Practice Area
Leasing Law & Lawyers in Pakistan
International Legal Partners
Leasing Law & Lawyers in Pakistan
In accordance with Section 2 (15A) (b) of the Companies Ordinance 1984, Financial Institution includes a leasing company. The provision as to establishment and regulation of leasing companies is contained in Section 282-A of the Companies Ordinance 1984, which is enlisted in the Non Banking Finance Companies (NBFC's). The Federal Government has made rules for establishment and regulation of NBFC's which include the rules for leasing companies. It cannot be incorporated without prior approval of the Securities and Exchange Commission of Pakistan and license is issued by it. In view of the practical difficulties being faced by the NBFC's, engaged in the business of leasing only (previously known as leasing companies), in giving effect to their business transactions and preparation of accounts, the Commission considering it necessary and expedient so to do, has decided to issue directions for the aforesaid NBFC's. The Commission therefore, in exercise of the powers conferred by Section 282-D of the Companies Ordinance 1984 has directed all undertakings, the business of leasing only to conduct their business in conformity with the directions / regulations, called Prudential Regulations for NBFC's undertaking, which are similar to the regulations prescribed through the Leasing Companies (Establishment and Regulations) Rules 2000.
Rule 2 (xxx) of the Non Banking Finance Companies (Establishment and Regulations) Rules 2003 prescribe that a leasing company means a company licensed by the Commission to undertake leasing. Rule 2 (xxix) Leasing includes financial services provided on operating lease or finance lease basis, in accordance with International Accounting Standard. The leasing company has separate tier of minimum equity of Rs. 200 million and the company is incorporated as a public limited company under the Ordinance. The company has to allow at least 15% of the paid up share capital to the promoters to have to undertake that they shall not dispose of their share for a minimum period of 3 years from the date of commencement of business except with the prior approval of the Commission. Other conditions regarding to the appointment of Chief Executive, Change in the Memorandum of Association and Board of Directors cannot be made without prior approval of the Commission.
Lease Deed
There are reciprocal covenants to be undertaken by the lessor as well the lessee to be entered in the deed of lease.
The following are the implied covenants on the case of a Leasee:
- To disclose material defects enhancing the value of the lessor's interest;
- To pay rent;
- To keep and restore the property leased in good condition, reasonable wear and tear and damaged by irresistible force excepted;
- To permit lessor and his agents to inspect the property;
- To make good defects caused by his acts or default within three months or notice by the lessor;
- To inform lessor of any attack of a stranger on lessor's title;
- Not to commit waste or use the property for a purpose other that that for which it is let; and
- Not to construct.