Investors of Investment Corporation of Pakistan:

At the beginning of its working ICP doesnt included the investors. They do all the working by
their selves but after some time they feel the need of investors.
The corporation introduced the investor's scheme in 1967. The investor's scheme of the
corporation is one of the initial steps maintained for individuals who for their limitations cannot
operate directly on the market taken for widening the base of share ownership through
investment accounts. They introduced two type of accounts:

Sharing Account
Non-sharing Account

They do prefer the industrial and institutional investors. This scheme is also for the individuals
and institutional investors who do not wish to operate through mutual funds, under this scheme,
the investors have some freedom and participation, which is not available in the mutual funds.
The corporation's investor's scheme has been very successful in fulfilling the objective of
broadening the base of investment. As a first step the corporation opened its branches in
important cities of the country for facilitating such investor who were facing difficulty to operate
on the only stock exchange at Karachi in 60's.
All these steps were taken for their main investors industrial and institutional investors.
Further in order to provide an incentive to small and medium investors for investing in shares,
the corporation provided extension to investment account holders were provided at concessional
rates in the ration of 3:1 in initial years and two 2:1 thereafter, 3:1 means investor has to deposit
1000 and against his deposit, ICP will give him 3000 loan which will be deposited with ICP and
this deposit will be used only for investing in shares. Later on their ration changed from 3:1 to
2:1.
After some time they converted their accounts into their two accounts mentioned above. These
accounts were not established as the investments started. They created these accounts to
facilitates their shareholders. In 1980, ICP converted its existing accounts into sharing and nonsharing account. An existing investment account was converted into non-sharing account only if
it had a credit balance. And old investment accounts only their approved securities had larger
value than debit balance.All the shares held in old investment account were transferred to Non-

Sharing account at the respective average rates through BIT vouchers whereas only approved
shares were transferred to Sharing account at prevailing market rate through internal purchase /
sale vouchers, without any BIT vouchers and service charges.
Two types of accounts were introduced in 1980

Sharing account
Non-Sharing account

Since 1967, the corporation through its investor's scheme attracted thousands of investors to
make investment in Shares of listed companies (which are quoted on stock exchange).

SHARING ACCOUNT

Definition
"Sharing scheme means an investor's deposit account in which ICP also makes deposit for
purchase of approved shares and share the net income or lost. Sharing scheme means an
investor's deposit account in which ICP also invests and to assist in implementing the policy of
the Government of Pakistan to substitute interest-bearing ICP advanced by profit and loss
Sharing investment." In short in sharing account:

ICP also makes deposit with the investor

ICP share profit and loss with the investor

Introduction
In 1980, ICP introduced two types of investor's scheme

Sharing account
Non-Sharing account

In Sharing scheme initially ICP provided this incentive to the investor that 40% deposit by
investor and ICP will deposit 60%. In case of profit ICP will get 40% profit and investor will get
60% of the profit and in case of loss Investor will bear 40% of the loss and ICP will bear 60% of
loss.

In 1991 when there was no restriction on the foreign exchange. Government allowed the ICP to
have the ration of 50:50-50% will be equity and 50% will be invested by ICP and similarly profit
and loss will also be distributed on equally basis.
Important Features of Sharing Scheme
ICP'S deposit in the account

ICP makes deposits only in sharing accounts. It makes deposit either directly or through

such sources as the board may approve.

ICP'S deposit in a Sharing account is always equal to the deposit of the account holder/

investor.
Total asset at all times in sharing account is the property of ICP and account holder in

equal proportion.
ICP cannot deposit money in sharing account less than Rs.50, 000 and investor also has

to deposit the same amount.

ICP will get 50% of the profit and (in case) will bear 50% of the loss.

Managing of Account:
ICP manages investor's deposit account for self and for the account holder(s). ICP receives the
following fee and charges from the account holder.
i. Services Charges
Service charges are calculated at the rate of % of money value of each transaction of sale and
purchase at the time of that transaction
ii. Management Charges
Management charges are calculated at the rate of 3/4% on cost of investment at the end of each
quarter. So management charges are 3% annually.

Annual Account of Sharing Accounts

Each Sharing account is examined after the 30th of June in every year to determine the net assets
of the account and the profit and loss accrued to the account the fiscal year. The profit / loss of
sharing account consists of:
Investment at cost
+/- Credit / debit balance
-

Net total deposits made by the ICP and account holders.

Withdrawal of Funds / Deposit

In a sharing account investor can not withdraw some amount of his deposit because sharing
account is a joint account of ICP and investor, but in a sharing account, investor can withdraw his
accrued profit from his account, but investor can not withdraw any profit of accrued prior to
finalization of the yearly account and declaration of net profit of the account.

Withdrawal of Shares
In Non-Sharing accounts, investor can withdraw his shares or transfer his shares on his own
name. But in sharing account investor cannot withdraw his shares and transfer shares on his own
name.

Distribution of Profit Adjustment of Loss

In Sharing account, profit / loss is distributed equally between the investor and ICP
Profit distribution is done on 1st July. (On an annual basis and the final year for this purpose is
July-1 to June-30.)
Profit is paid after the deduction of the tax and zakat if applicable.
The net profit / loss in sharing account compromises:
Investment at cost
+/-

Credit / Debit balance in the investor account

Net total deposit made by the investor and ICP.

In case of profit, ICP withdraws his share of profit and the investor gets his share.
In sharing account ceiling limit is Rs.50, 000 when the investor's deposit is less than Rs. 50,000
profit distribution is not made but reinvested till the balance of deposit reaches Rs. 50,000.
When liquid funds are not available in an investor's account, the profit distribution may be made
by scale of shares held in investor's account, if so required by the investor. Payment is made to
the investor by crossed cheque. The cheque is send to the depositor's bank under registered mail

Closure of Sharing Account

Sharing account is a joint account of ICP and investor. If investor wants to close his account, he
has to give 15 days notice in writing to the ICP and declare his intention to close the sharing
account. On the other side if ICP wants to close account then ICP has to give written notice to the
investor. If ICP closed the Sharing account at the request of the investor, then ICP shall not allow
the investor to open an account within one year from the date of closure of his sharing account.

Procedure for Closing of Account

First of all investor sends an application / notice to the ICP for closing of his account.
After receiving an application, investment officer sharing account prepares a sale order
sheet about the sale of the share of the investor's account and send this sheet to Karachi

head office for the sale of shares.

Investment officer sharing account fills "closure of account" form and send it to the head

office.
After selling of all shares department Karachi to finally close the account.
ICP determine the net assets of the account and distributes them between the ICP and the

investor.
Payments to investor are always made by crossed cheques and to "account payee only."
In case of joint account, the cheque should bear the names of all or any one of the
account holder. However, if all the joint account-holder authorizes in writing to issue
cheque in one name it may be issued accordingly.

NON-SHARING ACCOUNT
Introduction

Non-Sharing Scheme /account is further divided into two accounts:

Non-Sharing Discretionary Account

Non-Sharing Non-Discretionary Account

In Non-Sharing account:
ICP does not make any deposit
ICP does not share profit and loss with the investor.

Definition:
1. Non-Sharing Discretionary Account:
"Non-Sharing discretionary account means a deposit account /investment account which is
always operated by ICP."

2. Non-Sharing Non-Discretionary Account:

"Non-Sharing non-discretionary account means a deposit account /investment account which is
solely operated by investor."

IMPOTANT FEATURES OF NON-SHARING SCHEME:

1. Who can make deposit in this scheme?
Any person or persons, who are Pakistani nationals and want to open account, can open a NonSharing account. A Non-Sharing account can either be discretionary or a non-discretionary
account.

2. Joint Non-Sharing Account?

Investors can open a joint Non-Sharing discretionary / non-discretionary account. But more than
four

persons

cannot

open

joint

account.

Joint

application

is

not

acceptable.

3. How to Open an Account?

If an investor wants to open an account with Investment Corporation of Pakistan, he has to fill up
prescribed application form. Investor has to sign the form and investment officer also takes his
signature on a specimen signature card. Investor has to give a copy of his national ID card. He
has to comply with all other requirements specified in the application form.

Operations Of An Account
1. Non-Sharing Discretionary Account
Non-Sharing discretionary account is operated by ICP but if the investor wants to operate his
account then he can do so. If investor wants to be a sleeping investor then ICP operates his
account otherwise he would operate himself.
2. Non-Sharing Non-Discretionary Account
Non-Sharing discretionary account is solely operated by the investor. ICP cannot operate his
account. Investor gives his instruction in writing to the ICP for the operation of his account and
ICP acts accordingly.

3. Distribution of Profit and Loss

In both cases of Non-Sharing discretionary account and Non-Sharing non-discretionary account
whole profit and loss goes to investor. ICP does not take any profit or beer any loss from the
Non-Sharing account.

4. Declaration For Non-Deduction of Zakat

If any investor declares for non-deduction of zakat from his account, he has to submit such
declaration to the ICP branch office at least one month prior to 1 st of Ramazan.

5. Closure of Non-Sharing Account

ICP closes a Non-Sharing account at any time at the request of the investor. The request should b
in writing. When an investor wants to close his account, he has to pay all the ICP charges and
dues.

6. Management Of Accounts
ICP manages investor's deposit account and receives charges its service and management
charges. The term "Management" means that ICP performs a number of different tasks for
investor includes:
Acquisition of shares and securities by subscription by original or right issue.
Sale of shares and securities.
Transfer of shares and securities.
Collection of benefit including dividend and bonus.
Registrations of Shares and securities.
Purchases of shares and securities.
Professional council and assistance and other services related to investment.
ICP is entitled to receive the following fees and charges from account holders:
a. Service charges
ICP receives service charges on every transaction of sale and purchase at the time of
transaction. Service charges are calculated at the rate of % of money value of each
transaction.
b. Management Charges
Management charges are calculated on cost of investment and are 3% annually. These
charges are calculated at the rate of % of amount of investment at cost on the last day of
each quarter of the year.

7. Withdrawal of Funds / Deposit

In Non-Sharing account, investor can withdraw his funds / deposit if the investor has credit
balance in his account and he wants to withdraw some amount of his funds, he has to write an
application to the ICP about the withdrawal of funds. After receiving application, investment
officer (Non-Sharing account) checks his/her account / holding and will issue a debit voucher in
which investor's bank is credited and ICP'S bank and investor's account is debited. After
receiving debit voucher, accounts officer issues check to the investor.
In other case, if investor has no credit balance and he wants to withdraw some amount of his
deposit, then there would be two criterion depending on the nature of discretionary / nondiscretionary account.
Case: Non-Sharing non-discretionary
Investor has to give instruction in writing that please sell my shares and give required amount of
money. ICP will sell his shares and after 10 days of application, ICP will issue check to the
investor.
Case: Non-Sharing discretionary
If wants to withdraw his deposit and gives an application to the ICP then investment officer has
the right to sell his shares and give him the required amount of money. But if the investor has
given the instruction to ICP that you cannot operate my account without my instruction, then
investment

officer

cannot

sell

his

shares

without

his

instruction

or

permission

Withdrawal of Shares or Return Of Shares To Investor

Investor can transfer shares on his own name or withdraw shares from ICP only to his other NonSharing account; moreover investor cannot withdraw shares in case of sharing account.

Why Investor Withdraws Shares?

Investor withdraws shares from ICP because of certain reason.

To avoid the management charges investor withdraws his shares. If shares are with the

ICP then investor has to pay 3% per annum management charges to ICP.
Investor withdraws his shares and keeps them with himself. Whenever market conditions
would improve and price of his shares will increase he would sell his shares in the market
and would get maximum profit.

Procedure of Withdrawal of Shares

ICP receives an application about the withdrawal of shares from investor. Concerned investment
officer checks investor's holdings (account and shares).A requisition is prepared by the
concerned investment officer the concerned investment officer and an officer of shares
department jointly sign requisition. This requisition is sent to the head office Karachi, one copy
remains with the concerned investment officer and the other copy goes to the officer of share
department as a record. The shares department, head office Karachi confirms investor's holdings
according to his record. And sends shares physically to the branch.

Pricing
The shares internally transacted between the investors are priced on the basis of middle price
reflected in the turn over list issued by the stock exchange on the day on which the transactions
are matched.

If there is no transaction in a particular share, the price printed in the official ready board

quotation is taken as between the investors, is matched at that price.

If there are three are more transaction in odd numbers, the middle price is taken as the

matching price.
If the numbers are even, exceeding two, matching is affected at the list of two middle
prices.

TRANSFER OF ACCOUNTS
In ICP we have got two types of transferring accounts

BIT (Branch Internal Transfer)

TAB (Transfer Account Branch

BIT (Branch Internal Transfer)

This term is used when one account is transferred to another For example; shares and funds are
transferred from sharing account to a non-sharing account or from one non-sharing account to
another non-sharing account.

TAB (Transfer Account Branch)

This term is used when one account is transferred from one branch to another branch.

BRANCH INTERNAL TRANSFER OR TRANSFER OF ONE ACCOUNT TO

ANOTHER ACCOUNT

When an investor maintains more than one account he wants to merge his accounts he

can do this. For this purpose investor has to give a written request to ICP.
In case of sharing accounts investor cannot transfer his shares / balance from one sharing

account to another account.

In case of non-sharing accounts investor can transfer his shares / balance from one
account

to

another.

Investor can transfer shares / balance from a Sharing account to non-sharing account but

he cannot transfer balance from non-sharing to sharing.

The balance in the account being closed is debited to the concerned account and
credited to the account to which it is being merged.
The following documents are prepared to effect transfer:
a)Portfolio confirmation - PC form
b) Payment / transfer of account - PTA form
c) Statement of account being closed
d) Debit voucher
e) Transfer authorization

TRANSFER ACCOUNT BRANCH OR TRANSFER OF ONE ACCOUNT TO

ANOTHER BRANCH
A.

An Investor has to give a written application / request to ICP for one transfer of his account

to other branch.
B.

The application for transfer, must be signed by the investor in accordance with the signature

recorded with ICP.

C.

The manager must verify the investor's signature and his verification action must be

recorded.
The investment officer, who is currently handling the concerned account is responsible for

processing transfer formalities. Transfer of an investor's account to another branch must be

authorized by the chief manager.

In case of transfer of account to another branch the investment officer will furnish the
following to the Transferee branch:
Account opening form
Debit / credit voucher
Specimen signature card
General power of attorney
Investors account agreement
Three copies of each TAB
o Latest address of the investor an up to-date statement of investor s account
o
o
o
o
o
o

Benefits of shares
Investors get three types of benefits from the shares:
1.

Dividend

2.

Bonus Share

3.

Right Share

Dividend
Companies announce dividend on their shares from time to time. ICP receives this dividend from
the companies and add it in the credit balance of the investor.

Bonus Shares
Companies also give bonus shares to their shareholder. Bonus shares are free of cost that investor
has to pay nothing for it. These bonus shares are added in the portfolio of investor

Right Shares

If a company wants to increase its capital, it will issue right shares to its existing

shareholder after getting approval from the controller of capital issue.

Company cannot offer these right shares to the general public.
Company offers right shares to the existing shareholders.

These right shares are not free of cost.

If shareholder wants to purchase right shares that are offered to him, he can buy them
otherwise he has the right to sell them in the market after getting approval from the

company.
Some companies offer 50% right shares; it means if investor has 200 shares he is offered
100 right shares, if company offer 400% right it means if investor has 100 shares he is
offered 400 right shares. Right shares are offered to existing shareholder at par.