Below are some questions we frequently receive about forming a Capital Venture Funds Company in
Pakistan, along with answers based on the current laws, rules and regulations.
1) MINIMUM AMOUNT OF PAID UP CAPITAL AND EITHER THE WHOLE AMOUNT IS DEPOSITED IN
THE BANK AT ONE TIME OR NOT
An "eligible investor" is someone who has at least Rs. 15 million in assets, excluding the value of
their personal residence. They must also provide a declaration to the private fund management
company saying that they understand the risks associated with investing in a private fund.
REGULATION 8: – ROLE OF PRIVATE FUND MANAGEMENT COMPANY:
The Private Fund Management Company shall have a minimum equity of rupees ten (10) million.
This requirement shall not apply to an NBFC that has a valid investment advisory license and that
complies with the minimum equity requirements for investment advisory license.
2) TAXATION OF CAPITAL GAIN AND ANNUAL TAXATION AND AUDIT REQUIREMENT OF CAPITAL
Regulation 8: – Role of Private Fund Management Company:
It is the duty of the Private Fund Management Company to keep accurate records of the Private
Fund's assets, liabilities, profits, losses, and transactions. These records must be kept at the
company's registered office and must be maintained for at least ten years. Additionally, all amounts
received from the sale of units and any pay-outs made to unit-holders must be properly
The balance sheet, profit and loss statement, cash flow statement, and statement of movement in
NAV per unit of the private fund must be prepared in accordance with approved international
accounting standards and international financial reporting standards, and transmitted to the unit
holders and the commission within four (3) months of the close of the financial year of the private
It is the responsibility of the Private Fund's management to maintain a register of unit holders and to
exercise due diligence in ensuring that the register is accurate, complete, and up-to-date.
Furthermore, the management must take reasonable care to ensure that only eligible investors are
recorded in the register.
An external auditor shall be appointed to review the Private Fund's annual accounts. The auditor
must be a Chartered Accountant who has received a satisfactory rating under the Quality Control
Review (QCR) Program of the Institute of Chartered Accountants of Pakistan. The appointed auditor
shall provide a report on the annual accounts of the Private Fund containing the following:
The auditor has examined the accounts of the Private Fund for the period under review and has
expressed their opinion on whether the accounts have been prepared in accordance with the
relevant provisions of the Regulations. In addition, the auditor has confirmed that they have
conducted their audit in accordance with international standards on auditing as applicable in
The auditor’s opinion is that a true and fair view is given of the disposition of the Private Fund at the
end of the period under review, and of the transactions of the Private Fund during that period.
If the auditor finds that the Private Fund has not kept proper books and records, or that the
accounts prepared do not agree with the books and records of the Private Fund, the auditor shall
report that fact; and
If the auditor is unable to obtain all the information and explanations which, in his opinion, are
necessary for the purpose of the audit
REGULATION 15: – FEE PAYABLE TO THE COMMISSION:
The Private Fund Management Company will pay the Commission an annual fee, which will be
charged to the Private Fund as an expense, within three months of the close of the financial year of
the Private Fund. The rate for the annual fee is specified in Schedule I.
3) IN CASE OF FOREIGN INVESTORS, EITHER HE IS ELIGIBLE FOR EXPATRIATION OF ALL THE
AMOUNTS (PRINCIPAL, DIVIDEND AND GAIN) OR NOT.
The 2015 Regulations and the 2019 Amendments to the law do not place any restrictions on foreign
investors. As long as an investor meets the eligibility criteria and has complied with the registration
requirements, and is willing to undertake risks as laid out in the Investment Policy and the
Placement Memorandum, they can invest in the Capital Fund.
Since the law does not mention foreign investors specifically, it does not specify for the eligibility for
expatriation of all the amounts.
4) HOW MUCH TIME IS REQUIRED FOR REGISTRATION OF CAPITAL VENTURES.
There is no set timeline for registering a Capital Venture. The amount of time it takes to register is
dependent on the Registration procedure set out in Regulation 5 of the Private Funds Regulations
5) ENLIST THE REQUIRED DOCUMENTS FOR REGISTRATION AND ELIGIBILITY CRITERIA FOR
INVESTORS AND FOREIGN INVESTMENTS
"Eligible Investor" means a person who:
- has net assets of at least Rs. 15 million, excluding the value of their personal residence; and
- furnishes a declaration to the Private Fund Management Company stating that they understand the
risks of investing in a Private Fund.
No individual shall create, debut, or raise finances in Pakistan for investment in a Private Fund unless
the Fund is registered and compliant with these Regulations.
A private fund can be set up as a trust under the Trust Act, 1882 (II of 1882), or as a company under
Companies, Act 2017, or as a limited liability partnership under Limited Liability Partnership Act 2017
or any other legal structure as approved by the Commission.
Its units are not listed on any Exchange; and
Private Fund Management Company or Private Fund, as the case may be, shall comply with such
other condition as may be imposed by the Commission.
No Units of a Private Fund shall be offered for investment by Eligible Investors unless such fund is
registered as a Notified Entity with the Commission. The Private Fund Management Company shall
submit the draft Trust Deed along with the name and consent of the trustee of the proposed Private
Fund in accordance with Schedule II or draft Memorandum of Association or draft Limited Liability
Partnership Agreement along with custodian agreement for approval of the Commission as per
The Private Fund Management Company may raise money for investment in a Private Fund from an
Eligible Investor through the issuance of Units, subject to the following conditions:
the Private Fund Management Company can only accept offers for subscription to Units from eligible
a copy of the Placement Memorandum has been furnished to the prospective investor, and an
acknowledgement that the investor has read and understood the document is received in writing;
the Private Fund Management Company has obtained the declaration as specified in Schedule V
from the Eligible Investor.
The total number of eligible investors in a private fund does not exceed fifty, unless the investor is
classified as a Qualified Institutional Buyer.
This restriction does not apply to investors who are Qualified Institutional Buyers.
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