Legal framework for registration of organizationsNudrat Mufti

Sr no

Laws The Societies Registration Act, 1860

The Trusts Act, 18821

The Voluntary Social Welfare Agencies (Registration AndControl Ordinance), 1961

The Companies Ordinance, 1984

The Cooperative Societies Act, 1925

1. Which kind of organizations can getRegistration under the law?

Charitable society2

Literary society

Scientific society

Corporations

Private trusts Charitable

trusts.

Agency Organization Association

Non-governmental Organizations

Nonprofit making

Organizations Company not for

profit Associations not

for

Resource society

Producers’ society

Consumers’ society

Housing society General society

1 The person who reposes or declares the confidenceis called the “author of the trust”: the person who accepts the confidence is called the“trustee”:the person for whose benefit the confidence is accepted is called the“beneficiary”: the subject-matter of the trust is called “trust property” or “trust money”:the “beneficial interest” or “interest” of the beneficiary is his right against the trustee asowner of the trust property; the instrument, by which the trust is declared iscalled the “instrument of trust”:2 Section 4(3) income tax 1922

profit3

Industrial departments

Charitable and other companies

2. Registration authority

Application can be filled with Registrar and signed by President, Chairman or authorized governing body member.

Temporary registration of the documents can be given.

An officer authorized by the ProvincialGovernment.

Corporate law authority4.

In case of not for profit associations, the Corporatization & Compliance department has eight regional offices of the Securities and Exchange Commission.

The Provincial Government or registrar has authority to classify societies for registration.

3 Associations Not For Profit Section 42

4 Corporate Law Authority' deemed to mean and refer to the 'Securities and Exchange Commission

3- Tax exemption

Act is silent about tax exemption but other mode is applied through the income tax commissioner.

Act is silent about tax exemption but other mode relates to Property act.

Act is silent about tax exemption.

Act is silent about tax exemption but other mode is to apply by federal board of revenue

Power to exempt from income-tax, stamp-duty, registration and court fees.

4. ScopeLaws The Societies

Registration Act, 1860

The Trusts Act, 1882

The Voluntary Social Welfare Agencies (Registration AndControl Ordinance), 1961

The Companies Ordinance, 1984

The Cooperative Societies Act, 1925

4.1 Which kind of mandate/objectives can be registered under the law?

Promotei)Science,Literature,Fine artsii)Instruction of the diffusion of useful

i)Advancement of religionii) Advancement of knowledgeiii) Advancement of commerce,

i)Child, youth and women’s welfareii) Welfare of the physically, socially and mentally handicapped.

Promoting i) Commerce, art, science, religion, sports, social services and charity (education, religion, community

i) The promotion of thrift, self-help and mutual assistance amongst agriculturist and other persons with common

knowledgeiii)Diffusion of political education,iv)Foundation or maintenance of libraries or reading rooms for use among members or open to the publicv)Public museums and galleries of paintingsiv)Work of art andcollection of natural historyiiv)Mechanical and philosophical inventions

health and safety of the publiciv) Advancement of any other object beneficial to mankind.

iii) Family planning, recreational programme intended to keep people away from anti-social activities.iv)Social education, i.e., education of adults aimed at developing sense of civic responsibilityv) Welfare of juvenile delinquents, the aged and infirm, socially handicapped, the beggars and destitute.iv) Welfare and

bifacial activates, eradiation of povertyii) Any other ‘useful’ objective.

economic or social interests and for achieving better standards of living.

Instruments or designsiiiv) Educational and medical services.

rehabilitation of patients and released prisoners.

4.2 Prohibitions or restrictions in law

The legal proceedings or suit will continue with the name of or against the successor.

Every trust with unlawful purpose is void.

No Agency can be established or continue working except in accordance with the provisions of this

Ordinance Prohibition

against establishing or continuing an agency without registration

A n association partnership or company consisting of not more than twenty persons

For the purpose of carrying on any business with less than 21 members

In the case of a

Private company, two

Not registered for the purpose of carrying on business as a banking

Society, financing bank. Society shall

not make a loan to any person other than a member.

members.4.3 Evidence of

registrationThe registrarCertify about the registration.

Act is silent, however the instrument (trust deed) of trust can be considered as evidence.

The registration authority shall maintain a register of all certificates issued as evidence.

License issued by security and exchange commission.

A certificate of registration signed by the registrar.

5Internal Governance Of Registered Organizations

Laws The Societies Registration Act, 1860

The Trusts Act,1886

The Voluntary Social Welfare Agencies (Registration AndControl Ordinance), 1961

The Companies Ordinance, 1984

The Cooperative Societies Act, 1925

5.1

Number of member in an organization

Seven or morePersons can be associated.

Silent about number of member in an organization. However the charter may define

Silent about number of member in an organization. However the charter may define number of its member.

i) Three or more persons associated forany lawful purpose in a publiccompanyii) One or more

A society rule defines 30 or 50 members.

number of its member.

persons can associate in a private company.

5.2 Suspension or dissolution of office/officers of registered organizations

Act is silent about suspension or dissolution.However the charter may define its suspension or dissolution.

Apply by petition to a principal civil court of originalJurisdiction for the appointment of a trustee or a new trustee

Registration authority in writing can suspend or dissolve the governing bodies responsible for any irregularity in funds for any maladministration.

Silent about Suspension or dissolution. However the charter may define it.

Removed by the registrar or as given in rules.

5.3

Board of governors and directors of registered organizations

The governing body consists of governors,Council, directors, committees, trustees or other

Act is silent about board of governors and directors. However the charter may define it.

Governing body means, the council, committee, trustees, or other bodies, dealing with its executive

Single member company has at least one director, private company has not less than two directors and Public company

General body consists of all its members and managing committee.

management bodies and if members are guilty of offences they are punishable as strangers.

functions and the management affairs.

has not less than three Directors appointed and elected.Every listed company has not less than seven directors5, elected in a general meeting.

5 Section: 177,181,187and 236 describe the retirement, removal and ineligibility of certain persons to become director.

5.4 Annual general meetings/ annual report or general board or meetings of registered organizations,

1) Annual general meeting is held once in every year, which is convened by Chairman.2)A list be filed with the Registrar of Joint-stock Companies of the names, addressesand occupations of governing body.

Act is silent about meetings.However the charter may define it.

Act is silent about meetings. However the charter may define it.

Third schedule and ordinance describes the annual general meeting6, statutory (general) meeting of company7, calling of extraordinary general meeting8and deals with power of commission to call meetings9.

a)A generalmeeting held three months after the datefixed for making up its accounts for the year.b) Special general meeting after one month.c) Details about generalmeeting is given in rules.

6 Section : 1587 Section : 1578 Section : 1599 Section: 170

5.5 The memorandum of association or articles of association.

The document must have1)The name of the society2)The objects of the society3)The names, addresses, and occupations of the governors, council, directors, committee or other governing body to whom,

Act is silent about the memorandum of association or articles of association.

Act is silent about the memorandum of association or articles of association

Section 1016 is about Memorandum of company limited by sharesSection 17 is aboutMemorandum of company limited by guaranteeSection :18 is aboutMemorandum of unlimited companySection :19

Act is silent about the memorandum of association or articles of association

10 29. Form of memorandum and articles.- The form of—(a) the memorandum of association of a company limited by shares;(b) the memorandum and articles of association of a company limited byguarantee and not having a share capital;(c) the memorandum and articles of association of a company limited by guaranteeand having a share capital;(d) the memorandum and articles of association of an unlimited company having ashare capital;shall be respectively in accordance with the forms set out in Tables B, C, D and E in theFirst Schedule or as near thereto as circumstances admit.

by the rules of the society, the management of its affairs is entrusted.4) A copy of the rules and regulations of the society, certified to be a correct copy by not less than three of the members of the governing body.

Printing, signature, etc., of memorandum.

5.6

Schedule, rules, by-laws and their modifications or amendments

a) Bye-law made at a general meeting having three-fifths of the member’s

Act is silent about it.However the charter may define it.

1- RegistrationAuthority gives approval on the amendment2) Copy of the amendment be

Alteration of memorandum is to change the place ofits registered office from one province to

1Amendment 14of the by-laws of a society can be valid when it is registered under this act.15

2)When registrar

. votes.b)Books of society gives existence of by -lawsc) Societies can alter, extend or abridge their organizational purposes.11

forwarded to the RegistrationAuthority.2- Provincial government, by notification in the official gazette, makes rules.

another, or from one city or town in a province toanother, or from a part of Pakistan)12.Federal government have power to alter schedules and to make rules.13

is satisfied he can advise theSociety to make the amendments within a period of sixty days.3) By-laws are registered and enforce for the time being.

5.7 Penalties and Procedure of dispute settlements in registered organizations

Sue or be sued in the name appointed by the governing body for the occasion.

Where a decree has been made in a suit for the execution of a trust, the trustee cannot

1)SECTION :14 deals penalties and procedure of complaint in writing made by the registration authority,

Be liable to a fine. Penalties and Procedure of dispute settlements is handling by registrar.

11 Section : 1212 Section :2113 Section : 505 & 50614 Cooperative Societies (Amendment) Act 200615 Cooperative societies (amendment) act 2006

exercise any of his powers.

2)SECTION :232 dealsdefault in compliance with provisions of Section SECTION : 231 relate to account matters.SECTION : 290 deal applications to court.

5.8 Indication of fraud, abuse or illegal acts in registered organizations

Act is silent about it. However the charter may define it.

Act is silent. However the charter may define it.

Registration authority can deal in writing with organizations responsible for any irregularity in funds for any maladministra

Act is silent .However the charter may define it.

1) The registrar can issue a search warrant for recovering any papers, documents or books of account belonging to a society.2) Section 61-

tion. 62 explains fine not exceeding fifty thousand rupees for a liable person.

5.9 Power of courts

1) Court having jurisdiction where the defendant resides, or the society situated, as governing body.2) The principal court of original civil jurisdiction of the district is in which the chiefbuilding of the society is

1)Civil court ofOriginal jurisdiction for its opinion, advice or direction on question.2) Respecting the management or administration of the trust-property.

Registration Authority has the jurisdiction to decide matters relating to courts.

1)High court having jurisdiction in the place at which the registered office of the company 2)The federal government may, by notification in the official gazette empower any civil court to exercise3)Registered office within the territorial jurisdiction of such court4) The magistrate

1.No Civil court take cognizance of any matter connected with the winding up or dissolution of a society under this act and when a winding up order has been made no suit or other legal proceeding can take place.2) No court take cognizance of any offence

situating. of the first class or the court has the jurisdiction.

punishable

6 Policies

Laws The Societies Registration Act, 1860

The Trusts Act 1882

The Voluntary Social Welfare Agencies (Registration AndControl Ordinance), 1961

The Companies Ordinance, 1984

The Cooperative Societies Act , 1925

6.1 Policy of dissolution/ winding up of registration or organization

- Society cannot be dissolved without the consent of the government of the province of registration- Three-fifths of the members have expressed a wish for such dissolution by their votes, it dissolved at the time they agreed.

Silent about Policy of dissolution/ winding up of registration or organization. However the charter may define it.

i)- Registration authority has Reason to believe that at a registered agency is acting in contravention of its constitutionii) Making order for the dissolution of agency not less than three fifths of it members applies to the Provincial government.

Three models are 1)Application for winding up16 of companyii) Modes of winding up.iii) Circumstances in which company may be wound up by court.

If membership of the society has been reduced to less than the requisite minimum, the society dissolved.

6.2

Policy of cancellation /

Silent about cancellation.

A trust can be revoked

When agency is dissolved

The commission can revoke the

If certificate of registration is

16 Section: 275,297 and 305.

revocation of registration or organization.

However the charter may define it.

only—(a) Where all the beneficiaries are competent to contract-by their consent;(b) Where the trust has been declared by a non-testamentary instrument(c) Where the trust is for the payment of the debts.

under this Ordinance, its registration cancelled on and with effect from date the order ofdissolution takes effect.

license any time. not signed by the registrar, it’sRegistration can be cancelled.2) SECTION : 49. Describe effect of cancellation of registration.

6.3 Policy for Enquiries

In case of inquiry the Provincial government can declare the

Act is silent about Policy for Enquiries. However the charter may define it.

Registration Authority deals with inquiry matter.

Section : 263. On receiving an application by members or report byregistrar about

The registrar can hold an inquiry about thefinancial and working condition of a

governing body to be superseded for period, not exceeding one year.

affairs of the company.Section : 265. Investigation of company’s affairs in other cases.Section : 283defines Company’s power to refer matter to arbitration.Section : 478.define powers of the federal government, etc., in relation to enquiries.Section : 149 17deals with

society.

17 Substituted by Companies (Amendment) Ordinance, 2002.

proceedings.

6.4 Audit or account policy of organization,

Act is silent about Audit or account policy of organization. However the charter may define it.

A trustee is bound (a) to keep clear and accurateAccounts of the trust-property,

The registration authority, inspect the books records, securities,Cash and other properties.Section : 7. Conditions to be complied with the registered agenciesSection : 252.

Section : 230. Books of account to be kept by companySection : 231. Inspection of books of account by registrar, etc.Section : 233. Annual accounts and balance-sheet-Section : 282 Special audit18.-

1) Accounts are maintained by book, document, cash or securities 2) The Registrar himself, can be an auditor or can appointed a committee of auditors.

18 Non-Banking Finance Companies(i)Investment Finance Services;(ii) Leasing;(iii) Housing Finance Services;(iv) Venture Capital Investment;(v) Discounting Services;(vi) Investment Advisory Services;(vii) Asset Management Services

Appointment and remuneration of auditors.

6.5 Document’s Inspection policy of organization

1) On payment any person can inspect all documents which are filed with the registrar2) Any person can get required copy or extract of any document.

Act is silent about it. However the charter may define it.

1)Annual reportand audited accounts which are sent to the registration authority can be published for general Information.2) On payment any person can Inspect any document relating to a registered agency

1) The registrar can order an immediate inspection of the copies or register.Section :76,147, 149 and 156 deals withevidence of any matter /documents kept by the registrar.

A copy of act, rules, by-laws and a register is available for inspection at the registered address of the society.

THE END.