Background:
A Company was a Special Purpose Vehicle (SPV) for implementing Smart City Project of the Ministry of Urban Development (MoUD). The capital of the Company was contributed, subscribed and paid-up by the State Municipal Council. The Company was responsible for monitoring and evaluation of completion and progress of the work/activities carried out by the State Municipal Council according to the time frame with regard to the project.
A Memorandum of Agreement was entered between the Company and State Municipal Council to execute the project of Smart city. The related works to be executed by the Company in the project were development of new drainage system, facilities for general public, utility diversions, etc.
The funds of the Company were given as a grant and cost of execution of the project had to be met out from those funds and part of these funds received had been capitalised as equity capital of the Company.
All development works would not yield any revenue in future and none of the assets developed or created were controlled or owned by the Company. Also, the expenses so incurred were charged as operating and other expenses by the management of the Company since the expenses were incurred towards the main object of development works in the area of State Municipal Council. Further, any asset so generated or to be generated as part of the project would not belong to, or be owned or controlled by the Company or booked under the Company’s assets.
