Discussion:
As per Section 13 of Pakistan Foreign Exchange Regulations Act 1947 (reproduced below), there
are strict regulatory controls over the ability of non-residents to hold Pakistani securities (and
hence remit money outside of Pakistan) which is reproduced below for ready reference:
Export/ transfer of Pakistani securities or transfer of any interest in security. [Section 13]
Quote “No, person shall, except with permission of the state Bank of Pakistan
a. take or send any security to any place outside Pakistan;
b. transfer any security or create or transfer any interest in a security to or in favour of a
person resident outside Pakistan;
c. transfer any security from a register in Pakistan to a register outside Pakistan or do any act
which is calculated to secure, or forms part of a series of acts which together are calculated
to secure, the substitution for any security which is either in, or registered in Pakistan, of
any security which is either outside or registered outside Pakistan;
d. issue, whether in Pakistan or elsewhere, any security which is registered or to be registered
in Pakistan, to a person resident outside Pakistan.” Unquote
However, Chapter 20 Section 8 (see below) of Pakistan Foreign Exchange Manual as issued by
the State Bank of Pakistan allow non-residents to hold Pakistani securities but only on a non¬
repayable basis as reproduced below:
Issue of Securities and NIT Units to Persons Resident outside Pakistan on non-repatriation basis and its transfer on the same basis. [Section 8 SBP FEM.]
Quote “(i) It is permissible to issue Pakistani Securities of all types including NIT Units but
excluding shares of companies not quoted on stock exchange, in favour of persons resident outside Pakistan, on non-repatriation basis, if payment is made either in foreign exchange or in Pakistan rupees provided the securities are registered at the Pakistan address of the purchaser and a clear undertaking is furnished by him that no repatriation of capital and profits/dividends
accruing thereon will be claimed at any stage.
(ii) Such securities may also be transferred to a person, whether resident in or outside Pakistan,
on the same basis, provided the securities are registered at the Pakistan address of the
purchaser and a clear undertaking is given by him that no repatriation of capital and profit/dividend accruing thereon will be claimed at any stage.
(iii) A person resident outside Pakistan holding shares on non- repatriation basis may also be
issued bonus/right shares as per his entitlement, on the basis.of non-repatriation of capital and
dividend.” Unquote
As per the above discussion, it is clear that by default Pakistani securities are non-repatriable
hence, not allowed to transfer any interest in security outside Pakistan
