RECORDER REPORT

ISLAMABAD: Taking into account security concerns about the NGOs and INGOs operating in Pakistan, Securities and Exchange Commission of Pakistan (SECP) has tightened regulations for such NGOs and INGOs registered with the Commission.

According to the new regulations issued by the SECP for the section 42 companies here on Monday, the NGOs and INGOs cannot directly or indirectly participate in any political campaign for elective public office or other political activities akin to those of a political party or contribute any funds or resources to any political party or any individual or body for any such purpose.

The regulations have been formulated under the Companies Act 2017, though the NGOs were registered with the SECP under Companies Ordinance 1984 but there were no complete set of regulations to oversee the conduct of these entities, sources said.

The NGOs termed as (companies) in the regulations highlights the procedures related to grant of license, that is issued for three years unless it is revoked earlier by the Commission.

The Regulations highlight that the company (NGO or the INGO) cannot utilise all its money, property, donations or income or any part solely for promoting its objects, besides surplus money not exceeding the amount specified in the Income Tax Ordinance 2001 may be invested in the instruments or securities as specified income tax law.

The  directors and the chief executive officer shall be entitled only for reimbursement or payment of actual expenses incurred by them for attending meetings, the payment of remuneration and  other benefits shall be allowed only to the chief executive officer and directors who are non- members and  are  in  the whole-time employment of the company.

The income and any profits of the company, will be applied solely towards the  promotion of objects of the company  and  no  portion  of it be distributed, paid  or  transferred directly or indirectly by way  of  dividend, bonus or otherwise by way of profit to the members of the company or their close relatives.

The company shall close its accounts on 30th of June each year.

The Regulations highlight that the NGOs will receive all  funds grants,  contribution  and  donations through proper banking channels but any amount less than Rs25,000 can  be  received  in  cash.

The Regulations have also restricted the NGOs that all donations received and the charitable assets are utilised exclusively for charitable purposes only, and ensure that such donations do not benefit entities and individuals designated under the United Nations Security Council’s (UNSC) sanctions list as maintained and periodically updated on UNSC’s website.

No change in the memorandum of association shall be made except with the prior approval of SECP.

The company cannot unilaterally claim patronage of any government or authority or renowned personalities and organisations whether local or foreign without their written consent.

Any NGO cannot engage in any activities to function as a trade organisation and cannot exploit or offend the religious susceptibilities of the people.

The Regulations restrict the NGOs to admit any new member unless he/she meets the fit and proper criteria as contained in these regulations.

The Regulations have also laid down the ‘Fit and proper criteria’ for promoters, members, directors and   chief executive officer of the NGOs and INGOs.

It has restricted any person associated with any money laundering or terrorist financing activities, illegal banking business, illegal deposit taking or financial dealings and also understands the company’s unique risks including the money laundering and terrorism financing risks in the locations where the company operates.

Similarly any person declared tax defaulter by authorities, involved in any undesirable or anti-state activities, cannot be director or major shareholder in the NGOs of INGOs, SECP regulations added.