SECP to Impose New Conditions on Charitable and Not-For-Profit Organizations

The Securities and Exchange Commission of Pakistan (SECP) has proposed new conditions and restrictions on the companies registered as charitable and Not-For-Profit organizations to check possible misuse of Islamic donations received in the form of zakat/sadaqah. The SECP has proposed amendments in the Associations with Charitable and Not for Profit Objects Regulations, 2018 through a notification issued on Tuesday. The revised regulations shall apply to companies licensed under section 42 of the company law and shall not apply to trade organizations licensed under the Trade Organizations Act, 2013. The SECP’s amended regulations revealed that the company shall not exploit or offend the religious susceptibilities of the people. The company shall ensure that Islamic donations, including but not limited to zakat, sadaqah or in any other form, shall not be received, invested, or utilized by it in any way that is contrary to the Shariah principles. Provided that it shall be the responsibility of the company to arrange a Shariah opinion in the form of a Fatwa from a Shariah Advisor registered with the Commission for collection and utilization of such Islamic donations, which shall be duly annexed with the audited financial statements of the company. The SECP added that the company shall clearly disclose its policy for receipt, investment and utilization of Islamic donations, as mentioned in regulations, in the financial statements and shall also disclose amount of such donations and avenues where utilized.