Term Finance Certificate Application (Pakistan)
TERM FINANCE CERTIFICATE SUBSCRIPTION APPLICATION
Under the Companies Act 2017 | Securities Act 2015 | SECP Debt Securities Regulations 2021
To:
[Issuer Name]
TFC Programme: [TFC Programme]
Application Date: [Application Date]
Prospectus / IM Reference: [Prospectus Ref]
ISIN: [ISIN Code]
Credit Rating: [Credit Rating]
Offering Type: [Offering Type]
PART A — APPLICANT DETAILS
Applicant Name: [Applicant Name]
Applicant Type: [Applicant Type]
CNIC / SECP Registration: [Applicant CNIC/SECP]
NTN: [Applicant NTN]
Address: [Applicant Address]
Contact: [Applicant Contact]
CDC Account / Sub-Account No.: [CDC Account Number]
PART B — SUBSCRIPTION DETAILS
Face Value per TFC: [Face Value Per TFC]
Number of TFCs Applied For: [Number Of TFCs]
Total Subscription Amount: [Total Subscription Amount]
Profit Rate: [Profit Rate]
Profit Payment Frequency: [Profit Payment Frequency]
Tenor / Maturity: [Tenor]
Redemption Structure: [Redemption Structure]
Payment Method: [Payment Method]
PART C — DECLARATIONS
Tax Filer Status: [Tax Filer Status]. Withholding tax on profit payments will be deducted at the applicable rate under Section 150 of the Income Tax Ordinance 2001.
Zakat: [Zakat Declaration].
The Applicant hereby declares and confirms that:
1. The Applicant has read and understood the Prospectus / Information Memorandum for the [TFC Programme] issued by [Issuer Name] and accepts the terms and conditions therein.
2. The Applicant is eligible to subscribe to these TFCs under the Securities Act 2015 and the SECP Debt Securities Regulations 2021.
3. The subscription amount of [Total Subscription Amount] will be remitted to the issuer's designated account by [Payment Method] on the closing date.
4. The Applicant acknowledges that TFCs carry issuer credit risk and are not insured or guaranteed by the Deposit Protection Corporation or the State Bank of Pakistan.
5. The particulars stated in this application are true and correct. The Applicant consents to the processing of their personal data by [Issuer Name], the trustee, and the Central Depository Company of Pakistan (CDC) for the administration of this investment.
APPLICANT: [Applicant Name]
CNIC / SECP: [Applicant CNIC/SECP]
NTN: [Applicant NTN]
Authorised Signatory: _________________________
Designation: _________________________
Official Stamp (if entity): _________________________
Date: [Application Date]
FOR ISSUER / TRUSTEE USE ONLY
Application received by: _________________________
Amount received (PKR): _________________________
Number of TFCs allotted: _________________________
CDC credit confirmed: _________________________
Allotment date: _________________________
Investor / Applicant (Authorised Signatory)
________________
Signature
Issuer / Trustee Representative
________________
Signature
What Is a Term Finance Certificate Application (Pakistan)?
A Term Finance Certificate Application in Pakistan supplies the facts and figures the authority requires so the matter can be processed, assessed or verified.
A Term Finance Certificate is a fixed-income debt security issued by a Pakistani company — the issuer — representing a borrowing on which the issuer undertakes to pay a specified profit rate (or markup) at regular intervals and to repay the face value (principal) at maturity. TFCs are the Pakistani equivalent of corporate bonds or debentures in other jurisdictions, governed by Pakistani corporate law rather than the English company law framework. The term "Term Finance Certificate" was introduced in the Pakistani financial market in the 1990s as part of the Islamisation of finance under the Finance Act and subsequent SECP regulations, to distinguish Pakistani debt instruments from interest-bearing bonds — though in practice TFCs may carry fixed or floating profit rates, and their legal and economic character is functionally identical to conventional corporate bonds.
Section 65 of the Companies Act 2017 governs the issue of debentures and TFCs by companies — a company may issue TFCs subject to the conditions and restrictions specified in its articles of association and subject to SECP regulations. The SECP's Debt Securities Regulations 2021 govern the public offering of TFCs — an issuance to more than fifty persons is a public offering requiring a registered prospectus and SECP approval under Section 87 of the Securities Act 2015, while an issuance to fifty or fewer qualified investors is a private placement exempt from prospectus registration requirements. Public TFC issuances are listed on the Pakistan Stock Exchange (PSX) and traded in the secondary market, while private placements are unlisted.
The Pakistan Stock Exchange (PSX) operates a debt market where listed TFCs are traded, with settlement through the National Clearing Company of Pakistan Limited (NCCPL) and custody through the Central Depository Company of Pakistan (CDC). The CDC Investor Account Services allow TFC holders to hold their securities in electronic (dematerialised) form through CDC sub-accounts maintained at the CDC's Participant Broker or Investor Account Service.
Investors in TFCs are creditors of the issuing company — unlike shareholders, TFC holders do not have voting rights but have priority over shareholders in the distribution of assets in a winding-up under Section 339 of the Companies Act 2017. The SECP's TFC Trustee Regulations require public TFC issuances to appoint a trustee (typically a scheduled bank or a trust company) to represent TFC holders collectively and to take enforcement action against the issuer in the event of default.
The State Bank of Pakistan (SBP) regulates the participation of banks and financial institutions in TFC investments and issuances through the Prudential Regulations for Corporate and Commercial Banking and the Banking Companies Ordinance 1962. Banks are major investors in TFCs issued by corporate issuers and also act as lead arrangers and bookrunners for private placement TFC transactions.
When Do You Need a Term Finance Certificate Application (Pakistan)?
A Term Finance Certificate Application in Pakistan is required when an investor wishes to participate in a TFC issuance — whether a public offering through the Pakistan Stock Exchange (PSX) or a private placement by an issuing company — and must formally subscribe to the offered securities.
The application is needed when a company has issued a prospectus under Section 87 of the Securities Act 2015 for a public TFC offering and is inviting applications from the investing public through the Pakistan Stock Exchange's book-building or fixed-price offering mechanism. Retail investors and institutional investors submit formal subscription applications through the CDC's eIPO system or through the designated banker to the issue during the subscription period stated in the prospectus.
The application is required when a high-net-worth individual or institutional investor — a mutual fund, a pension fund, an insurance company, or a bank — is invited to participate in a private placement TFC issuance under the SECP's Debt Securities Regulations 2021. Private placements are marketed by lead arrangers (investment banks, commercial banks' investment banking divisions) to a maximum of fifty qualified investors, who sign subscription agreements and receive allocation confirmations.
The application is needed when a corporate investor — a company with surplus cash seeking fixed-income returns above the prevailing banking deposit rates — wishes to invest in TFCs issued by a reputable issuer with a strong PACRA or VIS credit rating. TFCs with AAA or AA credit ratings from PACRA (Pakistan Credit Rating Agency) or VIS Credit Rating Company are typically offered at profit rates of 200 to 500 basis points above the six-month KIBOR (Karachi Interbank Offered Rate) for floating-rate TFCs, or at competitive fixed rates for fixed-rate TFCs.
The application is required when an overseas Pakistani investor holding a Roshan Digital Account with a Pakistani bank wishes to invest in listed TFCs through the SBP's Roshan Digital Investment platform, which allows non-resident Pakistanis to invest in government and corporate debt securities from abroad without exchange control restrictions.
The application is needed when a company participating in a syndicated TFC transaction — where multiple investors collectively provide the total TFC financing amount — must execute a subscription agreement and pay its allocated portion of the TFC proceeds to the issuer's account through the lead bank on the closing date.
The application is required when an existing TFC holder wishes to transfer their TFCs to another investor through the CDC's secondary market mechanism or through a private transfer, and the transferee must submit a transfer application confirming their eligibility to hold the TFCs under SECP regulations and their compliance with the terms of the TFC trust deed.
What to Include in Your Term Finance Certificate Application (Pakistan)
A valid Term Finance Certificate Application in Pakistan under the Companies Act 2017, the Securities Act 2015, and the SECP Debt Securities Regulations 2021 must contain the following essential elements.
Applicant Identity and Eligibility: Full legal name, CNIC or SECP company registration number, National Tax Number (NTN), address, and — for institutional investors — the name of the regulated entity and its licence or registration number from the relevant regulator (SBP for banks and NBFIs, SECP for insurance companies, mutual funds, and asset management companies). For a public TFC offering, all applicants must have a CDC sub-account or Investor Account to receive the allocated TFCs in dematerialised form.
TFC Issuance Details: The name of the issuing company, the TFC programme size, the issue price per TFC (typically PKR 5,000 or PKR 100,000 face value per certificate), the tranche being subscribed (for multi-tranche programmes), the ISIN code assigned by the CDC, and the prospectus or information memorandum reference. The ISIN (International Securities Identification Number) is the unique identifier for each TFC series in the CDC system.
Subscription Amount: The number of TFCs applied for and the total subscription amount in PKR. For public offerings, the minimum subscription is stated in the prospectus (for example, one hundred certificates of PKR 5,000 each = PKR 500,000 minimum). For private placements, the minimum ticket size is typically much larger (PKR 5 million or more for institutional investors).
Profit Rate and Terms: The profit rate applicable to the TFCs being subscribed — whether fixed (stated as a percentage per annum) or floating (KIBOR + spread, reset periodically), the profit payment frequency (semi-annual or annual), and the tenor (maturity period, typically three to seven years for corporate TFCs in Pakistan). The applicant should confirm their acceptance of the profit terms stated in the prospectus or term sheet.
Redemption and Call/Put Options: The redemption schedule — whether bullet repayment at maturity or amortising (instalment repayments over the tenor) — and any call option (issuer's right to redeem before maturity) or put option (investor's right to demand redemption) provisions. TFCs with call options allow the issuer to refinance at a lower rate if market conditions improve, while put options protect investors against credit deterioration.
CDC Account Details: The applicant's CDC Investor Account or sub-account number and the name of the participant broker or investor account services provider through which the TFCs will be credited upon allotment. CDC dematerialisation is mandatory for listed TFCs under the Companies Act 2017 and CDC regulations.
Payment Mechanism: The mode of payment of the subscription amount — bank transfer (RTGS/IBFT) to the issuer's designated subscription account, cheque, or through a designated bank during the subscription period for public offerings. For private placements, RTGS payment on the closing date is the standard.
Tax Declaration: A declaration regarding the applicant's tax status — whether the applicant is a filer (on the FBR's Active Taxpayer List) or a non-filer, as this determines the rate of withholding tax (Zakat or Ushr) deducted at source on TFC profit payments under Section 150 of the Income Tax Ordinance 2001 and the Zakat and Ushr Ordinance 1980. Zakat at 2.5% of face value is deducted on the first profit payment unless the applicant has filed a Zakat exemption declaration (CZ-50 form) with the issuer or its trustee.
Forms-legal.com provides this Term Finance Certificate Application (Pakistan) template as a practical guide for investors in the Pakistani corporate debt market. TFC investors should obtain the issuer's prospectus or information memorandum, review the independent credit rating from PACRA or VIS, consult the TFC trust deed, and seek advice from an investment advisor licensed by the SECP before investing, as TFCs carry issuer credit risk and are not insured by the Deposit Protection Corporation.
Under the State Bank of Pakistan (SBP) Act 1956, the SBP regulates banking. The Securities and Exchange Commission of Pakistan (SECP) regulates capital markets under the Securities Act 2015. Section 4 of the Negotiable Instruments Act 1881 governs promissory notes. The Federal Board of Revenue (FBR) administers tax obligations under the Income Tax Ordinance 2001. The Sales Tax Act 1990 governs indirect taxation.
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}Frequently Asked Questions
A Term Finance Certificate (TFC) and a Sukuk are both debt-like instruments used by Pakistani companies to raise capital from investors, but they differ in their legal structure and Shariah compliance status. A TFC is a conventional debt security — it represents a borrowing by the issuer on which profit is paid at a fixed or floating rate, and the TFC holder is a creditor of the issuer. The profit on a TFC is economically equivalent to interest, though it may be structured to comply with Pakistani banking law requirements. A Sukuk (Islamic bond) is a Shariah-compliant instrument that represents the investor's proportionate ownership interest in an underlying asset, project, or business activity — the investor receives returns from the income generated by the underlying asset rather than from a contractually fixed interest rate, making the arrangement permissible under Islamic finance principles supervised by the SECP's Shariah Advisory Committee and certified by Shariah scholars. Sukuk issued in Pakistan include Ijarah Sukuk (based on lease payments from the underlying asset), Murabaha Sukuk (trade finance), and Musharakah Sukuk (profit-and-loss sharing). The State Bank of Pakistan and SECP have issued specific Sukuk regulations under the Companies Act 2017 and the Securities Act 2015. Both TFCs and Sukuk are listed on the Pakistan Stock Exchange and held in dematerialised form through the Central Depository Company (CDC).
Credit ratings for TFCs in Pakistan are assigned by PACRA (Pakistan Credit Rating Agency) and VIS Credit Rating Company — the two SECP-registered credit rating agencies. Under the SECP's Debt Securities Regulations 2021, a public TFC issuance must obtain a credit rating before the prospectus can be registered with the SECP. The rating assesses the issuer's ability to make timely profit payments and principal repayments, and is expressed on a scale from AAA (highest credit quality) to D (default). Investment-grade ratings are AAA to BBB; below-BBB are speculative grade. Most institutional investors in Pakistan — mutual funds, insurance companies, banks — are restricted by their investment policies or SECP regulations to investing only in investment-grade TFCs. A higher credit rating typically corresponds to a lower profit rate (spread over KIBOR), reflecting the lower risk. PACRA and VIS conduct annual rating reviews and may upgrade or downgrade a TFC rating during its tenor if the issuer's financial condition changes — downgrades can cause the market value of a listed TFC to fall below par and may trigger covenants in the trust deed requiring additional security or accelerated repayment. TFC investors should monitor rating actions throughout the investment period.
Profit payments on TFCs in Pakistan are subject to withholding income tax under Section 150 of the Income Tax Ordinance 2001 at the time of payment. The withholding rate depends on the investor's tax filer status on the FBR's Active Taxpayer List (ATL): for filers, the rate is typically 10 to 15 percent of the profit amount; for non-filers, the rate is higher — typically 25 to 30 percent. Withholding tax deducted from TFC profit is an advance income tax — it can be adjusted against the investor's total income tax liability in their annual return, and excess withholding tax is refundable. The withholding tax certificate issued by the TFC trustee or the issuer's paying agent is the evidence of tax deducted for the investor's tax return. Zakat at 2.5 percent of the face value of TFCs is deductible on the first profit payment date under the Zakat and Ushr Ordinance 1980 unless the investor has filed a CZ-50 declaration of Zakat exemption. Capital gains on listed TFCs sold in the secondary market before maturity are subject to Capital Gains Tax under Section 37A of the Income Tax Ordinance 2001 at the applicable rate for securities. Corporate investors holding TFCs as part of their investment portfolio include TFC income in their taxable income under normal corporate tax rules under the Income Tax Ordinance 2001.
Yes. Overseas Pakistanis can invest in TFCs issued by Pakistani companies through several mechanisms. The SBP's Roshan Digital Account (RDA) platform, launched in 2020, allows non-resident Pakistanis holding Roshan Digital Accounts with designated Pakistani banks — HBL, MCB, Meezan Bank, Standard Chartered, and others — to invest in listed government securities (Pakistan Investment Bonds, T-Bills) and SECP-approved Naya Pakistan Certificates (NPC). Extension of the RDA platform to listed corporate TFCs is under development by the SBP in coordination with the SECP and the Pakistan Stock Exchange (PSX). Overseas Pakistanis may also invest in listed TFCs through a non-resident Pakistani Rupee account (NRPA) maintained with a Pakistani bank, by remitting foreign exchange through normal banking channels and using the converted PKR to purchase TFCs through a SECP-registered broker on the PSX. CDC sub-accounts can be opened in the names of non-resident Pakistanis through the CDC's Participant services. All overseas Pakistani investors in TFCs must comply with FBR tax filing requirements and the SBP's foreign exchange regulations under the Foreign Exchange Regulation Act 1947 and SBP's Exchange Control Manual.
If a TFC issuing company in Pakistan defaults on profit payments or principal repayment, the TFC trustee — appointed under the SECP's TFC Trustee Regulations to represent all TFC holders collectively — has authority to take enforcement action. The trustee may accelerate the outstanding amount of all TFCs (declare the full principal immediately due and payable), enforce any security provided by the issuer (mortgage over assets, charge over receivables, pledge of shares), and commence winding-up proceedings against the issuer before the relevant High Court under Section 282 of the Companies Act 2017. TFC holders are creditors of the company — they rank ahead of shareholders in the distribution of assets on winding-up under Section 339 of the Companies Act 2017, but behind secured creditors (mortgage holders, banking institutions with registered charges) and preferential creditors (employee dues, government taxes). The actual recovery for TFC holders in a Pakistan insolvency depends on the value of the available assets and the priority of the outstanding claims. Listed TFCs on the Pakistan Stock Exchange (PSX) that are in default are placed on the PSX's defaulters segment and suspended from normal trading. Individual TFC holders can file claims through the trustee's proof of debt mechanism in the winding-up proceedings rather than filing individual suits, which is more efficient for mass creditor situations.
The minimum investment amount for a TFC in Pakistan varies by the type of offering. For public TFC offerings through the Pakistan Stock Exchange (PSX), the minimum subscription amount is stated in the prospectus and is typically set to facilitate retail investor participation — common minimums are PKR 500,000 (one hundred certificates at PKR 5,000 face value each) to PKR 1,000,000. For TFCs issued through the PSX's book-building mechanism, the minimum bid amount is set by the issuer in coordination with the PSX and SECP. For private placement TFCs marketed to institutional and high-net-worth investors by investment banks acting as lead arrangers, the minimum ticket size is significantly higher — PKR 5 million to PKR 25 million per investor — reflecting the wholesale nature of the private placement market and the qualified investor eligibility requirements under the SECP's Debt Securities Regulations 2021. Listed TFCs on the PSX can also be purchased in the secondary market through a SECP-registered broker in smaller quantities — the minimum tradeable lot size on the PSX debt market is typically one certificate (PKR 5,000 face value), making secondary market purchases accessible to smaller investors. The CDC's eIPO platform for new public TFC issuances allows retail investors to subscribe online through their CDC sub-account during the subscription period.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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