SECP framework: Security clearance of foreign donors/directors mandatory

Recommendations pertaining to The Associations with Charitable and Not for Profit Objects Regulations, 2018 as amended through S.R.O.1574 (I)/2021.dated 29-11-2021 by MYC Cost & Management Accountants: Deliberation .1: Regulation 7 (v) Each promoter shall undertake to donate a reasonable amount but not less than (200 k) two hundred thousand rupees as start-up donation or such other amount as may be required by the Commission: NPF 1: Section 2.1 Startup donation must be in the form of cash and duly deposited in the bank: 2.4 Details of donation by promoters and other persons: in part 3. Members’ donations — Start-up (mandatory) APPENDIX-B TO NFP FORM 1: Para c: Shall contribute a reasonable amount but not less than Rs.200,000/- as startup donation to the association/company. The same shall be deposited in the company’s account within a period of six months of its incorporation which shall be used for the attainment of its object(s) and shall not be refundable to the promoters, directly or indirectly; Observation: The above referred various requirements seem to be harsh and counterproductive, as for enthusiast persons, who want to pursue their charitable objectives, have to devote their most precious asset i.e. time. If somebody don't have sufficient funds like Rs.200,000/- how can one start his charitable objectives. In other words, young professionals/ common man /social activist, who have desire to contribute towards the society, can’t establish the company u/s 42? MYC Recommendation: (i) In case of existing NGO converting into Section 42 companies, there may be no requirement of cash donation as startup, as the NGO is already established and have made their setup with their contributions (cash & kind) and efforts ,hence they may be allowed to get registered w/o any cash donation requirement. (ii) In case of new NGOs, this cash donation requirement may also be relaxed, either by allowing initial donors to contribute or extend loan to NGO. Such amount of loan may be repaid to the promoters, after suitable time. Generally speaking as per global trend, there is no such restriction imposed on promoters of the NPOs to contribute under compulsion. Charity Commission of UK & Australian Charities & Not for Profit Commission (ACNC). In both cases, Promoter/member's donation "in kind" may also be allowed as substitute to "cash donation" ,specially services in Kind may also be considered ,which may be