Rules & Regulations
Investments under Employees' Old-Age Benefits Rule 1977

 

S.R.O. 1214 (1)/74, dated 23rd December, 1979:  In exercise of the powers conferred by Section 44 of the Employees’ Old-Age Benefits Act, 1976 (XIV of 1976) the Federal Government is pleased to make the following rules:-

  • Short title and commencement:

(1)      These rules may be called the Employees’ Old-Age Benefits (Investment) Rules, 1979.

(2)      They shall come into force at once.

  • Definitions:

In these rules unless there is anything repugnant in the subject or context:-

(a)      “Act” means the Employees’ Old-Age Benefits Act, 1976 (XIV of 1976);

(b)     “authority” means an authority constituted by or under any law, and includes an authority constituted under any housing or building scheme approved by the Federal Government or a Provincial Government;

(c)      “company” has the same meaning as defined in clause (2) of Section 2 of the Companies Act, 1913 (VII of 1913);

(d)     “controlled company” means a company in which not less than fifty-one per cent of the voting share capital is held by the Institution;

(e)      “corporation” means a corporation constituted by or under any law;

(f)      : “debenture”: means written acknowledgement of a debt raised by an authority, corporation, company or non-guaranteed bank and secured by a trust deed or mortgage, the debt being repayable at specified date or dates;

(g)     “dividend” means the distribution of profit in cash among, or of bonus shares in lieu thereof to, its shareholders by an authority, corporation, company or non-guaranteed bank;

(h)     “Government-guaranteed securities” means securities in respect of which the Federal Government or a Provincial Government has given a full and unconditional guarantee both as regards the principal and interest payable thereon on being presented at the State Bank or other bank or a Treasury Office;

(i)       “Government securities” means Government securities as defined in the Securities Act, 1920 (X of 1920), and includes Government Treasury Deposit Receipts, Postal Savings Deposits, Khas Deposit Certificates, Defense Saving Certificates, National Deposit  Certificates and such other similar certificates as may be introduced by the Federal Government or a Provincial Government under any scheme;

(j)       “guaranteed-bank” has the same meaning as defined in clause (1) of Section 3 of the Bank (Nationalization) Act, 1974 (XIX of 1974);

(k)     “net-worth” in respect of any authority, corporation, company or non-guaranteed-bank, means to the total value of its assets in  Pakistan less the total actual and contingent liabilities (other than in respect of ordinary of preference shares), provisions for liabilities, loans and other charges payable, out of, or provided against, or charged on, the said assets;

(l)       “non-guaranteed-bank” means a scheduled bank with a paid-up capital of not less than thirty million rupees, not being a guaranteed-bank;

(m)   “ordinary share capital” means any class or classes of share capital which under the constitution of an authority, corporation, company or non-guaranteed bank to which it relates has no right to any fixed or preferred dividend or to any priority in the event of its winding up or liquidation;

(n)     “paid-up capital” means the total amount credited as paid-up on issued share capital;

(o)     “portfolio” means the aggregate of all investments made by the Institution at book value; and

(p)     “preference share capital” means any class or classes of share capital which under the constitution of any authority, corporation, company or non-guaranteed bank to which it relates has a right to a fixed or preferred dividend or a priority over any other class of capital in the event of its winding up or liquidation.

  • Permissible investments:

The Institution may invest any moneys which are not immediately required for expenses under the Act:-

(a)      in Government securities;

(b)     in Government-guaranteed securities;

(c)  in loans to bodies or persons holding Government  securities or Government guaranteed securities, the realizable value of which exceeds the amount of the loan and the accrued interest and other charges thereon, by not less than twenty per cent  and such securities are pledged, hypothecated or assigned to the Institution;

(d)     in interest-bearing deposits in guaranteed banks;

(e)   in debentures or loan stocks of,  or other securities for money issued by, of loans to, any such authority, corporation or company, or interest-bearing deposits in such non-guaranteed bank as have paid dividends of not less than ten per cent per annum on their respective ordinary share capital for the two accounting years, or have paid interest in full on debentures issued or other money obligations incurred by them and have not defaulted in the repayment or the principal thereof during thirty-six months immediately preceding the day on which investment is made;

(f)  in ordinary or preference shares of any such authority or corporation or of such a company listed with any stock Exchange in Pakistan, as has paid dividends of not less than ten per cent. per annum on its ordinary share capital for three accounting years immediately preceding the year in which investments is made;

(g)  in  ordinary or preference shares or debentures or loan stock of, or other securities for money issued by, or loans to, a controlled company;

(h)     in immovable property, whether freehold or leasehold; or

(i)    with the previous approval of the Federal Government, in such other investments as the Institution may think it fit.

  • Limits of investments:

(1)  Subject to these rules, the following shall be the limits up to which investments may be made under rule 3, namely:-

 (i)    For  investment clauses (a) to (d), no limit.

 (ii)    For investment under clause (e), fifty per cent. of the portfolio.

 (iii)   For investment under clause (f), fifty per cent. of the portfolio.

 (iv)   For investment under clause (g),-

      (a)     in respect of any controlled company, ten percent, of the portfolio; and

      (b)    in respect of all such controlled companies together, thirty percent of the portfolio.

(v)    For investment under clause (h),-

      (a)    in respect of any one property, ten percent of the portfolio; and

      (b)    in respect of all properties together thirty per cent. of the portfolio.

(vi)   For investment under clause (i), two and-a-half percent of the portfolio.

(2)  No investment made in any one authority, corporation, company or non-guaranteed bank under clause (e) and

(f) of rule 3 shall exceed twenty-five percent of its paid-up capital, or twenty-five per cent of its net worth in

Pakistan or two and-a-half per cent of the portfolio, whichever is less:

Provided that if there be any investment in partly paid-up shares of an authority, corporation,

company or non-guaranteed bank, the limit shall be reduced by the uncalled for liability in respect of

such shares.

(3)   The aggregate of all investments made under clauses (f), (g) and (h) shall not exceed fifty percent of the portfolio.

(4)   The aggregate of all investments made under clauses (e), (f), (g) and (h) shall not exceed eighty percent of the portfolio.

Rule 3 of the Investment Rules prescribes the permissible investments that EOBI is authorized to make, and sub-rule (h) of Rule 3 authorizes EOBI to invest any moneys which are not immediately required for expenses under the EOB Act in immovable property,whether freehold or leasehold. Further, sub-rule 4(1)(v) of the Investment Rules, which prescribes the threshold to invest inimmovable property, states that EOBI can invest up to (i) ten percent of its portfolio, in respect of any one immovable property, and (ii) thirty percent of its portfolio, in respect of all immovable properties collectively.
  • Disbursement not to be made where limits exceed:

(1)  If at any time the existing investments in any class or aggregate of classes or in any one authority, corporation, company, non-guaranteed bank on immovable property exceed the limits prescribed by rule 4, then, except as provided in rule 6, no additional investment by way of actual disbursement of money or money’s worth shall be made by the Institution at that time in such class or classes, or authority, corporation, company, non-guaranteed bank or immovable property.

(2)  In respect of any class or aggregate of classes, or any one authority, corporation, company, non-guaranteed bank or immovable property, no additional investment shall be made at any time by way of actual disbursement of money or money’s worth if such additional investment will cause the limits prescribed by rule 4 to be exceeded, except as provided in rule 6.

(3)  For the purposes of this rule and rules 3,4 and 6 all existing investments shall be taken at current book value.

  • Power to invest in excess of prescribed limits: 

The Institution may, with the previous approval of the Federal Government, invest its money, in excess of the limits prescribed by rule 4:

Provided that the aggregate of all investments made under this rule, together with investments made under clause (i) of rule 3, shall not exceed two and a half percent of the profolio       

  • Loans to officers and staff:

The Institution may make loans to its officers and members of staff in accordance with the regulations made in this behalf, but the total amount of such loans outstanding at any time, including any interest accrued thereon, shall not exceed two percent of the assets of the fund at its book value.

  • Realization and reinvestment:

             The Institution may at any time sell or realize any of its investments at such price, and reinvest all or part of the proceeds in such manner as it deems fit.

  • Safe custody:        

             The Institution shall ensure that “Proper” and adequate arrangements are made for the safe custody of the documents of title relating to investments.



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