Category Archives: news story

Before the passage of the Finance Act 2019, the Income Tax Ordinance, 2001 (ITO) required Independent Power Producers (IPPs) to withhold tax at the concessional rate of 7.5% on dividends paid by them to shareholders. Depending on the terms of the concession documents of IPPs and tariff determinations issued by the National Electric Power Regulatory Authority (NEPRA), withholding tax on dividends was either treated as a pass-through item or borne by the IPP’s shareholder at the rate of 7.5%.

The Finance Act 2019 amended the ITO by enhancing the rate of withholding tax to 25% for those IPPs whose concession documents did not expressly allow withholding tax to be treated as a pass-through item. This change affected many IPPs, irrespective of the power policy under which they were established, their generation technology or whether their shareholders are local or foreign. We have advised numerous IPPs on addressing the increase in withholding tax and have undertaken advocacy on their behalf with relevant GOP entities. We are continuing to advise them on a strategy for achieving a lasting settlement of this issue.

The team advising on this matter was led by Senior Partner Hasnain Naqvee.

For further details on this matter, please see https://www.brecorder.com/news/10000090

Chambers and Partners has ranked RIAA Barker Gillette and its lawyers as front-runners in their areas of practice in the 2023 editions of the Chambers Asia Pacific Guide.

The Chambers Asia-Pacific guide and rankings provide the most in-depth and reliable recommendations on the best law firms and lawyers working across the legal market in Asia-Pacific. The Firm’s profile for the Chambers Asia Pacific Guide 2023 may be accessed through the following link: Chambers Asia Pacific Guide – RIAA Barker Gillette.

We have been ranked in Band 1 for our Corporate / Commercial and Projects, Infrastructure & Energy practices. Our Banking & Finance and Commercial Dispute Resolution (litigation and arbitration) practices have been ranked in Band 2. Notably, our Employment (employment, labour and industrial relations) practice has been ranked for the first time in the 2023 rankings. Partners Bilal Shaukat, Hasnain Naqvee, Omer Soomro, Mazhar Bangash and Mayhar Kazi have again been recognized as leading lawyers for their work in these practices. We are delighted that our partner, Adil Tirmizey has been ranked for the first time in our Projects, Infrastructure & Energy Practice.

The above rankings are based on rigorous research and feedback from our clients and peers by the Chambers team. An example of the feedback given anonymously by one of our clients is “I find the team at RIAA very capable of unravelling complex legal questions and handling sophisticated transactions very diligently and with thoroughness.”

We are delighted to consistently receive recognition from leading international legal directories, particularly based on high praise from our clients that value our ability to provide commercially sound legal solutions. We endeavor to ensure that we continue to maintain our reputation of providing high-quality service to our clients, across distinct practice areas and industry sectors.

Syngenta Pakistan Limited (Syngenta), a leader in plant sciences, has commenced work on a landmark project to develop state-of-the-art ecosystems for farmers in Pakistan by partnering with fellow market players providing goods and services required by the agriculture industry. The project follows the success of a similar project undertaken by Syngenta’s affiliates in other countries, including Indonesia.

Syngenta seeks to set up one-stop locations offering end-to-end solutions to farmers across Pakistan – the first of their kind in the country. These will be centred around the core requirements of farmers and offer essential products such as fertilizers, crop protection, seeds, and services, including drone spraying, crop insurance, agriculture financing, soil analysis, smart climate advice and disaster management consulting. Many of these services are only just beginning to be provided in Pakistan.
 
We are advising Syngenta on this project across Pakistan. Our role entails reviewing and analyzing sector-specific regulatory statutes, providing advice on the licensing and registration requirements for the products and services to be offered, preparing the commercial contracts that will underpin the project, and advising on land acquisition and transfer.    
 
Our team working with Syngenta is led by Shafaq Rehman (Partner-Pakistan), assisted by Ahmed Nisar (Associate-Lahore).

We acted for a majority shareholder of a well-known textile manufacturing company in defending a petition brought in the Sindh High Court by a minority shareholder under section 286 of the Companies Act, 2017 (the Act), alleging oppression and mismanagement.

We raised a preliminary issue of standing before the High Court, contending that the petitioners did not cumulatively hold the minimum 10% shareholding in the company required to maintain the petition. The petitioners argued that they held the necessary shareholding by virtue of the general principle of Islamic inheritance law, under which a person’s estate devolves upon the legal heirs in proportion to their respective shares immediately upon death.

As the Act is relatively new legislation, most of the available reported judgments on minimum shareholding are related to the period when the corresponding provision, section 290 of the Companies Ordinance, 1984, was in force. These judgments held that the shareholding threshold had to be strictly enforced and could not be treated as a mere technicality. We also argued that the general principle of Islamic inheritance law was overridden by section 78 of the Act, under which shares of a deceased member can be transferred to legal heirs only upon an application to the company duly supported by a succession certificate or lawful award.

The High Court ultimately dismissed the petition, holding that the minimum shareholding requirement had to be applied strictly and that the petitioners did not have the minimum shareholding required to maintain the petition. The High Court agreed with our argument that section 78 of the Act was a special law and, therefore, over rode the general principle of Islamic inheritance law that the estate devolves on legal heirs immediately on death.

The decision underlines how important it is for legal heirs of shareholders to complete the procedure for transfer of shares prescribed in section 78 of the Act so that they can invoke their statutory rights as company members.

Our team for this matter comprised Pakistan Partner Omer Soomro and Associate Zahid Ali Sahito.

We represent a major global commodity trading group in a multi-million dollar dispute with a Pakistani purchaser. Both parties had entered a long-term supply contract that required each of them to provide the other security for their respective obligations in the form of an on-demand banking instrument for tens of millions of dollars. The contract required disputes to be resolved by international arbitration in London. A dispute arose under the contract, leading to the purchaser seeking to encash the security instrument provided by our client.

To avoid breaching the arbitration agreement, we filed an application under section 3 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011, before the High Court seeking an order referring the parties to arbitration in accordance with the contract. By way of interim measures, we sought an order restraining the encashment of the security pending arbitration. As it happened, the purchaser filed civil proceedings the same day before the High Court to seek an interim injunction restraining the anticipated encashment of the security provided to our client. Both cases came up for hearing before the same learned Judge who, recognizing the urgency, heard and decided both applications for interim relief on the same day. A common order dismissed both applications passed later that day.

Our client sought to challenge such an order in an intra-court appeal we filed the following day. When our client’s application for interim injunction was heard, the foreign issuing bank had paid its correspondent bank in Pakistan, which was yet to make further payment to the purchaser. We obtained relief for the client requiring the correspondent bank to withhold the money from the purchaser until the dispute could be finally decided in arbitration.

Our team on this matter is led by Pakistan Partner Mayhar Mustafa Kazi and comprises Associate Partner Shahbakht Pirzada.

For years, the London Interbank Offered Rate (LIBOR), the reference rate for unsecured short-term borrowing in the interbank market, has served as a global benchmark for the pricing of floating-rate corporate loans, among other financial contracts. The Financial Conduct Authority of the United Kingdom has begun the LIBOR transition to phase out LIBOR, and the publication of the five remaining US Dollar rates will cease after 30 June 2023.

For US dollar-denominated debt, there is an ongoing transition towards an alternative reference rate – the Secured Overnight Financing Rate (SOFR). This is particularly significant for Pakistani Independent Power Producers (IPPs) that have executed LIBOR-based foreign currency loan agreements extending beyond June 2023 with international lenders.

RIAA Barker Gillette – Pakistan, with the support of Fieldfisher Capital LLC, is advising on the implications of the phase-out, alternatives to the LIBOR benchmark and on the legal, regulatory and other measures required to be undertaken by the IPPs, relevant Government of Pakistan entities and foreign lenders.

The transition is also significant for many other Pakistani businesses that have LIBOR-based US dollar-denominated debt with a tenor extending beyond June 2023.

Our team advising the IPPs on this matter is led by Hasnain Naqvee (Senior Partner-Pakistan).

For further details on the LIBOR transition, please visit https://www.brecorder.com/news/40145382.

In July 2022, we were engaged by a leading cargo service provider to advise on an aircraft purchase to update its fleet and enable the expansion of its operations.

We advised on the Pakistan law applicable to the transaction and conducted negotiations with sellers shortlisted by our client to identify those offering terms of sale compatible with our client’s legal and commercial requirements. We then negotiated, prepared and finalized the aircraft purchase agreement, which also dealt with certain pre-delivery modifications to align the aircraft with our client’s specifications, and advised on other documents relating to the transfer of the aircraft to our client.

Our team in this matter was led by Mazhar Bangash (Partner – Pakistan) and Momin Taufiq (Associate).

PIBT was established on a build, operate and transfer basis (BOT) at Port Qasim, as Pakistan’s first terminal for handling coal, clinker and cement. Development of the project was financed by the World Bank’s International Finance Corporation (IFC), the OPEC Fund for International Development (OFID) and a consortium of local lenders led by Faysal Bank.

We acted as counsel to several local financiers, led by Allied Bank, on the refinancing of the local portion of the senior debt availed by PIBT, amounting to PKR 6,000,000,000. The transaction will ease PIBT’s cash flows for the purposes of the expansion project it intends to undertake.

Our team for this matter comprised Shafaq Rehman (Partner – Pakistan) and Rafia Rauf (Senior Associate).

Details on the refinancing and expansion plans can be found at: https://mettisglobal.news/pibtl-approves-repayment-of-outstanding-loans-worth-rs5-904bn-from-banks/ and https://newsnreleases.com/2021/09/10/pibt-plans-to-expand-coal-handling-capacity-to-16mn-tons/

Major cement producers Attock Cement Company Limited and DG Khan Cement Company Limited own and operate manufacturing plants in Balochistan. They are entitled under leases granted by the Government of Balochistan (GOB) to extract limestone, shale and sand to use in the manufacturing process in consideration for payment of royalty in accordance with the Balochistan Mineral Rules, 2002 (BMR).

The GOB had earlier sought to levy excise duty on the cement companies through a notification issued under the BMR. We successfully represented the companies in constitutional proceedings before the Balochistan High Court (BHC), challenging such a levy as contrary to the Mines Act, 1923.

Thereafter, through the Balochistan Finance Act of 2020, the Balochistan Assembly amended the Mines Act of 1923 to drastically increase the excise duty rate to 25% of the royalty rate, as specified in the Third Schedule to the BMR. The Chief Inspector of Mines, GOB, issued notices to the companies demanding payment of excise duty under the amended provisions of the Mines Act, 1923.

We represented the companies in separate constitutional proceedings before the BHC challenging such notices on the ground that the amended provisions of section 30-A(d) of the Mines Act, 1923 did not authorise the levy of excise duty in respect of any mineral other than coal and coke. Further, given that the minerals extracted by the companies do not require sub-surface mining, the GOB had no justification for demanding excise duty whose proceeds could only be applied towards safety, rescue stations and training in relation to such mining. By a reasoned judgment handed down recently, the BHC allowed the petitions and set aside the notices, resulting in significant savings for our clients.

Pakistan Partner Omer Soomro led our team for this matter.