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–>Directors of the Karachi Stock Exchange (Guarantee) Limited have urged the government to make distribution of dividends by profit-making firms, saying it would improve market liquidity, besides enabling small investors to share in listed companies earnings. This will also result in additional revenue generation for the government, a handout said on Thursday.
This was discussed in an emergent Board meeting held on June 6 this year to determine the implications of the Finance Bill, 2012 on the Exchange. They also called for reducing the tax rate for listed companies so that the vast swathes of undocumented businesses come under documentation. Appreciating efforts made by the Ministry of Finance, they praised the Federal Budget 2012 announced by the Minister for Finance on June 1, 2012.
Praising the government for accepting some of the proposals submitted by the Karachi Stock Exchange (Guarantee) Limited, they noted that various components of the Federal Budget 2012 would have a healthy impact on the domestic capital market.
They, however, said that some proposals submitted by the Exchange should have been included in the Finance Bill 2012 to best serve the interest of stakeholders of the capital market, in particular with respect to the Stock Exchanges (Corporatization, Demutualization and Integration) Act, 2009. The Directors said that they decided to approach the Ministry of Finance for the Ministry’s consideration and acceptance of the proposals submitted by the Karachi Stock Exchange (Guarantee) Limited which are given below:
1. Compulsory distribution of dividends by profit-making listed companies to improve both market liquidity and enabling small investors to share in listed companies earnings. This will also result in additional revenue generation for the government.
2. Reduced rate of tax for listed companies so that the vast swathe of undocumented businesses come under documentation and become part of a better governance structure.
3. Capital Gains on Corporatization and Demutualization which was accepted in the past but due to an oversight an anomaly continues to exist and needs to be rectified in respect of exemption of (i) Capital Gains on Corporatization and Demutualization, (ii) difference amount on to issuance of shares due to Corporatization and Demutualization and (iii) gain on subsequent sale of shares to the strategic investors and to the public.
4. Appropriate method for calculation of Capital Gains for Non-Residents so that Pakistan can benefit from Non-Resident Pakistanis investments much like India and China have benefited from their respective diasporas.
5. Reduction in powers for amending assessment in order to avoid economic uncertainty and to establish and enhance investor confidence.-PR
Copyright Business Recorder, 2012