The Securities and Exchange Commission of Pakistan (SECP) has made certain changes to the conditions for grant of licences to non-profit associations under Section 42 of the Companies Ordinance, 1984, regarding multiple objectives, start-up donation, mandatory registration within three months and criteria for Credit Information Bureau (CIB) Reports.
From now on, an association shall be allowed to promote multiple objectives. A few years ago, a condition was added to allow licencing only to associations having a single objective.
The condition of start-up donation by each promoter of at least Rs200,000 has been relaxed, as it was detrimental to the corporate growth. It was observed that many skilled and professional persons were reluctant to become subscribers of associations due to this condition.
The association obtaining licence is required to get itself incorporated as a company under the ordinance within a period of three months of the date of licence. There was no mechanism to allow incorporation to subscribers that did not turn up for incorporation within the stipulated period. To provide a remedy to such subscribers, now the licencing authority, in special circumstances, may extend the time period on an application made by the applicants for grant of such extension. While processing a case for the grant of licence to an association, the CIB Reports are called from State Bank of Pakistan and licence was granted on obtaining clear CIB Reports of promoters. The condition has now been relaxed and the persons whose CIB reports show total overdue amount exceeding Rs300,000 shall not be allowed to act as promoter of the association.
Published in The Express Tribune, August 4th, 2011.
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