The Securities and Exchange Commission of Pakistan (SECP) has tightened regulations for chartable associations, non-profit associations and not-for-profit companies, which receive foreign funding/ donations.
In this regard, the SECP has issued circular number 16 of 2019 here on Thursday for non-profit organisations.
The SECP has directed all chartable associations, non-profit associations and not-for-profit companies, intended to receive foreign funding/donations, to apply to the Commission with specified documents for seeking prior permission from Ministry of Interior.
According to the SECP, the section 42 of the Companies Act, 2017 (the "Act") and regulations made thereunder provide the legal framework for licensing of associations formed with charitable and not for profit objects (companies licensed under section 42 of the Act). Sub-section (2) of section 42 of the Act empowers the Commission to grant license on such conditions as it may think fit.
The Commission vide SRO 733(1)2018 dated June 07, 2018 issued the Associations with Charitable and Not for Profit Objects Regulations, 2018 (the "Regulations"), which are binding on all companies licensed under section 42 of the Act. Regulation 7 of the Regulations provides conditions applicable to section 42 companies.
Attention is invited to the following condition contained in sub regulation (xxii) of Regulation 7 of the Regulations which is reproduced as under:- "the company shall not appeal, solicit, receive, or accept donations from foreign sources except with the prior permission, clearance or approval from the relevant authorities as may be required under any law or speqfied by the Government."
It has been noted that certain companies licensed under section 42 of the Act, receive foreign funding/donations without obtaining prior permission from relevant authorities in contravention to the requirements of aforementioned regulations.
Accordingly, all companies licensed under section 42 of the Act, which intend to receive foreign funding/donations, are hereby directed to apply to the Commission along with eight (08) sets of following documents for seeking prior permission from Ministry of Interior. (i) Latest Memorandum & Articles of the Association of the company; (ii) Certified copy of latest Form B of the company; (iii) Resumes and affidavits of the chief executive and directors of the company as per the format specified in the Regulations and (iv) CNICs/ passports of all the directors & chief executive of the Company, the SECP added.