 of Banking companies Ordinance Act, 1962. We are
providing our particulars as under in complete detail. The particulars and information
provided is complete up to best of our knowledge.

Yours Faithfully

Karim Ud Din

Sign:

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Name of Banking Company:

Place of location of registered office of banking company:

Head office location:

Type of Company:

State in which banking company is incorporated:

Any previous applications submitted before for same purpose: Yes No

Names and Addresses of directors in Pakistan:

Director 1: Name:

Address:

Director 2: Name:

Address:
CEO name, age experience, salary etc.

A company already carrying business in Pakistan: Yes No

No. of offices in Pakistan:

No. of branches in Pakistan:

Branch Locations:

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Population of area in which propose business is to be carried out:
Any agricultural or mineral or other commodity produced in area:

An Estimate of minimum business:

Deposits:

Advances:

Providing 5 year financial statements: Yes No

Any additional facts:

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 SALAM AGREEMENT

THIS SALAM AGREEMENT (the “Agreement”) is made at______________ on

__________ day of _______________ by and BETWEEN
______________________________________________________________,
(hereinafter referred to as the “Supplier” which expression shall where the context so
permits mean and include its successors in interest and permitted assigns) of the one part
AND
______________________________________________________________, (here in
after referred to as the “Institution” which expression shall where the context so permits
mean and include its successors in interest and assigns) of the other part.
IT IS AGREED BY THE PARTIES as follows:
1. PURPOSE AND DEFINITIONS
1.02 This Agreement sets out the terms and conditions upon and subject to which the
Institution has agreed to purchase the Goods from the Supplier:

1.03 In this Agreement, unless the context otherwise requires:

“Business Day” means a day on which banks are open for normal business in Pakistan;

“Contract Price” means Rs.____________________, paid by the Institution to the

Supplier or such other sum as may mutually be agreed in writing between the parties
hereto as the price of the Goods purchased in accordance with the terms of this
Agreement;
“Event of Default” means any of the events or circumstances described in Clause 09
hereto;

“Goods” means the Goods described in Salaam Document # __;

“Goods Receiving Note” means confirmation of receipt of Goods as set out in Salaam
Document#;

15
“Indebtedness” means any obligation of the Supplier for delivery of the Goods or for
payment of any sum of money due or, payable under this Agreement;

“License” means any license, permission, authorization, registration, consent or approval

granted to the Supplier for the purpose of or relating to the conduct of its business;

“Lien” shall mean any mortgage, charge, pledge, hypothecation, security interest, lien,
right of set-off, contractual restriction (such as negative covenants) and any other
encumbrance;
“Parties” means parties to this Agreement;

“Notice of Delivery” means the Notice of Delivery given by the Supplier to the
Institution as set out in Salaam Document # __

“Principal Documents” means this Agreement and the Security Documents;

“Promissory Note” is defined in Clause 3.01(b);

“Prudential Regulations” means Prudential Regulations or other regulations as are

notified from time to time by SBP or SECP;

“SecurityDocuments”
and “Security” is defined in Clause 3.01;

“Secured Assets” means the following assets of the Supplier [insert description of
assets in respect of which charge/mortgage may be created];

“Rupees” or “Rs.” means the lawful currency of Pakistan;

16
“SBP” means the State Bank of Pakistan established under the State Bank of Pakistan
Act, 1956 and includes any successors thereto;

“SECP” means the Securities and Exchange Commission of Pakistan established under
the Securities & Exchange Commission of Pakistan Act,

“Taxes” includes all present and future taxes (including central excise duty and sales
tax), levies, imposts, duties, stamp duties, penalties, fees or charges of whatever nature
together with delayed payment charges thereon and penalties in respect thereof and

“Taxation” shall be construed accordingly;

“Written Offer” means the Offer made by the Supplier to the Institution as per
Salaam Document # __.
1.04 Clause headings and the table of contents are inserted for convenience of reference
only and shall be ignored in the interpretation of this Agreement. In this Agreement,
unless the context otherwise requires, references to Clauses and Appendices are to be
construed as references to the clauses of, and Appendices to, this Agreement and
references to this Agreement include its appendices; words importing the plural shall
include the singular and vice versa and reference to a person shall be construed as
including references to an individual, firm, institution, corporation, unincorporated body
of persons or any state or any agency thereof.
1.05 The recitals herein above and Appendices to this Agreement shall form an integral
part of this Agreement.
2. SUPPLY OF THE GOODS PURCHASED
2.01 The Supplier has agreed to supply the Goods to the Institution pursuant to the
Written Offer for the Contract Price. Upon receipt by the Institution of the Supplier’s
Notice of Delivery, which shall be date or such other date as may be mutually agreed
between the parties hereto, hereinafter referred to as Delivery Date, advising the
Institution to take delivery of the Goods, the Institution shall receive or cause to receive
the Goods at the designated point of delivery.;

17
2.02 The Goods shall remain at the risk of the Supplier until they are delivered to the
point of delivery and have been inspected and accepted by the Institution, immediately
after which, all risks in respect of the Goods shall be passed on to the Institution;
3. SECURITY
3.01 As security for the performance of this Agreement by the Supplier under this
Agreement, the Supplier shall:
(a) Furnish to the Institution a collateral(s), substantially in the form and substance
attached hereto as Salaam Document # __ ;

(b) Execute such further deeds and documents as may from time to time be required by
the Institution for the purpose of more fully securing and or perfecting the security
created in favor of the Institution; and

(c) Create such other securities to secure the Supplier’s obligations under the Principal
Documents as the parties, hereto, may by mutual consent agree from time to time.
3.02 In addition to above, the Supplier shall execute a demand promissory note in favor
of the Institution for the amount of the Contract Price (the "Promissory Note");
(The Security and the Promissory Note are hereinafter collectively referred to as the
"Security Documents").
4. FEES AND EXPENSES
It is understood that each party shall bear the fees and expenses incurred from its own
account in connection with the negotiation, preparation and execution of the Principal
Documents and of amendment or extension of or the granting of any waiver or consent
under the Principal Documents.
5. PAYMENT OF CONTRACT PRICE
Payment to the Supplier under this Agreement has been made of such withholding taxes
that the institutions are required to deduct under various laws in force. The Institution
shall promptly deliver to the Supplier copies or originals of any receipts, certificates or
other proof evidencing the amounts (if any) paid or payable in respect of any deduction
or withholding as aforesaid.

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6. REPRESENTATIONS AND WARRANTIES
6.01 The Supplier warrants and represents to the Institution that:
a. The execution, delivery and performance of the Principal Documents by the Supplier
will not (i) contravene any existing law, regulation or authorization, which the supplier is
subject to, (ii) result in any breach of or default under any agreement or other instrument
to which the Supplier is a party or is subject to, or (iii) contravene any provision of the
constitutive documents of the Supplier or any resolution adopted by the board of directors
or members of the Supplier;

b. The financial statements together with the notes to the accounts and all contingent
liabilities and assets that are disclosed therein represent a true and fair financial position
of the business of the Supplier and to the best of the knowledge of the Supplier there are
no material omissions and or misrepresentations.

c. All requisite corporate and regulatory approvals required to be obtained by the Supplier
in order to enter into the Principal Documents are in full force and effect and such
approvals permit the Supplier, inter alia, to obtain the entire sales price in advance under
this Agreement and perform its obligations hereunder and that the execution of the
Principal Documents by the Supplier and the exercise of its rights and performance of its
obligations hereunder, constitute private and commercial acts done for private and
commercial purposes;
d. No material litigation, arbitration or administrative proceedings is pending or
threatened against the Supplier or any of its assets;

e. It shall inform the Institution within ------- Business Days of an event or happening
which may have an adverse effect on the financial position of the Supplier, whether such
an event is recorded in the financial statements or not as per applicable International
Accounting Standards, as applicable in Pakistan.

7. UNDERTAKING

19
7.01 The Supplier covenants and undertakes that so long as it remains obliged under this
Agreement:
a. It shall inform the Institution of any Event of Default or any event, which with the
giving of notice or lapse of time or both would constitute an Event of Default forthwith
upon becoming aware thereof;

b. It shall do all such things and execute all such documents which in the opinion of the
Institution may be necessary to;
(i) enable the Institution to assign or otherwise transfer the right of the Institution to
enable any creditor of the Institution or to any third party to receive the delivery of the
Goods as the Institution may deem fit at its entire discretion;

(ii) create and perfect the Security;

(iii) maintain the Security in full force and effect at all times including the priority
thereof;

(iv) maintain, insure and pay all Taxes assessed in respect of the Secured Assets and
protect and enforce its rights and title, and the rights of the Institution in respect of the
Secured Assets, and;
(v) Preserve and protect the Secured Assets. The Supplier shall at its own expense cause
to be delivered to the Institution such other documentation and legal opinion(s) as the
Institution may reasonably require from time to time in respect of the foregoing;
c. It will satisfactorily insure all Secured Assets with reputable companies offering
protection under the Islamic concept of Takaful. The Secured Assets shall be
comprehensively insured (with a reputable insurance company to the satisfaction of the
Institution) against all insurable risks, which may include fire, arson, theft, accidents,
collision, body and engine damage, vandalism, riots and acts of terrorism, and to assign
all policies of insurance in favor of the Institution to the extent of the amount from time
to time due under this Agreement, and to cause the notice of the interest of the Institution
to be noted on the policies of insurance, and to punctually pay the premium due for such

20
insurance’s and to contemporaneously therewith deliver the premium receipts to the
Institution. Should the Supplier fail to insure or keep insured the Secured Assets and/or to
deliver such policies and premium receipts to the Institution, then it shall be lawful for
the Institution but not obligatory to pay such premium and to keep the Secured Assets so
insured and all cost charges and expenses incurred by it for the purpose shall be charged
to and paid by the Supplier as if the same were part of the monies due. The Supplier
expressly agrees that the Institution shall be entitled to adjust, settle or compromise any
dispute with the insurance company (ies) and the insurance arising under or in connection
with the policies of insurance and such adjustments/compromises or settlements shall be
binding on the Supplier and the Institution shall be entitled to appropriate and adjust the
amount, if any received, under the aforesaid policy or policies towards part or full
satisfaction of the Supplier's indebtedness arising out of the above arrangements and the
Supplier shall not raise any question or objection that larger sums might or should have
been received under the aforesaid policy nor the Supplier shall dispute its liability(ies) for
the balance remaining due after such payment/adjustment;

d. Except as required in the normal operation of its business, the Supplier shall not,
without the written consent of the Institution, sell, transfer, lease or otherwise dispose of
all or a sizeable part of its assets, or undertake or permit any merger, consolidation,
dismantling or re organization which would materially affect the Supplier’s ability to
perform its obligations under any of the Principal Documents;

e. It shall not (and shall not agree to), except with the written consent of the Institution,
create, incur, assume or suffer to exist any Lien whatsoever upon or with respect to the
Secured Assets and any other assets and properties owned by the Supplier which may
rank superior, pari passu or inferior to the security created or to be created in favor of the
Institution pursuant to the Principal Documents;

f. It shall forthwith inform the Institution of:

21
(i) Any event or factor, any litigation or proceedings pending or threatened against the
Supplier which could materially and adversely affect or be likely to materially and
adversely affect:
(a) the financial condition of the Supplier;

(b) business or operations of the Supplier; and

(c) the Supplier’s ability to meet its obligations when due under any of the Principal
Documents,

(d) expiry or cancellation of a material patent, copy right or license,

(e) loss of a key executive or trade Agreement;

(ii) Any change in the directors or management of the Supplier;

(iii) Any actual or proposed termination, rescission, discharge (otherwise than by

performance), amendment or waiver or indulgence under any material provision of any of
the Principal Documents;

(iv) Any material notice or correspondence received or initiated by the Supplier relating
to the License, consent or authorization necessary for the performance by the Supplier of
its obligations under any of the Principal Documents;
g. The Supplier shall indemnify and hold the Institution and its officers and employees
harmless against any claims on account of quality, merchantability, fitness for use, and
any latent or patent defects in the Goods and any matters pertaining to intellectual
property rights in respect of such Goods.
8. EVENTS OF DEFAULT AND TERMINATION
8.1 There shall be an Event of Default if in the opinion of the Institution:
(a) The Supplier fails to deliver the Goods contracted to be delivered under this
Agreement on the Delivery Date at [insert Place of Delivery];

22
(b) Any representation or warranty made or deemed to be made or repeated by the
Supplier in or pursuant to the principal Documents or in any document delivered under
this Agreement is found to be incorrect;

(c) Any Indebtedness of the Supplier in excess of Rs.__________ (Rupees

________________only) is not paid when due or becomes due or capable of being
declared due in terms of this Agreement;
(d) Any authority of or registration with governmental or public bodies or courts required
by the Supplier in connection with the execution, delivery, performance, validity,
enforceability or admissibility in evidence of the Principal Documents are modified in a
manner unacceptable to the Institution or is not granted or is revoked or otherwise ceases
to be in full force and effect;

(e) The total interruption or cessation of the business activities of the Supplier;
(f) Any costs, charges and expenses under the Principal Documents shall remain unpaid
for a period of _______ days after notice of demand in that behalf has been received by
the Supplier from the Institution;
8.02 Notwithstanding anything contained herein, the Institution may without prejudice to
any of its other rights, at any time after the happening of an Event of Default by notice to
the Supplier declare that:
(a) The obligation of the Institution to take delivery of the Goods from the Supplier shall
be terminated, forthwith; and/or
(b) The entire outstanding amount of the Contract Price and any other amounts paid to
the Supplier under this Agreement along with all other costs, charges, and expenses
incurred or actual loss sustained by the Institution shall forthwith become due and
refundable.
9. PENALTY
9.01 Where any amount is required to be paid by the Supplier under the Principal
Documents on a specified date and is not paid by that date, or an extension thereof,
permitted by the Institution without any decrease in the Contract Price, the Supplier
hereby undertakes to pay directly to the Charity Fund, constituted by the Institution, a

23
sum calculated @ ------% per annum for the entire period of default, calculated on the
total amount of the obligations remaining un-discharged. The Charity Fund shall be used
at the absolute discretion of the Institution, exclusively for the purposes of approved
charity.
9.02 In cases
(i) any amount(s) referred to in clause 9.01 above, including the amount undertaken to be
paid directly to the Charity Fund, by the Supplier, is not paid by him, or
(ii) the Supplier delays the payment of any amount due under the Principal Documents
and/ or the payment of amount to the Charity Fund as envisaged under Clause 10.01
above, as a result of which any direct or indirect costs are incurred by the Institution, the
Institution shall have the right to approach a competent Court,
(i) For recovery of any amounts remaining unpaid as well as,

(ii) for imposing of a penalty on the Supplier. In this regard the Supplier is aware and
acknowledges that notwithstanding the amount paid by the Supplier to the Charity Fund
of the Institution, the Court has the power to impose penalty, at its discretion, and from
the amount of such penalty, a smaller or bigger part, depending upon the circumstances,
can be awarded as solarium to the Institution, determined on the basis of direct and
indirect costs incurred, other than the opportunity cost.
10. INDEMNITIES
The Supplier shall indemnify the Institution against any expense, which the Institution
shall prove as rightly incurred by it as a consequence of
(i) Any default in performance of any obligations under the Principal Documents,

(ii) the occurrence of any Event of Default, and

(iii) arising out of any misrepresentation

11. INCREASED COSTS

If any law or regulation or any order of any court, tribunal or authority has the effect of
subjecting the Supplier to Taxes or changes the basis or rate of Taxation with respect to

24
any payment or other obligation under this Agreement (other than Taxes or Taxation on
the overall income of the Institution), the same shall be borne by the Supplier. No
additional amount will be demanded or become payable by Institution;
12. SET-OFF
The Supplier authorizes the Institution to apply any credit balance to which the Supplier
is entitled or any amount which is payable by the Institution to the Supplier at any time in
or towards partial or total satisfaction of any sum which may be due from or payable by
the Supplier to the Institution under this Agreement including the Contract Price upon
occurrence of any event of the Supplier failing to meet the delivery.

13. ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of and be enforceable by
the Institution, the Supplier and respective successors, assigns and transferees of the
parties hereto, provided that the Supplier shall not assign or transfer any of its rights or
obligations under this Agreement without the written consent of the Institution. The
Institution may assign all or any part of its rights or transfer all or any part of its
obligations and/or commitments under this Agreement to any financial institution or
other person without any consent of the Supplier. The Supplier shall not be liable for the
costs of the assignment and/or transfer of commitments hereunder by the Institution. If
the Institution assigns all or any part of its rights or transfers all or any part of its
obligations and commitments as provided in this Clause, all relevant references in this
Agreement to the Institution shall thereafter be construed as a reference to the Institution
and/or its assignee(s) or transferee(s) (as the case may be) to the extent of their respective
interests.
14. FORCE MAJEURE
Any delays in or failure by a Party hereto in the performance hereunder if and to the
extent it is caused by the occurrences or circumstances beyond such Party’s reasonable
control, including but not limited to, acts of God, fire, strikes or other labor disturbances,
riots, civil commotion, war (declared or not) sabotage, any other causes, similar to those
herein specified which cannot be controlled by such Party. The Party affected by such

25
events shall promptly inform the other Party of the occurrence of such events and shall
furnish proof of details of the occurrence and reasons for its non-performance of whole or
part of this Agreement. The parties shall consult each other to decide whether to
terminate this Agreement or to discharge part of the obligations of the affected Party or
extend its obligations on a best efforts and an on arm’s length basis.
15. GENERAL
15.01 No failure or delay on the part of the Institution to exercise any power, right or
remedy under this Agreement shall operate as a waiver thereof nor shall a partial exercise
by the Institution of any power right or remedy preclude any other or further exercise
thereof or the exercise of any other power right or remedy. The remedies provided in this
Agreement are cumulative and are not exclusive of any remedies provided by law;
15.02 This Agreement represents the entire Agreement and understanding between the
parties in relation to the subject matter and no amendment or modification to this
Agreement will be effective or binding unless it is in writing, signed by both parties and
refers to this Agreement;
15.03 This Agreement is governed by and shall be construed in accordance with the
Pakistani law. All competent courts at _____ shall have the non-exclusive jurisdiction to
hear and determine any action, claim or proceedings arising out of or in connection with
this Agreement.
15.04 Nothing contained herein shall prejudice or otherwise affect the rights and
remedies that may otherwise be available under law to the parties.
15.05 Any reconstruction, division, reorganization or change in the constitution of the
Institution or its absorption in or amalgamation with any other person or the acquisition
of all or part of its undertaking by any other person shall not in any way prejudice or
affect its rights hereunder.
15.06 The two parties agree that any notice or communication required or permitted by
this Agreement shall be deemed to have been given to the other party seven days after the
same has been posted by registered mail or the next Business Day if given by a facsimile
message to telex or by any other electronic means, or the next Business Day as counted
from the date of delivery if delivered by courier mail;

26
IN WITNESS WHEREOF, the Parties to this Agreement have caused this
Agreement to be duly executed on the date and year first aforementioned.
  WITNESSES: For and on behalf of
[insert name of the
   
Institution]
1. ________________  ________________
2. ________________  ________________
     For and on behalf of
1. ________________  ________________
2. ________________  ________________

LEASE AGREEMENT
THIS LEASE AGREEMENT
(the "Agreement") is made at ________ on _____________ day of _____________ by
and
BETWEEN
_______________________________________________________________,
(hereinafter referred to as the “Lessee" which expression shall where the context so
permits mean and include its successors in interest and permitted assigns) of the one part
AND
_______________________________________________________________, (here in
after referred to as the “Lessor" which expression shall where the context so permits
mean and include its successors in interest and assigns) of the other part.
IT IS AGREED BY THE PARTIES as follows:
1. PURPOSE AND DEFINITIONS
This Agreement sets out the terms and conditions upon and subject to which the Lessor
has, acting on the Written Request of the Lessee which is attached as Lease Document #
__ of this Agreement, acquired/beneficially acquired the requested assets and have agreed
to Lease the same to the Lessee. All, else the same as above agreement had.

27
 INTEREST FREE LOAN AGREEMENT

This Agreement
is made at _________________ this ___________________ day of ________________
2007. BETWEEN
_____________________________________ Limited, having its place of business at /
resident of _______________________________ hereinafter referred to as “the Client”
(which term shall wherever the context so requires or permits mean and include its
successors-in-interest and assigns) of the ONE PART.
AND
__________________________________ Bank Limited (or financial institution), a duly
incorporated banking company (or financial institution) having its registered office at
___________________ hereinafter referred as “the Institution” (which expression shall
wherever the context so requires or permits mean and include the heirs, legal
representatives and successors-in-interest and assigns) of the OTHER PART.
WHEREAS, the Institution has agreed to give an Interest Free Loan to the Client on
terms and conditions, hereinafter appearing.
NOW, THEREFORE, THIS AGREEMENT WINTESSETH AS UNDER:-
1. The Institution hereby agrees to provide to the Client an Interest Free Loan (hereinafter
referred to as “the Loan”) up to a maximum of Rs. ___________________ on the terms
and conditions hereinafter contained.
2. The parties hereto hereby mutually agree and covenant as under:-
i. The Client undertakes to repay the loan without any interest on or before
______________.
ii. In case the Client fails to perform as per provisions of this Agreement or any amount is
required to be paid by the Client on a specified date and is not paid on that date, or any
amount is payable by the Client under this Agreement within a specified period after the
receipt of a demand from the Institution and is not paid by it within the specified period
after the receipt of the demand and such amounts have to be recovered through litigation,

28
a court may award solatium to the Institution to cover the expenses incurred in the
recovery of its dues.
3. As security for repayment of the Institution’s loan and/or all other sums payable as
aforesaid the Client hereby agrees and undertakes to give such security as may be
acceptable to the Institution and the terms and conditions of which shall be such as the
Institution may determine.

IN WITNESS WHEREOF the Client and the Institution have executed this
agreement on the day, month and year hereinabove mentioned.
Witness   CLIENT
1.
______________________
______________________  
__
__
2.

______________________   

__

Witness   INSTITUTION
1.
______________________
______________________  
__
__
2.

______________________   

__

Appendix A
Description of the Project
Appendix B
Schedule for Purchase of Project Shares

29
 Appendix C
Cost/Value of the Project

MUSAWAMA FACILITY AGREEMENT

THIS MUSAWAMA FACILITY AGREEMENT

(this "Agreement") is made at___________ on ______ day of ______ by and
BETWEEN
________________________________________________________, (hereinafter
referred to as the "Client" which expression shall where the context so permits mean and
include its successors in interest and permitted assigns) of the one part
AND
________________________________________________________(hereinafter,
referred to as the "Institution" which expression shall where the context so permits mean
and include its successors in interest and assigns) of the other part.
IT IS AGREED BY THE PARTIES as follows:

1. PURPOSE AND DEFINITIONS

1.01 This Agreement sets out the terms and conditions upon and subject to which the
Institution has agreed to purchase the Goods from time to time from the Suppliers and
upon which the Institution has agreed to sell the same to the Client from time to time by
way of Musawamah facility.

1.02 In this Agreement, unless the context otherwise requires:

"Act" means the Banking Companies (Recovery of Loans, Advances, Credits and
Finances) Act, 1997 or any statutory modification or re-promulgation thereof;

"Agent" means the person appointed under the terms of the Agency Agreement;

30
"Agency Agreement" means the Agency Agreement between the Institution and the
person appointed as Agent (which may be the Client) as provided in the Musawamah
Document#2;

"Business Day" means a day on which banks are open for normal business in Pakistan;

"Cost Price" means the amount which may be incurred by and/or on behalf of the
Institution for the acquisition of Goods plus all costs, duties, taxes and charges incidental
to and connected with acquisition of Goods;

"Contract Price" means the price payable by the Client to the Institution for Goods as
stipulated in Part-III of the Declaration (Musawamah Document # 5) to be issued by the
Institution from time to time;

"Declaration" means Declaration as set out in Musawamah Document # 5;

"Event of Default" means any of the events or circumstances described in Clause 9

hereto;

"Goods" means the Goods as may be specified in the Purchase Requisition(s) to be

issued by the Client from time to time;

"Indebtedness" means any obligation of the Client for the payment or any sum of
money due or, payable under this Agreement;

"License" means any license, permission, authorization, registration, consent or approval

granted to the Client for the purpose of or relating to the conduct of its business;

"Lien" shall mean any mortgage, charge, pledge, hypothecation, security interest, lien,

31
right of set-off, contractual restriction (such as negative covenants) and any other
encumbrance;

"Payment Date" or "Payment Dates" means the respective dates for the payment of the
installments of the Contract Price or part thereof by the Client to the Institution as
specified in Musawamah Document # 6 hereto, or, if such respective due date is not a
Business Day, the next Business Day;

"Profit" means any part of the Contract Price which is not a part of the Cost Price;

"Parties" mean the parties to this Agreement;

"Principal Documents" means this Agreement, the Agency Agreement; and the
Security Documents;

"Promissory Note" is defined in Clause 3.02 and is negotiable only at the face value, if
required;

"Prudential Regulations" means Prudential Regulations or other regulations as are

notified from time to time by SBP;

"Purchase Requisition” means a request from time to time by the Client to the
Institution as per Musawamah Document # 3/1;

"Security Documents" and "Security" is defined in Clause 3;

"Supplier" means the supplier from whom the Institution acquires Title to the Goods;

"Secured Assets" means (insert description of assets in respect of which

32
charge/mortgage may be created) offered as security by the Client;

“Receipt” means a confirmation by the Agent of the Institution, of receipt of funds by

the Supplier for the supply of Goods Musawamah Document # 4.

"Rupees" or "Rs." means the lawful currency of Pakistan;

"SBP" means the State Bank of Pakistan;

"Title" means such title or other interest in the Goods as the Institution receives from the
Supplier;

"Taxes" includes all present and future taxes (including central excise duty and sales
tax), levies, imposts, duties, stamp duties, penalties, fees or charges of whatever nature
together with delayed payment charges thereon and penalties in respect thereof and
"Taxation" shall be construed accordingly;

"Value Date" means the date on which the Cost Price will be disbursed by the
Institution as stated in the Purchase Requisition.
1.03 Clause headings and the table of contents are inserted for convenience of reference
only and shall be ignored in the interpretation of this Agreement. In this Agreement,
unless the context otherwise requires, references to Clauses and Musawamah Documents
are to be construed as references to the clauses of, and Musawamah Documents to, this
Agreement and references to this Agreement include its Musawamah Documents; words
importing the plural shall include the singular and vice versa and reference to a person
shall be construed as including references to an individual, firm, Institution, corporation,
unincorporated body of persons or any state or any Agency thereof.

1.04 The recitals herein above and Musawamah Documents to this Agreement shall form
an integral part of this Agreement.

33
2. SALE AND PURCHASE OF THE GOODS
2.01 The Institution agrees to sell the Goods to the Client to a maximum amount of
Rs._______________ and the Client agrees to purchase the Goods from the Institution
from time to time at the Contract Price. Upon receipt by the Institution of the Client's
Purchase Requisition advising the Institution to purchase the Goods and make payment
therefore, the Institution shall acquire the Goods either directly or through the Agent, the
payment for which shall be made by the institution to the Supplier. The Receipt for such
payment shall be acknowledged by the Client in his capacity as an Agent to the
Institution, should he be so appointed as an Agent of the Institution. The said Receipt
shall be substantially in a form given in Musawamah Document # 4.
2.02.1 After the purchase of Goods by the Institution, the Client shall offer to purchase
the Goods from the Institution at the Contract Price in the manner provided in the Part-II
of the Declaration.
2.03 The Client shall purchase the Goods from the Institution after the Institution has
beneficially acquired the Goods. The Musawamah purchase of the Client from the
Institution shall be affected by the exchange of an offer and acceptance between the
Client and the Institution. The Goods shall remain at the risk of the Institution until such
time the client has accepted the offer made by the Institution as set out in the Appendix C
of this Agreement, immediately after which, all risks in respect of the Goods shall be
passed on to the Client.

OR (to be applicable if sale is being made from inventory of the institution)

2.03 The Institution has agreed to sell the Goods to the Client and the Client has agreed to
purchase the Goods from the Institution for the Contract Price. Upon receipt by the
Institution of the Client's Purchase Requisition advising the Institution of its
requirements, the Institution shall deliver the Goods to the client. The title of Goods shall
stand transferred to the Client as per agreed terms of delivery
3. SECURITY
3.01 As security for the indebtedness of the Client under this Agreement, the Client
shall:-

34
(a) Furnish to the Institution collateral(s)/security(ies), substantially in the form and
substance attached hereto as Musawamah Document # 7;

(b) Execute such further deeds and documents as may from time to time be required by
the Institution for the purpose of more fully securing and or perfecting the security
created in favor of the Institution; and

(c) Create such other securities to secure the Client’s obligations under the Principal
Documents as the parties hereto, may by mutual consent agree from time to time.
(The above are hereinafter collectively referred to as the "Security").
3.02 In addition to above, the Client shall execute a demand promissory note in favor of
the Institution for the amount of the Contract Price (the "Promissory Note");

(The Security and the Promissory Note are hereinafter collectively

referred to as the "Security Documents").

4. FEES AND EXPENSES

The Client shall pay to the Institution on demand within 15 days of such demand being
made, all expenses (including legal and other ancillary expenses) incurred by the
Institution in connection with the negotiation, preparation and execution of the Principal
Documents and of amendment or extension of or the granting of any waiver or consent
under the Principal Documents.

5. PAYMENT OF CONTRACT PRICE

5.01 All payments to be made by the Client under this Agreement shall be made in full,
without any set-off, roll over or counterclaim whatsoever, on the due date and when the
due date is not a Business Day, the following Business Day and save as provided in
Clause 5.02, free and clear of any deductions or withholdings, to a current account of the
Institution as may be notified from time to time, and the Client will only be released from
its payment obligations hereunder by paying sums due into the aforementioned account.

35
5.02 If at any time the Client is required to make any non refundable and non-adjustable
deduction or withholding in respect of Taxes from any payment due to the Institution
under this Agreement, the sum due from the Client in respect of such payment shall be
increased to the extent necessary to ensure that, after the making of such deduction or
withholding, the Institution receives on the Payment Date, a net sum equal to the sum
which it would have received had no such deduction or withholding been required to be
made and the Client shall indemnify the Institution against any losses or costs incurred by
the Institution by reason of any failure of the Client to make any such deduction or
withholding. The Client shall promptly deliver to the Institution any receipts, certificates
or other proof evidencing the amounts (if any) paid or payable in respect of any
deduction or withholding as aforesaid.
6. REPRESENTATIONS AND WARRANTIES
the Client warrants and represents to the Institution that:
a. The execution, delivery and performance of the Principal Documents by the Client will
not
(i) contravene any existing law, regulations or authorization to which the Client is
subject,

(ii) result in any breach of or default under any agreement or other instrument to which
the Client is a party or is subject to, or

(iii) contravene any provision of the constitutive documents of the Client or any
resolutions adopted by the board of directors or members of the Client;
b. The financial statements submitted together with the notes to the accounts and all
contingent liabilities and assets that are disclosed therein represent a true and fair
financial position of the business and to the best of the knowledge of the client, its
directors and principal officers, there are no material omissions and/or mis-
representations;

c. All requisite corporate and regulatory approvals required to be obtained by the Client
in order to enter into the Principal Documents are in full force and effect and such

36
approvals permit the Client, inter alia, to obtain financial facilities under this Agreement
and perform its obligations hereunder and that the execution of the Principal Documents
by the Client and the exercise of its rights and performance of its obligations hereunder,
constitute private and commercial acts done for private and commercial purposes;

d. No material litigation, arbitration or administrative proceedings is pending or

threatened against the Client or any of its assets;

e. It shall inform the Institution within ____ business days of an event or happening
which may have an adverse effect on the financial position of the company, whether such
an event is recorded in the financial statements or not as per applicable International
Accounting Standards.
7UNDERTAKING
The Client covenants to and undertakes with the Institution that so long as the Client is
indebted to the Institution in terms of this Agreement:
a) It shall inform the Institution of any Event of Default or any event, which with the
giving of notice or lapse of time or both would constitute an Event of Default forthwith
upon becoming aware thereof;

b) It shall provide to the Institution, upon written request, copies of all contracts,
agreements and documentation relating to the purchase of the Goods;

c) The Client shall do all such things and execute all such documents which in the
judgment of the Institution may be necessary to;
(i) enable the Institution to assign or otherwise transfer the liability of the Client in
respect of the Contract Price to any creditor of the Institution or to any third party as the
Institution may deem fit at its absolute discretion;

(ii) create and perfect the Security;

(iii) maintain the Security in full force and effect at all times including the priority

37
thereof;

(iv) maintain, insure and pay all Taxes assessed in respect of the Secured Assets and
protect and enforce its rights and title, and the rights of the Institution in respect of the
Secured Assets, and;

(v) preserve and protect the Secured Assets. The Client shall at its own expense cause to
be delivered to the Institution such other documentation and legal opinion(s) as the
Institution may reasonably require from time to time in respect of the foregoing;
d) It will satisfactorily insure all its insurable assets with reputable companies offering
protection under the Islamic concept of Takaful. The Secured Assets shall be
comprehensively insured (with a reputable insurance company to the satisfaction of the
Institution) against all insurable risks, which may include fire, arson, theft, accidents,
collision, body and engine damage, vandalism, riots and acts of terrorism, and to assign
all policies of insurance in favor of the Institution to the extent of the amount from time
to time due under this Agreement, and to cause the notice of the interest of the Institution
to be noted on the policies of insurance, and to punctually pay the premium due for such
insurances and to contemporaneously therewith deliver the premium receipts to the
Institution. Should the Client fail to insure or keep insured the Secured Assets and/or to
deliver such policies and premium receipts to the Institution, then it shall be lawful for
the Institution, but not obligatory, to pay such premium and to keep the Secured Assets so
insured and all cost charges and expenses incurred by it for the purpose shall be charged
to and paid by the Client as if the same were part of the Indebtedness. The Client
expressly agrees that the Institution shall be entitled to adjust, settle or compromise any
dispute with the insurance company(ies) and the insurance arising under or in connection
with the policies of insurance and such adjustments/compromises or settlements shall be
binding on the Client and the Institution shall be entitled to appropriate and adjust the
amount, if any received, under the aforesaid policy or policies towards part or full
satisfaction of the Client's indebtedness arising out of the above arrangements and the
Client shall not raise any question or objection that larger sums might or should have
been received under the aforesaid policy nor the Client shall dispute its liability(ies) for

38
the balance remaining due after such payment/adjustment;

e) Except as required in the normal operation of its business, the Client shall not, without
the written consent of the Institution, sell, transfer, lease or otherwise dispose of all or a
sizeable part of its assets, or undertake or permit any merger, consolidation, dismantling
or re organization which would materially affect the Client’s ability to perform its
obligations under any of the Principal Documents;

f) The Client shall not (and shall not agree to), except with the written consent of the
Institution, create, incur, assume or suffer to exist any Lien whatsoever upon or with
respect to the Secured Assets and any other assets and properties owned by the Client
which may rank superior, pari passu or inferior to the security created or to be created in
favor of the Institution pursuant to the Principal Documents;

g) It shall forthwith inform the Institution of:

i) event or factor, any litigation or proceedings pending or threatened against the Client
which could materially and adversely affect or be likely to materially and adversely
affect:
(a) the financial condition of the Client;
(b) business or operations of the Client; and
(c) the Client’s ability to meet its obligations when due under any of the Principal
Documents;
ii) Any change in the directors of the Client;

iii) Any actual or proposed termination, rescission, discharge (otherwise than by

performance), amendment or waiver or indulgence under any material provision of any of
the Principal Documents;
iv) Any material notice or correspondence received or initiated by the Client relating to
the License, consent or authorization necessary for the performance by the Client of its
obligations under any of the Principal Documents
8. CONDITIONS PRECEDENT

39
8.01 The obligation of the Institution to pay the Cost Price shall be subject to the receipt
by the Institution (in form and substance acceptable to the Institution) at least ___
Business Days prior to the Value Date of:
a) Documentary evidence that:
i) This Agreement and the Agency Agreement (should the Institution appoint the Client
as its Agent) have been executed and delivered by the Client;

ii) The Client’s representatives are duly empowered to sign the Principal Documents for
and on behalf of the Client and to enter into the covenants and undertakings set out herein
or which arise as a consequence of the Client entering into the Principal Documents;

iii) The Client has taken all necessary steps and executed all documents required under or
pursuant to the Principal Documents or any documents creating or evidencing the
Security in favor of the Institution and has perfected the Security as required by the
Institution.
b) Certified copy of the Memorandum and Articles of Association of the Client.

c) Certified copies of the Client’s audited financial statements for the last ____ years

d) The Purchase Requisition.

8.02 The obligation of the Institution to pay the Cost Price on the Value Date shall be
further subject to the fulfillment of the following conditions (as shall be determined by
the Institution in its sole discretion):
a) The payment of Cost Price by the Institution to the Supplier on the Value Date shall
not result in any breach of any law or existing agreement;

b) The Security has been validly created, perfected and is subsisting in terms of this
Agreement;

c) c) The Institution has received such other documents as it may reasonably require in

40
respect of the payment of the Cost Price;

d) No event or circumstance which constitutes or which with the giving of notice or lapse
of time or both, would constitute an Event of Default shall have occurred and be
continuing or is likely to occur and that the payment of the Cost Price shall not result in
the occurrence of any Event of Default;

e) Delivery by the Client to the Institution of a true and complete extract of all relevant
parts of the minutes of a duly convened meeting of its Board of Directors approving the
Principal Documents and granting the necessary authorizations for entering into,
execution and delivery of the Principal Documents which shall be duly signed and
certified by the person authorized by the Board for this purpose;

f) All fees, commission, expenses required to be paid by the Client to the Institution have
been received by the Institution.
8.03 Any condition precedent set forth in this Clause 8 may be waived and or modified
by the mutual written consent of the parties hereto.
9. EVENTS OF DEFAULT

9.01 There shall be an Event of Default if in the opinion of the Institution

(a) Any representation or warranty made or deemed to be made or repeated by the Client
in or pursuant to the Principal Documents or in any document delivered under this
Agreement is found to be incorrect;

(b) Any Indebtedness of the Client to the Institution in excess of

Rs.__________________________ (Rupees
__________________________________only) is not paid when due or becomes due or
capable of being declared due prior to its stated maturity;
9.02 Notwithstanding anything contained herein, the Institution may without prejudice to
any of its other rights, at any time after the happening of an Event of Default by notice to

41
the Client declare that entire amount by which the Client is indebted to the Institution
shall forthwith become due and payable.

10. PENALTY
10.1 Where any amount is required to be paid by the Client under the Principal
Documents on a specified date and is not paid by that date, or an extension thereof,
permitted by the Institution without any increase in the Contract Price, the Client hereby
undertakes to pay directly to the Charity Fund, constituted by the Institution, a sum
calculated @ ------% per annum for the entire period of default, calculated on the total
amount of the obligations remaining un-discharged. The Charity Fund shall be used at the
absolute discretion of the Institution, exclusively for the purposes of approved charity.

10.2 In cases
(i) ) any amount(s) referred to in clause 10.01 above, including the amount undertaken to
be paid directly to the Charity Fund, by the Client, is not paid by him, or

(ii) the Client delays the payment of any amount due under the Principal Documents and/
or the payment of amount to the Charity Fund as envisaged under Clause 10.01 above, as
a result of which any direct or indirect costs are incurred by the Institution, the Institution
shall have the right to approach a competent Court
(i) For recovery of any amounts remaining unpaid as well as,

(ii) for imposing of a penalty on the Client. In this regard the Client is aware and
acknowledges that notwithstanding the amount paid by the Client to the Charity Fund of
the Institution, the Court has the power to impose penalty, at its discretion, and from the
amount of such penalty, a smaller or bigger part, depending upon the circumstances, can
be awarded as solatium to the Institution, determined on the basis of direct and indirect
costs incurred, other than the opportunity cost.

42
11. INDEMNITIES
The Client shall indemnify the Institution against any expense which the Institution shall
prove as rightly incurred by it as a consequence of:
(i) the occurrence of any Event of Default,
(ii) the purchase and sale of Goods or any part thereof by the Client or the ownership
there of, and
(iii) any mis-representation.
12.SET-OFF
The Client authorizes the Institution to apply any credit balance to which the Client is
entitled or any amount which is payable by the Institution to the Client at any time in or
towards partial or total satisfaction of any sum which may be due or payable from the
Client to the Institution under this Agreement.

13. ASSIGNMENT
13.01 This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the Institution, the Client, and respective successors permitted assigns and
transferees of the parties hereto, provided that the Client shall not assign or transfer any
of its rights or obligations under this Agreement without the written consent of the
Institution. The Institution may assign all or any part of its rights or transfer all or any
part of its obligations and/or commitments under this Agreement to any Institution, or
other person. The Client shall not be liable for the costs of the assignment and/or transfer
of commitments hereunder by the Institution. If the Institution assigns all or any part of
its rights or transfers all or any part of its obligations and commitments as provided in
this Clause, all relevant references in this Agreement to the Institution shall thereafter be
construed as a reference to the Institution and/or its assignee(s) or transferee(s) (as the
case may be) to the extent of their respective interests.

13.02 The Institution may disclose to a potential assignee or transferee or to any other
person who may propose entering into contractual relations with the Institution in relation
to this Agreement such information about the Client as the Institution shall consider
appropriate.

43
14. FORCE MAJEURE
Any delays in or failure by a Party hereto in the performance hereunder if and to the
extent it is caused by the occurrences or circumstances beyond such Party’s reasonable
control, including but not limited to, acts of God, fire, strikes or other labor disturbances,
riots, civil commotion, war (declared or not) sabotage, any other causes, similar to those
herein specified which cannot be controlled by such Party. The Party affected by such
events shall promptly inform the other Party of the occurrence of such events and shall
furnish proof of details of the occurrence and reasons for its non-performance of whole or
part of this Agreement. The parties shall consult each other to decide whether to
terminate this Agreement or to discharge part of the obligations of the affected Party or
extend its obligations on a best effort and on an arm’s length basis.
15. GENERAL
15.01 No failure or delay on the part of the Institution to exercise any power, right or
remedy under this Agreement shall operate as a waiver thereof nor a partial exercise by
the Institution of any power, right or remedy preclude any other or further exercise
thereof or the exercise of any other power right or remedy. The remedies provided in this
Agreement are cumulative and are not exclusive of any remedies provided by law;

15.02 This Agreement represents the entire agreement and understanding between the
Parties in relation to the subject matter and no amendment or modification to this
Agreement will be effective or binding unless it is in writing, signed by both Parties and
refers to this Agreement;

15.03 This Agreement is governed by and shall be construed in accordance with Pakistan
law. All competent courts at ________ shall have the non-exclusive jurisdiction to hear
and determine any action, claim or proceedings arising out of or in connection with this
Agreement.

15.04 Nothing contained herein shall prejudice or otherwise affect the rights and
remedies that may otherwise be available under law to the parties.

44
15.05 Any reconstruction, division, re-organization or change in the constitution of the
Institution or its absorption in or amalgamation with any other person or the acquisition
of all or part of its undertaking by any other person shall not in any way prejudice or
affect its rights hereunder.

15.06 The two parties agree that any notice or communication required or permitted by
this agreement shall be deemed to have been given to the other party seven days after the
same has been posted by registered mail or the next Business Day if given by a facsimile
message to telex or by any other electronic means, or the next Business Day as counted
from the date of delivery if delivered by courier mail;
IN WITNESS WHEREOF, the Parties to this Agreement have caused this
Agreement to be duly executed on the date and year first aforementioned.
  WITNESSES: For and on behalf of
[insert name of the
   
Institution]
1. ________________  ________________
2. ________________  ________________
     For and on behalf of
1. ________________  ________________
2. ________________  _____________

45
 THE COMPANIES ORDINANCE, 1984
COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION OF
ABN AMRO BANK LIMITED

I. The name of the company is ABN AMRO BANK LIMITED.

II. The Registered Office of the company will be situated in the Province of Lahore.
III. The objects for which the company is established are to undertake any or all of the
following businesses in or outside Pakistan:
1. To carry on the business of a "banking company" in line with the reference to the same
in Banking Companies Ordinance, 1962;
2. To borrow, raise or take up money;
3. To lend or advance money either upon or without security;
4. To draw, make, accept, discount, buy, sell, collect and deal in bills of exchange,
promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures,
certificates, scrips, participation term certificates, term finance certificates, musharika
certificates, modaraba certificates and such other instruments as may be approved by the
State Bank of Pakistan, and other instruments and securities whether transferable or
negotiable or not;
5. To grant and issue letters of credit, travelers' cheques and circular notes etc;
6. To buy, sell and deal in bullion spices and foreign exchange including foreign bank
notes;
7. To acquire, hold, issue on commission, underwrite and deal in stock, funds shares,
debentures, debenture stock, bonds, obligations, securities, participation term certificates,
term finance certificates, musharika certificates, modaraba certificates and such other
instruments as may be approved by the State Bank of Pakistan and investments of all
kinds;

46
8. To purchase and sell bonds, scrips or other forms of securities, participation term
certificates, term finance certificates, musharika certificates, modaraba certificates and
such other instruments as may be approved by the State Bank of Pakistan;
9. To negotiate loans and advances;
10. To receive all kinds of bonds, scrips of valuables on deposit or for safe custody or
otherwise;
11. To provide safe deposit vaults;
12. To collect and transmit money and securities;
13. To provide finance as defined in the Financial Institutions (Recovery of
Finances) Ordinance, 2001;
14. To act as agents for any Government or local authority or any other person or
persons;
15. To carry on agency business of any description including the clearing and forwarding
of goods, giving of receipts and discharges and otherwise acting as an attorney on behalf
of customers, but excluding the business of a managing agent or treasurer of a company;
16. To contract for public and private loans and negotiate and issue the same;
17. To amalgamate or merge with any other company, body corporate or entity in
accordance with the law.
18. To effect, insure, guarantee, underwrite, participate in managing and carrying out of
any issue, public or private, Government, municipal or other loans or of shares, stock,
debentures, debenture stock or other securities of any company, corporation or
association and the lending of money for the purpose of any such issue;
19. To carrying on and transact every kind of guarantee and indemnity business;
20. To purchase or acquire in the normal course of its banking business, any property,
including patents, designs, trade-marks and copyrights, with or without buy-back
arrangements by the seller, or for sale in the form of hire-purchase or on deferred
payment basis with markup or for leasing or licensing or for rent-sharing or for any other
mode of financing;
21. To manage, sell and realize any property, which may come into the possession of the
company in satisfaction or part satisfaction of any of its claims;

47
22. To acquire and hold and generally deal with any property or any right, title or interest
in any such property which may form security or part of the security for any loans or
advances or which may be connected with any such security;
23. To undertake and execute trusts;
24. To undertake the administration of estates as executor, trustee or otherwise;
25. To establish and support or aid in the establishment and support of associations,
institutions, funds, trusts and conveniences calculated to benefit employees or ex-
employees of the company or the dependents or connections of such persons;
26. To grant pensions and allowances and make payments towards insurance of
employees;
27. To subscribe to or guarantee moneys for charitable or benevolent objects or for any
exhibition or for any public, general or useful object;
28. To acquire, construct, maintain and alter any building or works necessary or
convenient for the purpose of the company;
29. To sell, improve, manage, develop, exchange, lease, mortgage, dispose of or turn into
account or otherwise deal with all or any part of the property and rights of the company;
30. To acquire and undertake the whole or any part of the business of any person or
company, when such business is of a nature enumerated or described in Section 7 of the
Banking Companies Ordinance, 1962;
31. To form subsidiary company for one or more purposes permitted under Section 23 of
the Banking Companies Ordinance, 1962;
32. To do all such other things as are incidental or conducive to the promotion or
advancement of the business of the company such as electronic banking, internet
banking, issuance of credit cards, charge cards, ATMs etc.;
33. To carry on any other form of business which the Federal Government may, by
notification in the Official Gazette, specify as a form of business in which it is lawful for
a banking company to engage.
34. To carry on the business of housing finance and asset securitization in accordance
with the relevant Rules & Regulations.
35. To carry on the business of financial derivatives under the provisions of relevant
Rules & Regulations.

48
It is hereby undertaken that the company shall follow and abide by all the conditions and
restrictions imposed by the State Bank of Pakistan vide license issued by it as well as the
covering letter of the license and any subsequent conditions or restrictions imposed by
State Bank of Pakistan.
IV. The liability of the members is limited.

V. The authorized share capital of the company is rupees ----------------- (Rs.--------),

divided into -------------- (-------) ordinary shares of rupees ---- (Rs. --) each, with
power to increase, consolidate and divide, and sub-divide its share capital into
several classes; provided that the rights between various classes of shares shall be
strictly proportionate to the paid up value of shares.

49
We, several persons whose names and addresses are subscribed below, are desirous of being formed into a company in pursuance of
Memorandum Of Association and we respectively agree to take the no. of shares in the capital of the company set opposite our names.
Names in full Father’s name Nationality Address No. of
shares Sign nature

Dated: the ----------- day of ----------, 2007

Witness to above sign

ABN AMRO (Company Secretary/Head)

 ARTICLES OF ASSOCIATION

The Company is a private company and accordingly:-

(a) The right to transfer shares is restricted in the manner hereinafter prescribed;
(b) the number of members of the Company (exclusive of persons who are in the
employment of the Company and of persons who having been formerly in the
employment of the Company were while in such employment and have continued after
the determination of such employment to be members of the company) is limited to fifty.
Provided that where two or more persons hold one or more shares in the Company
jointly; they shall for the purpose of this regulation be treated as a single member;
(c) Any invitation to the public to subscribe for any shares or debentures of the Company
is prohibited;
(d) The Company shall not have power to issue share warrants to bearer.
SHARE ISSUE
3. Subject to any direction to the contrary that may be given by the meeting sanctioning
the increase in capital, all new shares of whatever kind shall be offered to the members in
proportion to the nominal value of the existing shares held by them, and such offer shall
be made by them, and such offer shall be made by notice specifying the number of share
to which the member is entitled and limiting a time within which the offer if not accepted
will be deemed to be declined to accept the member to whom such notice is given that he
declined to accept the share so offered, the directors may dispose off the same in such
manner as they may think most beneficial to the Company If, owing to any inequality in
the number of new shares to be issued of such new shares any difficulty shall arise in the
apportionment of nay new shares amongst the members, such difficulty shall in the
absence of direction by the company be resolved by the directors.
LIEN
4. The Company shall have a first and paramount lien on every share for all money
(whether presently payable or not) called or payable at a fixed time in respect of that
share, and the company shall also have a first and paramount lien on all shares standing
registered in the name of a single person for all moneys presently payable by him or his
estate to the company.
The Company’s lien, if any, on a share shall extend to all dividends payable thereon.
CALLS
5. The directors may, from time to time make calls upon the members in respect of any
moneys unpaid on their shares (whether on account of the nominal value of the shares or
by way of premium) and not by the conditions of allotment thereof, made payable at
fixed times, and each member shall (subject to receiving at least 14 to the dates notice
specifying the time or times and place of payment) pay to the Company at the time or
times so specified, the amount called on his shares. A call may be revoked or postponed
as the Directors may determine.
TRANSFER AND TRANSMISSION
Subject to the provisions hereinafter contained, any share in the Company shall be
transferable by written instrument in the common form signed by both the transferee and
the transferor and the transferor shall be deemed to remain the holder of the share until
the name of the transferee is entered in then register of members in respect thereof.
The Directors may in their absolute discretion and without assigning any reason decline
to register:-
(a) Any transfer of a share on which the company has a lien;
(b) Any transfer of a share (whether fully paid or not) to a person of whom they do not
approve.
(c) Any transfer of a share the registration of which would cause the number of members
to exceed the maximum permitted by article 3 hereof.
The directors may also suspend the registration of transfers during the fourteen days
immediately preceding the annual general meeting in each year.
If the Directors refuse to register a transfer, they shall within one month, after the date on
which the transfer was ordered with the company, send to the Transferee notice of the
refusal.
The Directors may also refuse to register any instrument of transfer unless:-
(a) A fee not exceeding twenty-five Rs. is paid to the company in respect thereof and
(b) The instrument of transfer is accompanied by the certificate of shares to which it
relates, and such other evidence as the directors may reasonably require to show the right
of the transferor to make the transfer and if the directors refuse to register a transfer of
any shares they shall within two months after the date on which the transfer was lodged
with the company send to the transferee notice of refusal.
The personal representatives of a deceased sole holder of a share shall be the only
persons recognized by the company as having any title to the share. In the case of a share
registered in the names of two or more holders, the survivors, or
10
Survivor, or the personal representative of the deceased survivor, shall be the only
persons recognized by the company as having any title to the share.
Any person becoming entitled to a share in consequence of death or bankruptcy of a
member shall:-
(a) upon such evidence produce as may from time to time be required by the directors,
have the right either to be registered as a member in respect of the share or, instead of
being registered himself, have some person nominated by he registered as the transferee
of the share; but the company shall, in either case, have the same right to decline or
suspend registration as they would have had in the case of a transfer of the share by the
deceased or bankrupt person before his death or bankruptcy;
(b) be entitled to some dividends and other advantages to which he would be entitled if he
were the registered holder of the share, except that he shall not, before being registered as
a member in respect of the share, be entitled in respect of it to exercise any rights
conferred by membership in relations to meetings of the company.
ALTERATION OF CAPITAL
7. The Company may from time to time by ordinary resolution increase the share capital
of the company by such sum to be divided into shares of such amount as the resolution
shall prescribe.
8. Except so far as otherwise provided by the conditions of issue or by these presents any
capital raised by the creation of new shares shall be considered part of the original capital
and shall be subject to the provisions herein contained with reference to the payment of
calls and installments, transfer and transmission, forfeiture, lien, surrender and otherwise.
NOTICE OF GENERAL MEETINGS
9. The Annual General Meeting and any meeting called for the passing of a special
resolution shall be called by twenty-one days’ notice in writing at least, from the date on
which the notice was sent out and a meeting of the company other than an annual general
meeting, or a meeting for the passing of a special resolution, shall be called by fourteen
days’ notice in writing at the least. The notice shall specify the place, the day and the
hour of meeting and the general nature of the business shall be given in sufficient detail
as to enable persons as are, under the regulations the company, entitled to receive such
notices from the company to decide
11 whether to attend or not; and where the meeting is to consider a special resolution, the
terms of such resolution shall be set out therein. Provided that a meeting of the company
shall, not withstanding that it is called by shorter notice than that specified in this
regulation, be deemed to have been duly called if it is so agreed:-
(a) in the case of a meeting called as the annual general meeting, by all the members
entitled to attend a vote thereat; and
(b) in the case of any other meeting, by a majority in number of the members having a
right to attend and vote at meeting, being a majority together holding not less than 95
percent in nominal value of the shares giving that right.
10. Notice of a general meeting of the company shall only be given to the following
persons: - every member of the company; every person upon whom the ownership of a
share devolves by reason of his being a legal representative, receivers or a trustee in
bankruptcy of a member; every director of the company; every auditor for the time being
of the company; and the secretary.
11. Failure to give notice of a meeting to any person entitled to receive notice shall
invalidate the proceedings at that meeting.
PROCEEDINGS AT GENERAL MEETINGS
12. All business shall be deemed special that is transacted at an Extra- Ordinary General
Meeting and also all that is transacted at an Annual General Meeting, with the exception
of declaring dividend, the consideration of accounts, balance sheets, the reports of the
directors and auditors, the election of director in the place of those retiring and the
appointment of, and the fixing of the remuneration of the auditors.
13. No business shall be transacted at any general meeting unless quorum of members is
present at the time when the meeting proceeds to business and for the purpose hereof,
unless it is otherwise provided, two third members present in person or by proxy, or
being a corporation and is represented in accordance with the provisions of Section 231
of the Act, shall be a quorum.
14. If within one hour from the time appointed for the meeting a quorum is not present,
the meeting if convened upon the requisition of members shall be dissolved; and in any
other case it shall stand adjourned to the same day in the next week at the same time and
place or to such other day and at
12
Such other time and place as the chairman and in his absence, the directors may
determine, and at the adjourned meeting in a quorum is not present within one hour from
the time appointed for the meeting; the meeting shall stand dissolved.
15. The Chairman, if any, of the Board of Directors shall preside every general meeting,
or if at any meeting shall not be present within one hour after the time appointed for
holding same or shall be unwilling to act as chairman, the directors present shall elect
some director present to be chairman of the meeting or if no director be present or willing
to take the chair, they shall choose one member present to be chairman of the meeting.
16. At any general meeting a resolution put to the vote of the meeting shall be decided on
a show of hands unless a poll is (before or an the declaration of the result of the show of
hands) demanded by the chairman where he is a shareholder or a proxy; or by at least
three members entitled to vote at the meeting, present in person or by proxy; or by the
holders present in person or by proxy of at least one-tenth part of the total voting rights of
all members having the right to vote at the meeting or by a member or members holding
shares on which an aggregate sum paid upon all the shares conferring that right. Unless a
poll is so demanded, a declaration by the chairman that a resolution has, on a show of
hands, been carried or carried unanimously or by a particular majority, or lost, and an
entry to that effect in the minute book of the company, shall be conclusive evidence
thereof without proof of the number of proportion of the votes recorded in favor of or
against such resolution. A proxy need not be a member of the company.
17. Subject to the provisions of the Act, a dated resolution in writing signed by all the
members for the time being entitled to receive notice of and to attend and vote at general
meetings (of being corporations, by their duly authorized representatives) shall be as
valid and effectual as if the same had been passed at a general meeting of the company
duly convened and held. And such resolution may consist of one or several documents
each duly signed by or on behalf of one or more members (provided that each such
document shall bear the same date).
18. A proxy may take part in the proceedings of a general meeting as if he were the
member whom he represents.
VOTE OF MEMBERS
19. On a show of hands every member present in person or by proxy shall have one vote
and on a poll such member shall have one vote for each share of which he is the holder.
13
DIRECTORS
20. The first directors of the Company shall be appointed by the subscribers to the
Memorandum of Association.
21. Unless and until otherwise determined by the Company in general meeting, the
number of directors shall not be less than three not more than seven.
22. The directors shall have power at any time and from time to time to appoint a person
as an additional director to fill a casual vacancy; such appointment to be approved by the
members at next Annual General Meeting.
23. The Company in General Meeting may from time to time direct such sums as may be
thought fit to be paid as and by way of remuneration to the directors and any such sum
shall be divided amongst them as they may agree, or failing agreement, equally. The
directors shall also be entitled to be repaid all expenses reasonably incurred by them
respectively in or about the performance their duties as directors.
24. Any director who, being so requested by the directors the directors, performs special
or extraordinary services on behalf of the company, or who travels or resides outside
Pakistan (or travels to or reside in any place other where he usually resides) for the
purpose of discharging his duties may be paid such extra remuneration (whether by way
of lump sum, salary, omission on participation in profits or otherwise) as the directors
may determine.
POWERS AND DUTIES OF DIRECTORS
25. The directors may grant retirement pensions or annuities or other gratuities or
allowances, including allowances on death to any person or to the widow of or
dependants of any person in respect of services rendered by the person to the Company,
whether as managing director or in any other office or employment under the company or
indirectly as an officer or employee of any subsidiary of the company, notwithstanding
that he may be or may have been a director of the company; and the company may make
payments towards insurances or trusts for such pensions, annuities and allowances in the
term of engagement of any person.
14
26. The directors, from time to time, and at any time, may provide through local boards,
attorneys or agencies for the management of the affairs of the company outside Pakistan,
and may appoint any persons to be members of such local boards or as attorney or agents
and may remove any person so appointed and appoint others in their place, and may fix
their remuneration.
27. The directors, from time to time, and at any time may delegate to any such local
board, attorney or agent, any of the power, authorities and discretion for the time being
vested in the directors, where such delegation is provided for under any provisions of the
Act other than the power to make calls, forfeit shares, borrow money or issue debentures
and any such delegation may be made on such terms and subject to such delegation shall
not amount to an abdication of duty; and the directors may at any time annul or vary such
annulment or variation shall be affected thereby.
28. Any directors may at any time appoint any other director or other person to be his
alternate and May at any time remove alternate director appointed by him, and appoint
another in his place. An alternate director shall not be entitled to receive any
remuneration from the company nor shall it be necessary for him to acquire or hold any
qualification share, but he shall be entitled to receive notice of meetings of the directors
and to attend and vote as director at any such meetings at which the director appointing
him present and at such meetings to exercise powers, duties and authorities of the director
appointing him. A director who is also an alternate director shall be entitled, in addition
vote, to a separate vote on behalf of the director he is representing. An alternate director,
if his appoint or cease for any reason to be a director, shall ipso facto cease to be alternate
director. Every person acting as an alternate director shall be an officer of the company
and shall alone be responsible to the company for his own acts and defaults and he shall
not be deemed to be an agent of, or for the director appointing him. All appointment and
removals of an alternate director made by any director in pursuance of this article shall be
in writing under the hand of the director making the same and shall be sent to or left at
the registered office of the company.
BORROWIG POWERS
29. The directors may exercise all the power of the Company to borrow money and to
mortgage or its undertaking, property and uncalled capital,
15 or any part thereof, and to issue debentures, debenture stock, and other securities
whether outright or as security for debt, liability or obligation f the Company or of any
third party.
DISQUALIFICATION OF DIRECTORS
31. The office of a director shall be vacated:-
(1) Upon removal.
(2) If by notice in writing to the Company he resigns the office of director.
(3) If he becomes bankrupt or insolvent or makes any arrangement or composition with
his creditors generally.
(4) If he is prohibited from being a director by an order made.
5) If he is found lunatic or becomes of unsound mind.
(6) If he is requested in writing by all the other directors to resign his office.
32. A director may hold any other office or place under the company except that of
auditor, upon such terms as to remuneration, tenure of office and otherwise as may be
determined by the board of directors.
33. A director may vote in respect of any contract or proposed contract or arrangement
withstanding that he may be interested therein and if he does so his vote shall be counted
and he may be counted in the quorum at any meeting of the directors at which any such
contract or arrangement shall come before the meeting for consideration.
33. The company may, by ordinary resolution remove any director and may by an
ordinary resolution appoint another person in his stead, such removal shall be without
prejudice to any claim such director may have for damages or for breach of any contract
of service between him and the company.
PROCEEDING OF DIRECTORS
34. In case of an equality of votes, the chairman of the board should not have a second or
casting vote.
35. The quorum necessary for the transaction of the business of the directors may be
fixed by the directors and unless so fixed shall be two.
16
36. A resolution in writing signed by each director or his alternate shall be as valid and
effectual as if it had been passed at any meeting of the directors duly convened and held
and when signed may consist of several documents each signed by one or more of the
aforesaid.
WINDING UP
37. In writing up, the liquidator may, with the sanction of a special resolution, distribute
all or any of the assets in specie among the members in such proportions and manner as
may be determined by resolution, provided always that if any such distribution
determined to be made otherwise than in accordance with the existing rights of the
members, every member shall have the right s of dissent and other ancillary rights as are
provided in the Act.
INDEMNITY
38. Every director, managing director, agent, auditor, secretary and other officer for the
time being of the company shall be indemnified out of the assets of the company against
any liability incurred by him in defending any proceedings, whether civil or criminal in
which judgment is given in his favor in which he is acquitted or in connection with any
application in which relief is granted to him by the court.
THE SEAL
39. The seal of the company shall not be affixed to any instrument except by the authority
of a resolution of the Board of Directors and in the presence of at least one Director and
the Secretary or such other person as the Directors may appoint for the purpose; and the
Director and Secretary or other person as aforesaid shall sign every instrument to which
the seal of the company is so affixed in their presence.
17
No NAME, ADDRESS AND DESCRIPTION OF
SUBSCRIBERS
SIGNATURE
1.
2.
3.
4.
5.
Dated this……………… day of ……………… 2007
Witness to the above signature
Name:
Address:
Occupation:
TERMS & CONDITIONS / PROFIT & LOSS SHARING MECHANISM
In consideration of ABN AMRO opening and /or continuing to maintain any Current,
Savings, Call Deposit, Time Deposit. Joint Pool Investment or any other accounts in
my/our name(s) (also referred to as the ‘Account’) and providing banking facilities to me/
us, I/We (also referred to as ‘Customer’ or ‘Accountholder’) agree to be bound by the
terms and conditions (also referred to as the ‘Terms’) set out below and I/We agree,
acknowledge and understand that:
1. All accounts are opened/maintained/placed with the Bank under the State Bank of
Pakistan’s (also referred to as SBP) rules and regulations and are governed by and subject
to all applicable rules/laws of Pakistan in effect, as notified/amended from time to time.
2. Any information advised/provided to the Bank by me/us shall be deemed to be correct
and binding on me/us unless the Bank receives within fifteen days from the date of such
advice any written notice to the contrary from me/us.
3. The Bank may, at its discretion, disallow/restrict operations in my/our account in case
of non-fulfillment of any account opening formality.
4. The Bank shall have the right to refuse to open any other account or close an existing
account in my/our name, without assigning any reason.
5. The bank may accept cheques, drafts or other instruments under clearing or collection
arrangements, entirely at the account holder’s own risk for loss, claims, dis honor, non-
payment, loss/delay in transit, etc. Value of un-cleared/un-realized items, if credited, but
returned unpaid later, may be debited again to my/our account by the Bank, and I/We
shall be responsible to pay its full value back to the Bank, if withdrawn from the account
wholly or partially.
6. There can be a profit or a loss on employment/investment of my/our funds deposited
with the Bank and the extent/amount of such profit/loss, as determined by the Bank, shall
be acceptable to me/us, without contestation or proof.
7. All Customer Deposits shall be invested by the Bank in accordance with Islamic
principles on Profit and Loss sharing basis.
8. In calculating Profit applicable to PLS accounts the Bank shall deduct proportionate
administrative costs at actual and a profit share of the Bank as Mudarib, which would be
50% of the realized profit. The Bank may change its profit share and weight age
applicable from time to time details of which will be available at the Bank and its website
for information of the customers.
9. No profit is paid on current accounts.
10. In the event of loss in business/investments that may occur without any fault or
negligence on part of the Bank all Investors of the Investment Pool shall share loss on pro
rata basis and the Bank shall loose the share for its efforts.
11. Any amount allocated as Profit/Loss by the Bank shall be final and binding on all
customers. No customer or any other person claiming under his/her authority or in his/her
place shall be entitled to question the basis of determination of such profit/loss.
12. The Bank, at its sole discretion and based on profit/loss from its
operations/investments, shall determine the amount/rate of profit/loss to be paid to the
customers, on six-monthly rests or any other interval prescribed by the Bank.
13. Withdrawal may not be made in a fixed term deposit / investments except on the
maturity date. If the Bank approves the withdrawal request submitted by a client for an
urgent reason, provisional profit shall be paid on premature encashment of the deposit
subject to final settlement at the end of the relevant term. Provisional profit shall be
calculated for actual period of deposit.
14. Where premature encashment of deposits/investments is allowed, the depositor will
be entitled to profit rate concurrent to the deposit category, which equals to the deposit
period with the Bank. In case the deposit period is not equal to any category; the category
less than such deposit period will be applicable.
15. Unless specifically advised by me/us to the contrary, on maturity, a fixed term
deposit/investment will be renewed/re-invested for the same period, at the sole discretion
of the Bank, on terms then applicable.
16. The deposits and withdrawals, shall solely be transacted at the branch to which the
attached application is addressed (the “Deposit Branch”) and at no other branch of the
Bank. The Bank shall not be liable beyond the control of the Deposit Branch, and
registered office or any other branch of the Bank shall not be liable in respect there of.
17. The Profit on the amount of the deposit will cease to accrue at the expiration of the
period of notice terminating the deposit given by me/us or the Bank and in this case the
whole amount of deposit including profit will be transferred to the current account
immediately.
18. The terms and conditions contained herein shall be deemed to be and construed as a
part of my/our original account opening form/agreement as if it were agreed between
me/us and the Bank at the very outset.
19. Advices and statements of account in respect of my/our accounts will be provided/
sent by hand or by mail at such frequency as the Bank may determine.
20. Notices, advices, statements etc, delivered/posted to my/our address recorded with the
Bank, will be assumed to have been rightly/duly served on or sent to me/us.
21. The Bank shall have the right to debit my/our account with all the expenses and fees
and other transaction costs related to my/our dealings and commitments towards the Bank
at any time, at is sole discretion, as per its schedule of charges.
22. The Bank shall have the right of lien and set-off and /or disposal in respect of any of
my/our rights, funds, profits or assets that are in the custody of the Bank, against any
liability on my/our part in favor of the Bank at any time. As a result of exercise of such a
right through set-off, merger, combination, consolidation etc. of accounts with any of its
branches, if there is a shortfall in clearing my/our liability,
I/We undertake to make good any such difference at the Bank’s first demand.
23. Subject to SBP Regulations and if permitted by SBP, the Bank may prescribe
minimum balance requirements for opening and/or maintaining any accounts and it shall
be my/our responsibility to comply with such minimum balance requirement, failing
which, the Bank may levy any charges/fees on such accounts, as per its schedule of
charges.
24. Subject to SBP Regulations and if permitted by SBP, the Bank shall be entitled to
levy any service charges on my/our un-remunerative account balances only if and to the
extent it is specified in its schedule of charges.
25. In general, my/our signature on the account opening application/form shall mean
acceptance of all the applicable terms, conditions and regulations of the Bank in
connection with my/our dealings with the Bank.
26. It shall be my/our responsibility to verify/approve all correspondence or instructions
given by me/us over telephone or send by me/us to the Bank by fax or e-mail in
connection with all my/our various accounts and dealings with the Bank and all matters
and issues related thereto I/We also acknowledge that the Bank would normally act only
on my/our written/signed/witnessed instructions and that it would be the Bank’s
discretion to accept/reject any verbal/telephonic/fax/email instructions.
27. The Bank would carry out all my/our instructions bearing my/our signatures as
recorded with the Bank, regardless of how I/We ‘actually’ sign on any other
documents/record.
28. It shall be my/our responsibility to indemnify the Bank against any loss, legal action,
damages or claims suffered by the Bank owing to any
Incorrect/Incomplete information provided by me/us to the Bank or for any loss, legal
action, damages or claims arising out of the Bank agreeing to open/operate an account for
me/us in its books.
29. It shall be my/our responsibility to use the account opened with the Bank only for
legitimate/legal/allowed personal or business purposes and not for money laundering
purpose or any purpose that violates any rules/laws in force.
30. The Bank, in its absolute discretion, may issue me a cheque book for withdrawals
from my/our account and May, at its discretion, withdraw or recall the same. The Bank
may also refuse to allow withdrawals except through such cheques.
31. I/We would be completely responsible for the safe custody of any cheque books/pass
books and shall immediately notify the Bank, in writing, if a cheque book or any leaf
from it is lost /stolen. In such a case, the Bank may, in its discretion, accept/place a ‘stop
payment’ instruction from me/us against such cheques. Further, I/We undertake to
indemnify the Bank and hold it harmless against any loss, claims or legal action arising
out of any accidental payment of such cheques due to rush of work or any other
legitimate reason.
32. The Bank is authorized to reverse any incorrect entries and the amount of profit/loss
thereon, accidentally/mistakenly posted to my/our account(s). In case
I/We have withdrawn all or part of sum wrongly/mistakenly credited to my/our account,
I/We undertake to re-deposit that sum immediately on being notified of the wrong credit
to my/our account, without contestation or delay.
33. The Bank shall be fully authorized to deduct/withhold any duties/taxes/levies in any
form, as required under any applicable rules/laws in force, without referring to me/us.
34. In case of conflicting instructions received from two authorized signatories to my/our
account or relating to my/our joint account, the Bank would be authorized to act at its
discretion or stop operations in the account until such time as the dispute is resolved to
the satisfaction of the Bank.
35. In the event of my/our death, and provided the Bank receives a valid notice of death,
credit balances in my/our accounts shall be released by the Bank only against a valid
succession certificate, order of the court, letter of administration probable, provided,
where operating instructions are ‘either/or survivor’ The account may be operated by the
survivor.
36. Withdrawals from my/our accounts foreign currency accounts would be subject to
availability of foreign currency notes with the Bank at the time of withdrawal.
37. Withdrawals from or deposits to my/our foreign currency accounts would be subject
to foreign exchange rules and regulations of the State Bank of Pakistan or the
Government of Pakistan, currently in force and as amended from time to time. I/We agree
further that, the Bank’s interpretation/determination of whether or not it is able to allow
any such deposits/ withdrawals, shall be final and binding on me/us.
38. The Bank may stop/suspend operations in my/our accounts or close/freeze my/our
accounts in pursuance of any court or administrative order, without reference to me/us.
39. The Bank, it’s Head Office, subsidiary offices, branches or any of its officers shall
not be liable for unavailability of funds credited to my/our accounts due to any legal
restrictions imposed by relevant government agencies, involuntary transfer, and acts of
war, civil strife, industrial action, and acts of nature or other causes beyond the control of
the Bank.
40. The Bank is authorized by me/us to respond, at its discretion, to any or all enquiries
received from any other banks, or authorized government agencies, concerning my/our
accounts, without reference to me/us.
41. In case I/We request the Bank to ‘hold my/our mail’, i.e. not to mail any notices,
advices, statements etc. to my/our given address, without any responsibility obligations
on part of the Bank, so that I/We may collect it myself/ourselves at my/our convenience,
such notice, advice or statements will be considered as having been duly delivered to me,
while being held by the Bank and I/We shall hold the Bank harmless against any
liability/consequences of non delivery to me/us of such notice, advice or statement on
time.
42. Generally, all the services/facilities provided by the Bank shall be subject to the
Bank’s Schedule of Charges, currently in force and as amended from time to time and
available on request.
43. These terms are in addition to specific terms and conditions applicable in each of the
different types of accounts.
44. The Bank reserves the right to modify these Terms from time to time. The revised or
modified Terms will become effective upon notice being given to me/us, such notice
being deemed to have been properly given, if displayed at the branches of the Bank or
otherwise notified/advised to me/us.
45. A Photocopy of this Account Opening Form and these Terms and Conditions has
been received by me for my records/reference.
Read, Understood & Agreed. Received one copy of this Account Opening Form
………………………………………………………………………………………………
Accountholder(s) authorized signature(s). Date
………………………………………………………………………………………………
Witness

BANK GLOSSARY
 “approved securities” means the shares of the Bankers Equity Limited or securities
in which a trustee may invest money under clause (a), clause (b), clause (bb), clause (c)
or clause (d) of section 20 of the Trust Act, 1882 (II of 1882), and for the purpose
of— (i) sub-section (3) of section 13, includes such other securities as the Federal
Government may, by notification in the official Gazette, declare to be approved securities
for the purpose of that subsection; (ii) sub-section (1) of section 29, includes such types
of Pakistan rupee obligations of the Federal Government or a Provincial Government or
of a Corporation wholly owned or controlled, directly or indirectly, by the Federal
Government or a Provincial Government and guaranteed by the Federal Government as
the Federal Government may, by notification in the official gazette, declare, to the extent
determined from time to time, to be approved securities for the purpose of that
subsection;
“Banking” means the accepting, for the purpose of lending or investment, of deposits of
money from the public, repayable on demand or otherwise, and withdraw able by cheque,
draft, order or otherwise;

“Banking Company” means any company which transacts the business of banking in
Pakistan;

“branch” or “branch office”, in relation to a banking company, means any branch

or branch office, whether called a pay office or sub-pay office or by any other name, at
which deposits are received, cheque cashed or moneys lent, and for the purposes of
section 40 includes any place of business where any other form of business referred to in
sub-section (1) of section 7 is transacted;
“creditor” includes persons from whom deposits have been received on the basis of
participation in profit and loss and a banking company or financial institution from which
financial accommodation or facility has been received on the basis of participation in
profit and loss, mark-up in price, hire-purchase, lease, or otherwise.
 “Company” means any company which may be wound up under the Companies Act,
1913
“Debtor” includes a person to whom, or a banking company or financial institution to
which, finance as defined in the Banking Tribunals Ordinance 1984, has been provided;
“Demand liabilities” means liabilities which must be met on demand

“Time liabilities” means liabilities which are not demand liabilities;

“Family members” in relation to a person means his spouse, dependent lineal

ascendants and descendants and dependent brothers and sisters;*

“Gold” includes gold in the form of coin, whether legal tender or not, or in the form of
bullion or ingot, whether refined or not;
“Loans, advances, and credit” includes “finance” as defined in the Banking
Tribunals Ordinance, 1984;
“managing director”, in relation to a banking company, means a director who, by
virtue of an agreement with the banking company or of a resolution passed by the
banking company in general meeting or by its Board of Directors or, by virtue of its
memorandum or articles of association, is entrusted with the management of the whole,
or substantially the whole of the affairs of the company, and includes a director
occupying the position of a managing director, by whatever name called;
“secured loan or advance” means a loan or advance made on the security of assets
the market value of which is not at any time less than the amount of such loan or
advance, and “unsecured loan or advance” means a loan or advance not so secured, or
that part of it which is not so secured;
“State Bank” means the State Bank of Pakistan;

REFERENCES
Asrar H. Siddiqi, “Practice and law of banking in Pakistan”, sixth Edition, Royal Book
Company, Karachi
Shaukat Mahmood, Nadeem Shaukat “The Law of banks”, fifth edition, Legal research
center, Lahore
www.google.com.pk
www.sbp.com
www.abnamro.com
www.yahoo.com
www.secp.gov.pk

QUESTIONNAIRE
The following informal interview was conducted by Sadaf Fayyaz from Ms. Farah Gul of
Askari Commercial Bank Ltd. She guided us with certain information. A few list of
questions asked, is as below :( Qamar Abbas provided excellent information regarding
the questions on his own :)

Q1what guidelines are required to commence a banking business in Pakistan

for a foreign company?
Q2 Are guidelines, rules and regulations for a banking company and a non
banking finance company same?
Q3 which governmental body is mainly responsible for providing rules and
regulations to banking companies in Pakistan?
Q4 what documents or papers are required for registration of a limited
company?
Q5 How does sbp monitor that the foreign company is acting according to
the standards?
Q6 Does SBP collaborates with Ministry of Finance for a banking company
business?
Q7 Do the forms and annexure provide enough information for SBP to carry
out the request?
Q8 what are the requirements for commercial paper issue for a banking
company?
Q9 what are certain company share capital requirements?
Q10 How does SBP come in compliance for company buy back share rules?