The Securities and Exchange Commission of Pakistan (SECP) has revised the fit and proper criteria for promoters, members, directors and chief executive officer of the charitable and not-for-profit organizations (NPOs).
The SECP issued SRO 145 (I)/2020 here on Wednesday to amend the Associations with Charitable and Not for Profit Objects Regulations, 2018 (the Regulations).
Under the regulations, all companies licensed under Section 42 of the company law at the time of coming into force of these regulations, shall comply with all the requirements of these regulations.
Under the revised amendments, each of the promoters, directors, chief executive officer and members of association shall meet the fit and proper criteria as provided in these regulations.
Provided that the commission shall assess the fitness and propriety of the promoters, directors and the chief executive officer, whereas the company shall assesses the fitness and propriety of its members: provided further that the fit and proper criteria shall remain applicable at all times and in case of any non-compliance at any point of time, the company shall be responsible for replacement of above referred persons for which necessary approval of the commission shall be obtained.
The fitness and propriety shall be assessed by taking into account all the relevant facts. The SECP said that a person shall fulfill the following requirements in order to act as promoter, member, director or chief executive officer of the company:
(a) he has not been found associated with any money laundering or terrorist financing activities, illegal banking business, illegal deposit taking or financial dealings, and also understand the company's unique risks including the money laundering and terrorism financing risks in the locations where the company operates;
(b) he or the companies in which he is a director or major shareholder have not been declared by tax authorities as a tax defaulter; (c) he or the companies in which he was a promoter or is a director or major shareholder have not been found involved in any fraudulent activities or illegal activities;
(d) he has not been found convicted of fraud or breach of trust or of an offence involving moral turpitude by a court of law;
(e) he has not been actively involved in the management of a company whose registration or license has been revoked or cancelled or which has gone into liquidation or other similar proceedings due to financial irregularities or malpractices;
(f) he is not ineligible, under the Act and company law or any other legislation; (g) he has not been found involved in any undesirable or anti-state activities; and
(h) he has not been found involved in multi-level marketing (MLM), Pyramid and Ponzi Schemes, or other related activities/businesses or any lottery business.
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