Karachi: In a notice filed on 7th April 2023, Askari Bank Limited (AKBL) has notified that Sindh High Court has sanctioned the scheme of arrangement for the merger of Askari Securities Limited (ASL) into Foundation Securities Private Limited (FSL) and dissolution of ASL without winding up.
In October 2021, ASL received an Expression of Interest from FSL exploring the possibility of a merger between ASL and FSL, which was subsequently accepted by the Board of Directors at AKBL.
Under the scheme of arrangement of amalgamation, the entire business operations of ASL will be seamlessly transferred and vested into FSL, along with all its properties, assets, liabilities, and obligations of every nature. Furthermore, the shares of ASL will be cancelled, and in exchange, AKBL, as the holder of 100% of ASL shares, will be allotted a total of twenty-seven million one hundred and forty thousand (27,140,000) shares of FSL. In other words, for every 1 ordinary share of ASL worth Rs 10 held by AKBL, an impressive allocation of 1.18 ordinary shares of FSL, each with a face value of Rs 10, will be issued to AKBL. Finally, ASL will be dissolved without undergoing any winding up procedures, culminating this noteworthy transformation.
Askari Securities Limited (ASL)
ASL is a security brokerage company that serves investment needs of corporate and retail clients in the capital markets. It is a wholly owned subsidiary of AKBL and was incorporated on 16th Oct 1999. It is a member of Pakistan Stock Exchange (PSX).Through ASL, investors can invest both in shares/securities as well as commodities.
For the year of 2022, ASL earned a net profit of Rs 10.19 million as compared to the corresponding year of 2021, net profit was Rs 47.5 million. According to the financial statements of ASL, it was confident that it is geared towards improving profitability substantially once the merger between ASL and FSL is complete.
Foundation Securities Private Limited (FSL)
FSL is an equities broking and investment banking firm with corporate membership of PSX. It was started in January 2005 as the first of its kind partnership between a group of industry professionals and Fauji Foundation – one of largest conglomerates in Pakistan. FSL marked the entry of Fauji Foundation in the financial services sector who is a major sponsor of FSL.
For the year ending June 2022, FSL earned a net profit of Rs 15.9 million as compared to the corresponding year of 2021, net profit was Rs 161.3 million.
Details of the court order
The order approved of the scheme that requested to restructure the companies, with Askari Securities Ltd to be amalgamated into Foundation Securities (Pvt) Ltd.
The court notice proposed that the complete undertaking and business, including assets, rights, properties, benefits, power privileges, contracts, trading terminals, servers, back-office system, trademarks, patents, liabilities, obligations and dues of Askari Securities Ltd are to be transferred to and assumed by Foundation Securities (Pvt) Ltd. This was based under the recommendation of the Chartered Accountants after reviewing the financial positions of the two companies.
The letter noted that the audited financial statements for the year ending 31.12.2021 of both companies are present with the court and on record. The scheme for the merger was approved by the respective board of directors of both petitioners, after thorough consideration of all aspects, which included the values and calculations by the Chartered Accountants. Moreover, it was ensured that the interests and rights of the employees of Askari Securities Ltd will be safeguarded under the merger and a comprehensive policy has been devised to ensure this.
It was also noted that the creditors of the two companies have consented to the merger and a letter of Chartered Accountants is also available on record. The Competition Commission of Pakistan deliberated upon the arrangement and passed an order approving the merger, on 14.2.2022, a copy of which is also available on record. Moreover, the Securities and Exchange Commission of Pakistan (SECP) has also given its approval for the merger of the two petitioners in a letter dated 10.2.2022.
