Form 15 End of Bearer Securities

Form 15: Tracking the End of Bearer Securities in Pakistan

Islamabad, Pakistan – In a significant move towards greater transparency and to curb illicit financial activities, Pakistan’s corporate law, specifically the Companies Act, 2017, has strictly prohibited the issuance of bearer securities. For companies that historically issued such instruments, Form 15 stands as a crucial statutory requirement, serving as a compliance record for the surrender or cancellation of these now-prohibited securities. This detailed guide explores the intricacies of Form 15, its legal basis, filing requirements, and the consequences of non-compliance.

What is Form 15?

Form 15 is a mandatory statutory form prescribed under the Companies Act, 2017 of Pakistan. Its primary purpose is to enable companies to maintain and submit a comprehensive register of past holders of bearer securities, such as bearer shares, and to formally record the details of these securities when they are surrendered or cancelled.

This form is particularly vital for companies that, in a previous era, issued bearer securities. With the current legal prohibition on these instruments, Form 15 acts as the official mechanism to confirm that these securities have been either surrendered by their holders or otherwise cancelled by the company, ensuring their conversion into registered form or complete extinguishment in compliance with the law.

Legal Background and Prohibition of Bearer Securities

The existence and filing of Form 15 are firmly rooted in Pakistan’s corporate legislative framework, driven by a broader global push for enhanced financial transparency and combating money laundering.

Form 15 is governed by:

• Section 72 of the Companies Act, 2017: This pivotal section explicitly prohibits the issuance of bearer shares and mandates that any existing bearer shares must be surrendered or converted into registered shares. It lays the groundwork for the eventual elimination of such instruments from the corporate landscape.
• Regulation 9 of the Companies (General Provisions and Forms) Regulations, 2018: These regulations provide the specific procedural details and the format for various statutory forms, including Form 15, ensuring the smooth implementation of the Companies Act’s provisions.

The legislative intent behind these provisions is clear: to eliminate the anonymity associated with bearer securities, which could be easily transferred without official record, making them susceptible to misuse. Form 15, therefore, serves as a critical compliance record of this transition process.

Who Must File Form 15?

Form 15 is not a universally applicable form. It is specifically mandated for:

• Companies with Past Bearer Securities: Any company, particularly older unlisted companies, that previously issued bearer securities and is now legally required to cancel or convert them into registered form.
• Companies Maintaining Bearer Share Registers: Companies that currently maintain or have historically maintained registers pertaining to bearer shares, even if the shares have since been converted or cancelled, must use Form 15 to formalize these records with the SECP.

Purpose and Significance of Form 15

The overarching purpose of Form 15 extends beyond mere compliance; it plays a crucial role in enhancing the integrity and transparency of corporate shareholding structures:

• Record of Bearer Security Holders: It provides a definitive historical record of all past holders of bearer securities, linking them to the company’s official documentation.
• Declaration of Securities Issued: It mandates companies to declare the number, class, and value of bearer securities that were initially issued.
• Disclosure of Surrendered/Cancelled Securities: It requires comprehensive disclosure of particulars related to bearer securities that have been surrendered by holders or cancelled by the company.
• Compliance with SECP Requirements: It ensures adherence to the SECP’s mandate for greater transparency and accountability in shareholding patterns, aligning Pakistani corporate practices with international best standards.
• Elimination of Anonymity: By documenting the conversion or cancellation of bearer securities, Form 15 contributes to the elimination of anonymous ownership, making it harder for illicit funds or activities to be concealed through corporate structures.

Key Information Required in Form 15

To fulfill its purpose, Form 15 demands detailed information to ensure a comprehensive record of the bearer securities and their disposition:

• Company Name and Incorporation Details: Basic identifying information of the company, including its legal name and incorporation number.
• Class and Type of Bearer Securities: Specific details about the type of bearer securities (e.g., bearer shares, bearer bonds) and their class (e.g., ordinary, preference).
• Date of Issuance of Bearer Securities: The original date(s) when these bearer securities were initially issued.
• Name and Identity of Bearer Security Holders (where known): While bearer securities are designed for anonymity, if the company has any record or knowledge of the last known holders during the surrender/conversion process, this information must be provided.
• Security Certificate Numbers: Unique identification numbers of the bearer security certificates.
• Date of Surrender or Cancellation: The exact date(s) on which the bearer securities were surrendered by their holders or formally cancelled by the company.
• Mode of Conversion (if applicable): Details on how the bearer securities were converted, for example, into registered shares, including the particulars of the new registered shares issued.
• Details of Register Maintenance: Information about how the company has maintained its bearer securities register and the steps taken to update it.
• Confirmation of Compliance: A formal declaration confirming that the company has complied with all relevant provisions of the Companies Act, 2017, concerning the prohibition and disposition of bearer securities.

Supporting Documents for Form 15

To validate the information provided in Form 15, certain supporting documents must be prepared and attached to the electronic submission:

• Board Resolution for Cancellation/Surrender: A certified copy of the Board of Directors’ resolution approving the process for the cancellation or conversion/surrender of the bearer securities.
• Declaration by Company Secretary or Authorized Officer: A formal declaration signed by the company secretary or another authorized officer, confirming the accuracy of the information provided and compliance with legal requirements.
• List of Bearer Security Holders (if available/applicable): Any existing list or record of persons who presented bearer securities for surrender or conversion.
• Evidence of Cancellation or Conversion: Documentary proof that the bearer shares have been physically cancelled (e.g., defaced certificates) or legally converted into registered shares (e.g., new share certificates for registered shares).
• Certified Copy of the Updated Share Register (if applicable): If bearer securities were converted into registered shares, a certified copy of the company’s updated share register reflecting these changes.

How to File Form 15

The filing process for Form 15 is streamlined through the SECP’s eServices portal, ensuring efficiency and accessibility:

1. Log in to SECP eServices Portal: Access the online portal using the company’s registered login credentials.¹
2. Choose “Statutory Filings”: Navigate to the section dedicated to statutory filings.
3. Select Form 15: From the list of available forms, choose “Form 15 – Register of Bearer Securities and Records of Surrendered/Cancelled Bearer Securities.”
4. Fill in Mandatory Fields: Carefully complete all the required fields in the online form, ensuring accuracy and completeness.
5. Upload Supporting Documents: Attach all the necessary supporting documents in the prescribed electronic format.
6. Pay Applicable Filing Fee: Proceed to pay the prescribed filing fee through the integrated online payment gateway.
7. Submit the Form Online: Once all details are entered and documents uploaded, electronically submit the form.
8. Retain Acknowledgment: Save or print the system-generated acknowledgment of successful submission for future reference.

Filing Timeline

Unlike some routine annual filings, Form 15 is an event-driven filing. This means there isn’t a fixed, recurring timeline (e.g., quarterly or annually). Instead, Form 15 must be filed as soon as the bearer securities are surrendered or cancelled, ensuring that the SECP is promptly informed of the updated status. Companies should not delay this filing once the conversion or cancellation process is complete.

Filing Fee for Form 15

The fee for filing Form 15 is not a fixed universal amount but varies based on the company’s authorized capital. This fee structure is detailed in Schedule II of the Companies (Registration Offices) Regulations, 2018. Typically, the fees are nominal, starting from around Rs. 500 for companies with lower authorized capital, with incremental increases for companies with larger authorized capital. Companies should always consult the most current fee schedule available on the SECP’s official website to confirm the exact amount payable.

Consequences of Non-Compliance

Failure to file Form 15 as and when required, or providing false or incomplete information, can lead to serious consequences under the Companies Act, 2017:

• Penalties: Imposition of monetary penalties as stipulated in the Companies Act for non-compliance with statutory filing requirements.
• SECP Inquiries or Audits: The company may become subject to inquiries, investigations, or audits by the SECP to ascertain the reasons for non-compliance and the status of its bearer securities.
• Legal Action: Continued non-compliance or the failure to take appropriate action regarding bearer securities can result in legal action being initiated against the company and its directors.
• Possible Disqualification of Directors: In more severe cases of persistent non-compliance or deliberate concealment, directors of the company could face disqualification from holding directorships in other companies.

Frequently Asked Questions (FAQs) – Form 15

Q1: Are bearer securities still allowed in Pakistan?

A: No. The issuance of bearer securities is strictly prohibited under Section 72 of the Companies Act, 2017. All existing bearer securities must be surrendered or converted into registered form.

Q2: What if the bearer securities were lost or not surrendered by the holders?

A: Even if bearer securities are lost or not surrendered by their holders, the company is legally obligated to take necessary steps to cancel them from its records and formally report this cancellation to the SECP via Form 15. The company may need to follow specific procedures for such cancellations, often involving public notices.

Q3: Is physical submission allowed for Form 15?

A: No, Form 15, like most other statutory filings with the SECP, must be filed exclusively through the SECP’s online eServices portal. Physical submissions are generally not accepted.

Q4: Do all companies need to file Form 15?

A: No. Form 15 is only required for companies that have historically issued bearer securities or that still maintain records related to such securities, and are now in the process of complying with the prohibition by cancelling or converting them. Companies that never issued bearer securities do not need to file Form 15.

By diligently adhering to the requirements of Form 15, companies not only ensure legal compliance but also contribute to the ongoing efforts to enhance corporate transparency and combat financial irregularities within Pakistan’s corporate sector.