SHC Single Bench, which barred JS Group from acquiring another banking license, to hear the sale of BIPL to JS Bank case on Divisional Bench orders
KARACHI: The minority shareholders of the BankIslami Pakistan Limited (BIPL) have served a legal notice to the State Bank of Pakistan (SBP), demanding the top banking regulator to “refrain” from initiating any process of handing over the majority shares of their bank to the JS Bank in line with the Sindh High Court order passed on May 5, 2023.
The minority shareholders – Muhammad Ayub Tareen, Mohsin Balaghamwala, Asif Mannan and AKD Investment Management Limited – in their legal notice to the Governor SBP said that the JS Bank Limited had announced acquiring more than 51% of the voting shares of the BIPL.
This public announcement was shared with the Pakistan Stock Exchange and the Securities and Exchange Commission of Pakistan on November 16, 2022, the notice said.
The JS Group’s attempt to acquire the majority shareholding and control of the BIPL through the JS Bank — which is in the banking business since December 31, 2006 — stand in violation of the Section 23 of the Banking Companies Ordinance 1962 and the IBD circulars No. 02 of 2004 and 04 of 2020.
“The ‘Guidelines and Criteria for setting up a Commercial Bank’ issued by the SBP states that a group, as defined in the Prudential Regulations, shall not be eligible to own more than one commercial bank.”
The notice said that it is clear under the law that the JS Group and the JS Bank cannot acquire 51% of the BIPL shares. Therefore, the shareholders of the BIPL challenged the move before the Sindh High Court, which on March 6, 2023 restrained the JS Group, particularly JS Bank and JSCL, from acquiring the majority shares and the management control of the BIPL.
The JS Group challenged this decision before the SHC Division bench which on May 5, 2023 sent back the case to the single bench without setting aside the earlier ad-interim order barring the JS Group from acquiring the majority stake in the BIPL.
However, in relation to the processes undertaken during the course of the pendency of the application, including any extraordinary general meeting or the annual general meeting, the division held that “the status prior to deciding of the application… dated 06-03-2023 would operate till such time the above CMA is decided by the single judge.”
“In light of the order dated 05-05-2023… the ad-interim order dated 06-03-2023 stood revived,” the notice said while asking the SBP to halt the process of share transaction to the JS Bank.