SECP Proposes Dedicated Legal Framework for Waqf Management Companies

The Securities and Exchange Commission of Pakistan (SECP) has announced its decision to propose a key amendment to the Companies Act, 2017. The amendment aims to introduce the concept of Waqf management companies and enable their licensing and regulation under a dedicated legal framework. The proposed Section 42A would empower the SECP to license companies for managing Waqf assets, which will operate as not-for-profit entities. These companies will be responsible for the management and administration of Waqf assets in strict accordance with Shariah principles and the declared objectives of the Waqf. This landmark initiative marks Pakistan’s first formal step toward corporatizing the governance of Waqf, drawing inspiration from global best practices in Islamic finance, fiduciary stewardship, and social impact investment. The proposed framework will enable the creation of modern Waqf structures, such as cash Waqf and investment Waqf, thereby paving the way to support noble causes through earnings generated from financial assets. Furthermore, the development of Waqf-linked Sukuk and dedicated Waqf mutual funds will help establish a new segment of Islamic social finance within Pakistan’s regulated financial markets, enhancing the mobilization of capital for charitable and developmental objectives. Under the proposed framework, the operations of Waqf Management Companies will be subject to robust safeguards and regulatory conditions. These include the immutability of declared Waqf objectives, which cannot be altered or substituted; the perpetual preservation of the Waqf corpus, restricting its sale, pledge, or encumbrance except where explicitly permitted by the Waqf’s objectives; and mandatory compliance with Shariah principles and standards as prescribed by the SECP. Additionally, these companies will be required to maintain strong governance, reporting, and fiduciary controls, reflecting the religious and charitable nature of Waqf. Ongoing regulatory oversight will include Shariah compliance monitoring and the appointment of qualified Shariah advisors. Any non-compliance with the framework may result in penalties and regulatory sanctions as provided under the law. This initiative aligns with the SECP’s broader vision to revive Islamic social finance institutions, foster trust-based asset management, and channel Waqf assets for public benefit through structured, transparent, and professionally governed entities.