Taxes and Legal Aspects
INCOME TAX
When you receive your dividend cheque, income tax has already
been deducted by the company at basic rate. Basic-rate taxpayers
have nothing more to pay.
Higher-rate taxpayers have to pay the difference between basic
and higher rate at the end of the tax year.
Non-taxpayers can reclaim the tax deducted through their local
tax office.
CAPITAL GAIN TAX
You make a capital gain when you sell shares at a higher price
than you are paid. If you sell at a lower price, you make a
loss.
There is no Capital Gain Tax in Pakistan at present.
Tax is a very complex subject - you should always speak to a
properly qualified tax adviser to make sure you have a complete
picture of the tax rules.
WHO IS INELIGIBLE TO OPEN A TRADING
ACCOUNT?
Upon discovering that an investor fits any of the descriptions
below, the stockbroker should refuse to accept his or her
application to open an account, or refuse to take orders from
such customer to buy, sell or subscribe securities:
- Minors who do not have the authorization of their legal guardian
- Personnel or employees of the authorities in charge of securities matters and regulators
- Person is declared bankrupt and rights have not been reinstated
- A person's opening an account that cannot supply proof of his identity
- Securities dealer who have not been approved by the competent authority.
DISPUTE RESOLUTIONS:
HOW DOES THE CLIENT KNOW IF HE/SHE HAS A CASE AGAINST
STOCK EXCHANGE MEMBER?
Just because the client has lost money while dealing in
securities doesn't mean that he/she has a case against the
member. The financial markets have always gone through periodic
down turns and upturns and these fluctuations are not always the
fault of member. However, it is the responsibility of a member
to invest money according to the client's instructions. There
are certain malpractices against which a client can lodge a
complaint such as:
- Unauthorized trading (Sale/Purchase)
- Unauthorized transfer/movement of shares
- Non-supply of statements of account
- Non-supply of trade confirmations within 24 hours
- Overcharged commission
- Failure to execute investors' instructions/orders
- Suspension of payment
- Non-Delivery of securities.
WHAT ARE THE DIFFERENT WAYS TO HANDLE A PROBLEM WITH STOCK EXCHANGE MEMBER?
1. AMICABLE SETTLEMENT:
Although the client has the recourse to approach the relevant
stock exchange, SECP or the Courts for lodging complaint, it is
strongly advised that the complaint/problem should first be
taken up directly with the member. This will not only save the
time consumed in correspondence and procedures but will also
preserve the trust and confidence.
2. ARBITRATION COMMITTEES OF STOCK
EXCHANGES:
The client also has the alternative of taking up his/her
complaint with the management of the concerned stock exchange.
All the stock exchanges have their own Arbitration Committees
that look into the grievances/disputes between the Investor and
the Members.
3. SECP:
The client can also lodge his/her complaint with the Vigilance
Cell which has been setup at SECP to ensure that
grievances/complaints of the general public are heard and
redressed, in a quick and efficient manner. All the complaints
received by the Vigilance Cell against Stock Exchange members
are forwarded to the Investor Complaint Wing (“ICW”) of the
Securities Market Division (“SMD”) for further processing.
However, SECP is not empowered to force the member for
compensation/damages.
4. CIVIL COURTS:
The client can also file his/her complaint with the Civil
Courts.
WHAT ARE DIFFERENT FORUMS AVAILABLE
FOR PURSUING A CLAIM AGAINST STOCK EXCHANGE?
There are three forums available for pursuing claims against
Stock Exchange members:
1. ARBITRATION COMMITTEES OF STOCK EXCHANGES:
The Stock Exchanges are Self-Regulatory Organizations (SROs)
empowered to take cognizance of complaints against the members
under the approved Rules and Regulations. All the Stock
Exchanges have their own Arbitration Committees that look into
the grievances/disputes between investor and members.
Arbitration Committees after perusing the documents and
providing the parties an opportunity of being heard pass an
Arbitration Award in accordance with the relevant Rules and
Regulations of the Exchange.
2. SECP:
The SECP has established a Vigilance Cell which is responsible
for ensuring that grievances/complaints of the general public
are heard and redressed, in a quick and efficient manner. The
client can file his/her complaint with the Vigilance Cell
against Stock Exchange members on the prescribed Complaint
Registration Form (“CRF”) which is available, free of cost in
the offices of Stock Exchanges and the Commission including the
Company Registration offices (“CROs”). CRF may be downloaded
from the official website of SECP: http://www.secp.gov.pk/ComplaintForm1.htm.
The ICW after perusing the documents and giving the parties an
opportunity of being heard passes an Order according to the
relevant Rules and Regulations. Any party dissatisfied with the
Order can file an appeal before the Appellate Bench of the
Commission within thirty days from the date of issue of such
Order under Section 33 of the SECP Act, 1997.
3. CIVIL COURTS:
The client can also file his/her complaint with the Civil or
Criminal Court. However this forum is more appropriate for
claiming compensation or damages.
WHAT IS ARBITRATION?
Arbitration is an alternative dispute resolution mechanism
provided by the Exchanges for those persons who do not wish to
go to Court. Through this method disputes between the trading
members and between trading members and their constituents (i.e.
clients of trading members), may be addressed and resolved in
respect of trades done on the Exchange. This process of
resolving a dispute is comparatively faster than litigation.
WHO ARE THE PERSONS WHO CAN ACT AS ARBITRATORS?
The Arbitrators are members and management of the Exchange and
non-member directors of the Exchange. For further details please
refer to Regulation 29 of the General Rules & Regulations of
Karachi Stock Exchange (Guarantee) Limited
Disclaimer: The information contained herein is subject to
change without prior notice. While every effort is made to
ensure accuracy and completeness of information contained, the
Commission makes no guarantee and assumes no liability for any
errors or omissions of the information. No one can use the
information for any claim, demand or cause of action