July 9, 2021 (MLN): The Board of Directors of The United Insurance Company of Pakistan Limited (UIC), in a meeting held on July 8, 2021, approved the draft of the Scheme of Merger of SPI Insurance Company Limited with and into UIC under some sections of the Companies Act, 2017, subject to obtaining all necessary shareholders and SECP approvals.
According to the notice issued to Pakistan Stock Exchange (PSX), the Board also approved the Swap Computation Certificate, issued by RSM Avais Hyder Liaquat Nauman, Chartered Accountants, which inter alia, contains the methodology, valuation and calculation of swap ratios.
The business carried on by UIC, a public company listed on the PSX, is substantially similar to the business that is being carried on by SPI, an unquoted public company. The merger of the companies will result in the shareholders holding shares in a single company carrying on the same insurance business.
The Scheme shall achieve the benefits that include economies of scale, increasing risk absorption, synergies, organizational efficiency and optimal utilization of resources, efficiency in management and control, reduction in costs on account of common procedures and efficient fund management.
The principal object of this Scheme is to merge SPI with and into UIC by transferring to, merging with and vesting in UIC the whole of SPI, including all assets, liabilities and obligations of SPI, as of the Effective Date, against the allotment and issue of shares of UIC to the shareholders of SPI based on the swap ratio, and dissolving SPI without winding-up (the “Merger”).
Consequent to the Scheme becoming effective, the authorized capital of SPI will merge and combined with the authorized capital of UIC; and, the issued share capital of SPI will be eliminated in consequence of the issuance of new shares of UIC to the shareholders of SPI.
The pre-merger authorized share capital of UIC and SPI is Rs4billion and Rs1billion respectively, while post-merger, the authorized share capital of UIC will be Rs5billion.
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