Navigating Non-Profit Company Registration Law in Pakistan: A Comprehensive Guide
Disclaimer: The information provided here is for general guidance only and should not be considered as legal advice. For property and real estate legal advice and consulting, please contact City Laws Associates.
Licensing Requirements:
– Q. Does a non-profit company/organization need to obtain a license?
– A. Yes, under section 42 of the Companies Ordinance, 1984, a license from the Securities & Exchange Commission of Pakistan is mandatory before registering as a company limited by guarantee.
License Duration:
– Q. For how many years is the license issued?
– A. The license is issued for five years and is renewable for subsequent five-year terms.
Minimum Members for Association Formation:
– Q. How many members are required to form a non-profit association under the Companies Ordinance, 1984?
– A. A minimum of three members can form an association/company not for profit.
Multiple Objects for Non-Profit Companies:
– Q. Can a non-profit company have multiple objects?
– A. Yes, a non-profit company is allowed to have multiple objects.
Asset Distribution on Company Closure:
– Q. Where do assets go in case of closing a non-profit company?
– A. Upon dissolution, surplus assets or property should be transferred to another section 42 company with similar or identical objects.
Foreigners in Non-Profit Associations:
– Q. Are foreigners allowed to form non-profit associations/companies?
– A. There is no restriction on foreigners becoming trustees of a non-profit company.
License Revocation:
– Q. Can the license granted under section 42 be revoked?
– A. Yes, the Securities & Exchange Commission of Pakistan can revoke the license. The company ceases to enjoy exemptions, and notice and hearing are provided before revocation.
Minimum Capital Requirement:
– Q. Is there a minimum paid-up capital requirement for non-profit companies under section 42?
– A. No, a non-profit company under section 42 is not required to have a minimum authorized paid-up capital.
Global Activities for Non-Profit Companies:
– Q. Can a non-profit company registered under section 42 have activities outside Pakistan?
– A. The Companies Ordinance, 1984 does not prohibit activities outside Pakistan.
Governance Structure:
– Q. Can one person be the sole director and officer of a nonprofit company in Pakistan?
– A. No, at least three trustees are required as per the Companies Ordinance, 1984.
Compensation for Directors and Officers:
– Q. Can a non-profit company pay a salary to its directors, officers, and employees?
– A. Reasonable compensation for services rendered to employees is allowed, but trustees cannot draw a salary or remuneration.
Tax-Exempt Status:
– Q. Is a nonprofit company a tax-exempt entity, and how can it become tax-exempt?
– A. Charities can be exempt from tax on most forms of income. Exemption must be applied for separately to the Commissioner of Income Tax.
