1
PART II
Statutory Notifications (S.R.O)
GOVERNMENT OF PAKISTAN
SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN
Islamabad, the 8th
April, 2013
NOTIFICATION
S.R.O. 301(I)/2013.- In exercise of the powers conferred by section 506A read with
section 42 of the Companies Ordinance, 1984 (XLVII of 1984) the following draft of the
Associations Not For Profit (Licensing and Regulations, 2013 is hereby published for the
information of all persons likely to be affected thereby and notice is hereby given that the
draft shall be taken into consideration after fourteen days of its publication in the Official
Gazette.
Any objection or suggestion received from any person in respect of the said draft
before the expiry of the aforesaid period shall be considered by the Securities and
Exchange Commission of Pakistan.
ASSOCIATIONS NOT FOR PROFIT (LICENSING AND CORPORATE
GOVERNANCE) REGULATIONS, 2013
CHAPTER I
PRELIMINARY
1. Short title, commencement and application.- (1) These Regulations shall
be called the “Associations Not For Profit (Licensing and Corporate Governance)
Regulations, 2013.”
(2) They shall come into force at once.
(3) These regulations shall apply to,-
(a) all existing companies licensed under section 42 of the Ordinance;
and
(b) Associations seeking licence under section 42 of the Ordinance and
willing to register with the Commission as company with limited
liability. .,
2. Definitions.- (1) In these Regulations, unless there is anything repugnant in
the subject or context ,-
2
(a) “Association” means a group of persons united for a common object
and includes-
(i) existing associations licensed under section 42 of the
Ordinance and willing to be registered with the Commission
as company with limited liability; and
(ii) associations capable of being formed as a company with
limited liability seeking license under section 42 of the
Ordinance,;
(b) “Board” means the board of directors of the association;
(c) “Commission” means the Securities and Exchange Commission of
Pakistan established under section 3 of the Securities and Exchange
Commission of Pakistan Act, 1997 (XLII of 1997);
(d) "Connected Person" includes,-
(i) a member of the association;
(ii) a person who has donated any movable or immovable
property to the Association;
(iii) the promoters, directors, officers, agents or employees of the
association;
(iv) spouse, lineal ascendants or decedents, relatives, partner,
employee or nominee of any person falling within any of
sub-clauses (i) to (iii);
(v) any legal person in which any person falling within any of
sub-clauses (i) to (iv) has an interest; or
(vi) associated companies and associated undertakings of the
association;
(e) “Donation” includes contribution in the form of charity, grant, gift,
subsidy, etc. received in cash or in kind, from whichever source
whether internal or external, for the purpose of achieving the objects
of Association;
(f) “Form” means the form appended to these Regulations;
(g) “Ordinance” means the Companies Ordinance, 1984 (XLVII of
1984);
(h) "Promoter" means a person named as a subscriber to the
Memorandum and Articles of Association of the Association and
3
members of the Association which has applied for the grant of a
licence under section 42;
(i) “Regulations” means the Associations Not For Profit (Licensing and
Corporate Governance) Regulations, 2013;
(j) “Schedule” means the schedule appended to these Regulations;
(k) "Section" means the section of the Ordinance; and
(l) “Subscriber” means a subscriber to the memorandum and articles of
association of the association.
(2) Words and expressions used but not defined in these Regulations shall have
the same meaning as assigned to them under the Ordinance and the laws administered by
the Commission.
3. Compliance of existing section 42 companies, etc.- (1) All Associations
licensed under section 42 of the Ordinance and registered with the Commission with
limited liability at the time of coming into force of these Regulations, shall comply with all
the requirements of these Regulations within a period of six month from the date of
notification of these Regulations in the Official Gazette.
(2) The provisions of these Regulations shall have effect notwithstanding
anything contained in the memorandum or articles of an Association, or in any contract or
agreement executed by it, or in any resolution passed by the association in general meeting
or by its directors, whether the same be registered, executed or passed, as the case may be,
before or after coming into force of the said provisions and any provision contained in the
memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is
repugnant to the aforesaid provisions of these Regulations, become or be void, as the case
may be.
CHAPTER II
GRANT OF LICENCE
4. Application and procedure for grant of a licence.- (1) An Association
desirous of obtaining a licence under section 42 of the Ordinance shall make an application
to the Commission on Form-N1 and a printed copy of memorandum and articles of
association as set out in Form-N2 along with all the documents supporting such application
and receipt evidencing payment of non-refundable fee as set out in Schedule I through a
person authorized by the Association in this behalf.
(2) The Commission, while considering the application for the grant of license,
may require the Association to furnish such further information or clarification as it deem
necessary.
4
(3) An Association may apply for the promotion of single or multiple objects,
provided in section 42 of the Ordinance.
(4) Where an Association applies for a licence for the promotion of multiple
objects, it shall have at least one promoter or director who possesses sufficient educational
background, skill and expertise in the field of each proposed object and in case it applies
for licence for the promotion of single object, majority of the promoters or directors shall
be so qualified.
(5) Any subsequent change in the information provided to the Commission at
the time of filing of application under sub-regulation (1) shall be intimated to the
Commission immediately.
(6) The application for grant of licence shall be made by a duly authorized
person, who is, either:-
(a) an advocate entitled to appear in High Court or Supreme Court in
Pakistan; or
(b) a member of the Institute of Chartered Accountants of Pakistan
(ICAP) or the Institute of Cost and Management Accountants of
Pakistan (ICMAP); or
(c) a practicing Secretary who is member of a recognized institute of
Secretaries in Pakistan; or
(d) a person who has served the Commission or the erstwhile Corporate
Law Authority as officer in past and having at least ten years’
relevant experience and was not removed from service consequent to
disciplinary action; or
(e) A person named as subscriber, director or officer in the articles of a
proposed association or a responsible officer of an Association.
(7) Where an existing company incorporated under the Ordinance applies for
grant of licence under sub-regulation (1), the application shall in addition to the documents
required under sub-regulations (1) be accompanied by the following further information
and documents,-
(a) a copy of the special resolution and minutes of the meeting at which
the special resolution was adopted;
(b) a copy of the revised memorandum and articles of association of the
company;
(c) statement of reasons for conversion of status of the existing
company in to section 42 company; and
(d) a copy of the latest financial statements;
5
(8) Where an Association is already in existence and registered under any other
law for the time being in force, the application for the grant of license under section 42
shall, in addition to the list of documents referred to in sub-regulation (1), be accompanied
by the following further information and documents,-
(a) a brief statement of charitable or other useful work undertaken, if
any;
(b) a copy of the audited balance-sheet, income and expenditure account
and the annual report on the working of the association for the
financial year immediately preceding the date of the application;
(c) statement of reasons for conversion of status of the existing entity into the
company;
(d) attested copy of Certificate of Registration or any document of
evidencing registration under any law;
(e) list of members of board of directors/governing body of the existing
entity; and
(f) attested copy of Memorandum and Articles of Association, Charter, or
Statute under which it was registered.
5. Grant of licence.- (1) The Commission, while considering the application
for granting a license made under sub-regulation (2) of regulation 4, may make such
enquiry and obtain such other information as it may consider necessary.
(2) The Commission may, on being satisfied that all conditions for the grant of
a licence as provided in regulation (7) have been fulfilled and that it shall be in the public
interest so to do, may grant a licence under section 42 in Form-N3 to the Association,
subject to such conditions as it may deem fit to impose and may direct such Association to
be registered as a company with the Commission in accordance of the provisions of the
Ordinance.
6. Incorporation of Association.- (1) The Association which has been granted
a licence by the Commission under regulation (5) shall get itself incorporated as a
company under provisions of the Ordinance within a period of six months of the date of
issuance of such licence:
Provided that the Commission may, under special circumstance, on an application
made by the Promoters, extend such time.
Provided further that any such extension shall not be more than a cumulative period
of twelve months.
(2) The registrar shall, upon being satisfied that the application for
incorporation has been filed within the time from the grant of the licence, or within such
time as extended by the Commission, incorporate the Association under provisions of the
Ordinance.
6
(3) An Association having not for profit object(s) with enabling provisions to
appeal, solicit or accept donations, shall be incorporated only after grant of licence under
section 42 of the Ordinance.
(4) The licence granted to an Association under section 42 shall stand cancelled
if the association does not apply for its incorporation as a company under provisions of the
Ordinance within the prescribed or extended time as provided under Regulation 5.
7. Conditions applicable to section 42 companies.- (1) In particular and
without prejudice to the generality of the power of the Commission under section 42 of the
Ordinance and Regulation 5, a license may be granted to Associations subject to following
conditions, namely,-
(a) The company shall be formed as a public company limited by
guarantee and not having a share capital or, having regard to the
circumstances of the case, in any other form;
(b) each subscriber shall undertake to donate a reasonable amount as
start-up donation having regard to circumstances of the case,
however, in case of any subscriber representing or nominated by
some Ministry, Department or Statutory Body of the Federal or
Provincial Government(s), the said requirement shall not apply to
such subscriber(s);
(c) payment of remuneration for services or otherwise to its members, or
their family members whether holding an office in the company or
not, shall be prohibited;
(d) a subscriber or director who has resigned as member of the
company, whether holding an office in the company or not, shall not
be eligible to receive remuneration for services or otherwise;
(e) no change in the memorandum and articles of association shall be
made except with the prior approval of the Commission;
(f) patronage of any government or authority, express or implied, shall
not be claimed unless such government or authority has signified its
consent thereto in writing;
(g) the company shall not itself set up or otherwise engage in industrial
and commercial activities or in any manner function as a trade
organization;
(h) the company shall not exploit or offend the religious susceptibilities
of the people;
7
(i) the subscribers to the memorandum and articles of association shall
continue to be the members of the company unless allowed by the
Commission on application to quit as members;
(j) the company shall state with its name, the phrase “A company set up
under section 42 of the Companies Ordinance, 1984”, in all its
letterheads, documents, signboards, and other modes of
communication;
(k) the income and any profits of the company, shall be applied solely
towards the promotion of objects of the company and no portion
thereof shall be distributed, paid or transferred directly or indirectly
by way of dividend, bonus or otherwise by way of profit to the
members of the company or their family members;
(l) the company shall not appeal, solicit, receive or accept donation
from foreign sources except with the prior permission, clearance or
approval from the relevant public authorities as may be required
under any relevant statutory regulations and laws;
(m) the company shall receive all funds through proper banking channels
i.e., through crossed cheque, pay-order, bank draft etc., and all
accounts of the company shall be maintained in scheduled bank(s) in
Pakistan;
(n) the company, on having multiple objects, shall keep separate books
of account and record of all the donations with respect to each object
and all such donations shall be applied solely for the promotion of
that particular object and no other object, if any, of the company;
(o) the company shall close its accounts on 30th of June each year;
(p) the company shall make no loan to or investment with, whatsoever,
its connected persons;
(q) the company shall not undertake any trading activities and shall
conform to relevant statutory regulations and laws;
(r) notwithstanding anything stated in any object clause, the company
shall obtain such other licences, permissions, or approvals of the
relevant public authorities as may be required under any relevant
statutory regulations and laws for the time being in force, to carry
out its specific object;
(s) the company shall comply with any other condition(s) as may be
imposed by the Commission.
8
8. Revocation of licence.- (1) If the company licensed and registered under
Section 42 does not comply with any conditions applicable to it under Regulation 7 or is in
violation of these Regulations or any other law, rules or regulations, the Commission may,
after giving a notice in writing and an opportunity of being heard, revoke its licence.
(2) If the Commission revokes the licence granted under section 42 it shall
make the action public by notice in two newspapers of wide circulation in the country and
send the revocation order to the company by registered post to its registered office and the
residential address of the chief executive and directors which shall be deemed to have been
delivered.
(3) Upon revocation of the licence by the Commission granted under section 42,
the registrar shall proceed under section 42(4) of the Ordinance and the company shall
cease to enjoy the exemptions and privileges conferred upon it by virtue of registration
under section 42 and it shall forthwith stop soliciting or receiving donation from persons or
donors other than the members of the association.
(4) The Commission, upon revocation of a licence, may issue such directives to
the company under section 506B of the Ordinance as are considered necessary.
CHAPTER III
CORPORATE GOVERNANCE
9. Composition of the Board.- (1) The Board shall have a balance of
executive and non-executive directors, including independent directors and those
representing donors and other stakeholders interests with the requisite skills, competence,
knowledge and experience so that the board as a group includes core competencies and
diversity considered relevant in the context of the association’s operations.
(2) For the purposes of above sub-regulation (1), associations shall comply with
the following requirements:
(a) The board shall state in the annual report the names of the non-
executive, executive, independent and other directors;
Explanation.- For the purpose of this clause, the expression
"independent director" means a director who is not connected with
the association or its subscribers, directors including chief executive
on the basis of family relationship or employment and who does not
have any other relationship, whether pecuniary or otherwise, with
the association, its directors, executives or connected persons and the
person can be reasonably perceived as being able to exercise
independent judgment without being subservient to any form of
conflict of interest.
9
Provided that without prejudice to the generality of this
explanation no director shall be considered independent if one or
more of the following circumstances exist:
(i) If he has received remuneration from the association or any
of its directors including chief executive or businesses
managed or controlled by them within the last three years
preceding his appointment as director,
(ii) He has been an employee of the association or any of its
subsidiaries within the last three years; and
(iii) He has, or has had within the last three years, a material
business relationship with the association either directly, or
indirectly as a partner, major shareholder or director of a
body that has such a relationship with the association;
(iv) He has served on the board for more than three consecutive
terms from the date of his first appointment provided that
such person shall be deemed independent director after a
lapse of one term:
(b) executive directors, i.e., paid executives of the association from
among senior management and directors representing donors and
other stakeholders, shall not be more than one third of the elected
directors including the chief executive:
Provided that nothing contained in this clause shall supersede
any law for the time being in force or regulations made by any
regulator regarding the composition of the board.
10. Filling up a casual vacancy.- Any casual vacancy on the Board shall be
filled up by the directors at the earliest but not later than ninety days thereof.
11. Responsibilities, powers and functions of the Board.-(1) The Board shall
exercise its powers and carry out its fiduciary duties with a sense of objective judgment and
independence in the best interests of the association.
(2) The Board shall ensure that:
(i) the conditions applicable on the association for grant of licence
under section 42 of the Ordinance are being complied with in letter
and spirit;
(ii) professional standards and corporate values are put in place that
promote integrity for the board, senior management and other
employees in the form of a code of conduct, defining therein
acceptable and unacceptable behaviors. The board shall take
10
appropriate steps to disseminate code of conduct throughout the
association along with supporting policies and procedures and these
may be put on the association’s website;
(iii) adequate systems and controls are in place for identification and
redress of grievances arising from unethical practices.
(iv) a vision and/or mission statement and overall corporate strategy for
the association is prepared and adopted. It shall further ensure that
significant policies have been formulated;
Explanation.- The significant policies for this purpose may include:
(a) governance, risk management and compliance issues;
(b) human resource management including preparation of a
succession plan;
(c) procurement of goods and services;
(d) write-off of bad/doubtful debts, advances and receivables;
(e) capital expenditure, planning and control;
(f) investments and disinvestment of funds;
(g) borrowing of moneys;
(h) determination and delegation of financial powers;
(i) transactions or contracts with connected persons;
(j) health, safety and environment; and
(k) the whistleblower policy.
A complete record of particulars of the significant policies along
with the dates on which they were approved or amended by the
Board shall be maintained.
(v) a system of sound internal control is established, which is effectively
implemented and maintained at all levels within the association;
(vi) within two years of coming into force of these Regulations, a
mechanism is put in place for an annual evaluation of the board’s
own performance;
(vii) the decisions on the following material transactions or significant
matters are documented by a resolution passed at a meeting of the
board:
(a) investment and disinvestment of funds where the maturity
period of such investments is six months or more;
(b) determination of the nature of loans and advances made by
the association and fixing a monetary limit thereof.
11
(viii) the Board shall define the level of materiality, keeping in view the
specific circumstances of the association and the recommendations
of any technical or executive subcommittee of the board that may be
set up for the purpose.
(3) The chairman and the chief executive officer (CEO), by whatever name
called, shall not be the same person except where provided for under any other law. The
chairman shall be elected from among the non-executive directors of the association. The
chairman shall be responsible for leadership of the board and shall ensure that the board
plays an effective role in fulfilling all its responsibilities. The Board shall clearly define the
respective roles and responsibilities of the chairman and chief executive.
Provided that a Small-Sized Association shall not be required to split the positions
of the chairman and the chief executive officer.
Explanation.- “Small-Sized Association” in this chapter means an association
having net assets not exceeding ten million rupees or gross annual donation not exceeding
fifty million rupees as per annual audited accounts of any of the preceding last five years.
12. Meetings of the Board.-(1) All written notices, including the agenda, of
meetings shall be circulated at least seven days prior to the meetings, except in the case of
emergency meetings, where the notice period may be reduced or waived.
(2) The chairman shall ensure that the minutes of meetings of the Board are
appropriately recorded. The company secretary shall be the secretary to the board.
(3) In the event that a director of an association is of the view that his
dissenting note has not been satisfactorily recorded in the minutes of a meeting of the
Board, he may refer the matter to the company secretary. The director may require the note
to be appended to the minutes, failing which he may file an objection to that effect with the
Commission within thirty days of the date of confirmation of the minutes of the meeting.
(4) A Board meeting held and attended through tele/video conferencing shall be
a valid meeting, so far as its proceedings are properly recorded and the requirements
specified by the Commission for public companies for holding Board meetings through
tele/video conferencing are met.
13. Significant issues to be placed for decision of Board.-(1) In order to
strengthen and formalize corporate decision-making process, significant issues shall be
placed for the information, consideration and decision of the Board and/or its committees,
including, inter-alia, the following:
(a) the chief executive shall immediately bring before the board, as soon
as it is foreseen that the association will not be in a position of
meeting its obligations on any loans (including penalties on late
payments and other dues, to a creditor, bank or financial institution
12
or default in payment of public deposit), TFCs, Sukuks or any other
debt instrument. Full details of the association’s failure to meet
obligations shall be provided in the association’s annual financial
statements;
(b) annual operations plan, cash flow projections, forecasts and strategic
plan;
(c) budgets including capital, manpower and overhead budgets, along
with variance analyses;
(d) analysis of utilization of the funds received from the donors for
specific purposes in accordance with the terms of agreement entered
into with them;
(e) matters recommended and/or reported by the committees of the
board;
(f) internal audit reports, including cases of fraud, bribery, corruption,
or irregularities of a material nature;
(g) management letter issued by the external auditors;
(h) details of joint venture or collaboration agreements or agreements
with donors, donees, partners in projects, stakeholders, etc.;
(i) promulgation or amendment to a law, rule, regulation or condition of
licence, enforcement of an accounting standard or guideline and such
other matters as may affect the association;
(j) status and implications of any law suit or proceedings of material
nature, filed by or against the association;
(k) any show cause, demand or prosecution notice received from
revenue or regulatory authorities;
(l) failure to recover material amounts of loans, advances, and deposits
made by the association;
(m) any significant accidents, dangerous occurrences and instances
having impact on the projects undertaken by the association;
(n) significant public liability claims made or likely to be made against
the association, including any adverse judgment or order made on
the conduct of the association or of another company that may bear
negatively on the association;
(o) report on governance, risk management and compliance issues.
Risks considered shall include reputational risk and shall address
risk analysis, risk management and risk communication; and
(p) whistleblower protection mechanism.
14. Related party transactions.- (1) The details of all related party and
connected person transactions shall be placed before the Audit Committee of the
association and upon recommendations of the Audit Committee the same shall be placed
before the board for review and approval.
13
(2) The related party and connected person transactions which are not executed
at arm's length price shall also be placed separately at each board meeting along with
necessary justification for consideration and approval of the board on recommendation of
the Audit Committee of the association.
(3) The Board shall approve the pricing methods for related party and
connected person transactions that were made on the terms equivalent to those that prevail
in arm’s length transaction, only if such terms can be substantiated.
(4) Every association shall maintain a party wise record of transactions, in each
financial year, entered into with related parties and connected persons in that year along
with all relevant documents and explanations. The record of related party and connected
person transactions shall include the following particulars in respect of each transaction:
(i) Name of related party or connected person;
(ii) Nature of relationship with related party or connected person;
(iii) Nature of transaction;
(iv) Amount of transaction; and
(v) Terms and conditions of transaction, including the amount of
consideration received or given.
15. Directors’ Orientation Courses.- All associations may make appropriate
arrangements to carry out orientation courses for their directors to acquaint them with these
Regulations, applicable laws, their duties and responsibilities to enable them to effectively
manage the affairs of the association.
16. Chief Financial Officer, Company Secretary and Chief Internal
Auditor – appointment and removal.- (1) Every association shall appoint a chief
financial officer, a whole-time company secretary and chief internal auditor.
Provided that a Small-Sized Association may not be required to appoint a whole-
time company secretary and the CFO can be entrusted with the same position.
(2) The appointment, remuneration and terms and conditions of employment of
the chief financial officer, the company secretary and the chief internal auditor of Public
Sector Companies shall be determined with the approval of the Board.
(3) The chief financial officer and the company secretary shall not be removed
except with the approval of the Board.
(4) The removal of chief internal auditor shall be made with the approval of the
board only upon recommendation of the chairman of the Audit Committee:
Explanation: For this purpose the term removal shall include non-renewal of
contracts of service of the CFO, Company Secretary and chief internal auditor.
17. Qualifications of CFO, company secretary and head of internal audit.-
(1) No person shall be appointed as a CFO of an association unless he has at least three
years of experience of handling financial affairs of a company, an association, a bank or a
financial institution and is:
(a) a member of a recognized body of professional accountants; or
14
(b) has a postgraduate degree in finance from a recognized university or
equivalent.
Provided that individuals serving as CFO of an association for the last three years at
the time of coming into effect of these Regulations shall be exempted from the above
qualification requirement.
(2) No person shall be appointed as the company secretary of an association
unless he meets the qualification criteria prescribed under rule 14B of the Companies
(General Provisions & Forms) Rules, 1985.
(3) No person shall be appointed as the chief internal auditor of an association
unless he/she has three years of relevant audit experience and is:
(a) a member of a recognized body of professional accountants; or
(b) a Certified Internal Auditor; or
(c) a Certified Fraud Examiner; or
(d) a Certified Internal Control Auditor
Provided that individuals serving as chief internal auditor of an association for the
last three years at the time of coming into effect of these Regulations shall be exempted
from the above qualification requirement..
Provided further that a person holding a graduate degree in the relevant field with a
minimum of five years of relevant experience shall be eligible to hold the aforesaid
positions in a Small-Sized Association.
18. Corporate and financial reporting framework.-(1) Without prejudice to
the requirements of filing of documents with the registrar under the Ordinance, the
association shall, within thirty days of the date of its annual general meeting or where no
such meeting is held or if held is not concluded, within four months of the close of its
annual accounts, file with the registrar concerned and also furnish to the Commission:
(a) a copy of annual audited accounts, and
(b) the Directors’ Report of the association, prepared under section 236
of the Ordinance, which shall include statements to the following
effect:
(i) The financial statements, prepared by the management of the
company, present its state of affairs fairly, the result of its
operations and its cash flows;
(ii) Proper books of account of the company have been
maintained;
15
(iii) Appropriate accounting policies have been consistently
applied in preparation of financial statements and accounting
estimates are based on reasonable and prudent judgment;
(iv) International Financial Reporting Standards, as applicable in
Pakistan, have been followed in preparation of financial
statements and any departures therefrom have been
adequately disclosed and explained;
(v) The system of internal control is sound in design and has
been effectively implemented and monitored; and
(vi) There are no significant doubts upon the company’s ability to
continue as a going concern:
Provided that where necessary, the following information shall also be
annexed to the Directors’ Reports of the associations:
(a) If the association is not considered to be a going concern, the fact
along with the reasons shall be disclosed;
(b) Significant deviations from last year in operating results of the
association shall be highlighted and reasons thereof shall be
explained;
(c) Key operating and financial data of last six years shall be
summarized;
(d) Where any statutory payment on account of taxes, duties, levies and
charges is outstanding, the amount together with a brief description
and reasons for the same shall be disclosed;
(e) Significant plans and decisions, such as expansion or discontinuance
of operations, shall be outlined along with future prospects, risks and
uncertainties surrounding the association;
(f) A statement as to the value of investments of provident, gratuity and
pension funds, based on their respective audited accounts, shall be
included;
Provided that a Small-Sized Association shall not be required to
annex such a statement with the directors’ report to the members.
(g) The number of board and committees’ meetings held during the year
and attendance by each director shall be disclosed; and
(h) All business transactions with the association, carried out by its
director, executive and their spouse and minor child shall also be
disclosed.
16
Explanation: For the purpose of this sub-clause, the expression
“executive” means the CEO, CFO, chief internal auditor and
company secretary by whatever name called, and other employees of
the association for whom the Board will set the threshold to be
reviewed on an annual basis and disclosed in the annual report.
(2) The association shall separately maintain the following accounting registers
in addition to the books of account as required under the Ordinance:
(a) register of donors of the funds received in cash or in kind with their
complete names, addresses, the amounts received from them, mode
of receipt with instrument of receipt’s full particulars and the
purpose of donation;
(b) register of donees and beneficiaries of the funds disbursed in cash or
in kind with their complete names, addresses, the amounts received
by them and the purpose of disbursement;
(c) register of connected persons of the association who have received
any disbursement in cash or in kind from the association or made
any transaction or contract with the association; and
(d) register of object related projects showing all revenues received and
generated for a particular object and expenditures incurred for each
of such object;
(3) The association shall furnish to the Commission as well as the registrar
concerned a certified copy of the association’s certificate from the NPO Certification
Agency notified by the Federal Government for the purpose.
(4) The association shall also annexed to the directors’ report information
regarding sources of donations received and their application as per specimen set out in
Form-N4.
19. Responsibility for financial reporting.-(1) No association shall circulate
its financial statements unless the CEO and the CFO present the financial statements, duly
endorsed under their respective signatures, for consideration and approval of the Board.
(2) It shall be mandatory for the CEO and CFO to have the annual accounts
initialed by the external auditors before presenting it to the audit committee and the Board
for approval.
20. Secretarial Compliance Certificate.- The company secretary of an
association shall furnish a Secretarial Compliance Certificate in the format set out in
Form-N5, along with annual return filed with the registrar concerned certifying that the
secretarial and corporate requirements of the Ordinance and the Regulations have been
complied with.
17
21. Committees of the Board.-(1) The Board shall establish an Audit
Committee, comprising at least of one non-executive independent director. The board shall
satisfy itself such that at least one member of the audit committee has relevant financial
skills/expertise and experience.
(2) An Association which is not a Small-sized Association shall form a
Procurement Committee comprising at least of one non-executive independent director.
(3) An Association which is not a Small-sized Association shall also form a
Human Resource and Remuneration Committee comprising at least of one non-executive
independent director. The committee shall be responsible for:
(a) recommending human resource management policies to the board;
(b) recommending to the board the selection, evaluation, compensation
(including retirement benefits) and succession planning of the CEO;
(c) recommending to the board the selection, evaluation, compensation
(including retirement benefits) of CFO, Company Secretary and
Chief internal auditor; and
(d) consideration and approval on recommendations of CEO on such
matters for key management positions who report directly to CEO or
COO.
Provided that CEO may be member of the committee but shall not participate in the
proceedings of the committee on matters that directly relate to his performance and
compensation.
(4) The names of members of the committees of the board shall be disclosed in
each annual report of the Association.
(5) The Audit Committee of an association shall meet at least once every
quarter of the financial year, including before and after completion of external audit. A
meeting of the Audit Committee shall also be held, if requested by the external auditors or
the chief internal auditor.
(6) The CFO, the chief internal auditor and external auditors represented by
engagement partner or in his absence any other partner designated by the audit firm shall
attend meetings of the Audit Committee at which issues relating to accounts and audit are
discussed.
Provided that at least once a year, the Audit Committee shall meet the external
auditors without the CFO and the chief internal auditor being present.
Provided further that at least once a year, the Audit Committee shall meet the chief
internal auditor and other members of the internal audit function without the CFO and the
external auditors being present.
18
Provided further that the chairman of the Audit Committee and engagement partner
of external auditor or in his absence any other partner designated by the audit firm shall be
present at the AGM for necessary feedback to the members.
(7) The Board shall determine the terms of reference of the Audit Committee.
The board shall provide adequate resources and authority to enable the Audit Committee
carry out its responsibilities effectively. The Audit Committee shall, inter alia, recommend
to the Board the appointment of external auditors, their removal, audit fees, the provision
by the external auditors of any service to the association in addition to audit of its financial
statements. The board shall give due consideration to the recommendations of the Audit
Committee in all these matters and where it acts otherwise; it shall record the reasons
thereof.
(8) The terms of reference of the Audit Committee shall also include the
following:
(a) determination of appropriate measures to safeguard the association’s
assets;
(b) review of annual financial statements of the association, prior to
their approval by the Board, focusing on:
(i) major judgmental areas;
(ii) significant adjustments resulting from the audit;
(iii) the going concern assumption;
(iv) any changes in accounting policies and practices;
(v) compliance with applicable accounting standards and
guidelines;
(vi) compliance with statutory and regulatory requirements; and
(vii) significant related party and connected person transactions.
(c) facilitating the external audit and discussion with external auditors of
major observations arising from the audit and any matter that the
auditors may wish to highlight (in the absence of management,
where necessary);
(d) review of management letter issued by external auditors and
management’s response thereto;
(e) ensuring coordination between the internal and external auditors of
the association;
(f) review of the scope and extent of internal audit and ensuring that the
internal audit function has adequate resources and is appropriately
placed within the association;
19
(g) consideration of major findings of internal investigations of activities
characterized by fraud, corruption and abuse of power and
management's response thereto;
(h) ascertaining that the internal control systems including financial and
operational controls, accounting systems for timely and appropriate
recording of purchases and sales, receipts and payments, assets and
liabilities and the reporting structure are adequate and effective;
(i) review of the association’s statement on internal control systems
prior to endorsement by the Board and internal audit reports;
(j) remitting any matter to the external auditors or to any other external
body in consultation with the CEO;
(k) determination of compliance with relevant statutory requirements;
(l) monitoring compliance with the best practices of corporate
governance and identification of significant violations thereof; and
(m) consideration of any other issue or matter as may be assigned by the
Board.
(9) The Audit Committee of an association shall appoint a secretary of the
committee who shall either be the company secretary or chief internal auditor. However,
CFO shall not be appointed as the secretary to the Audit Committee. The secretary shall
circulate minutes of meetings of the Audit Committee to all members, directors, chief
internal auditor and the CFO prior to the next meeting of the board and where this is not
practicable, the Chairman of the Audit Committee shall communicate a synopsis of the
proceedings to the board and the minutes shall be circulated immediately after the meeting
of the board.
22. External auditors.-(1) No association shall appoint as external auditors a
firm of auditors which has not been given a satisfactory rating under the Quality Control
Review program of ICAP.
(2) No association shall appoint as external auditors a firm of auditors which or
a partner of which is non-compliant with the International Federation of Accountants'
(IFAC) Guidelines on Code of Ethics, as adopted by ICAP.
(3) The Board shall recommend appointment of external auditors for a year, as
suggested by the Audit Committee. The recommendations of the Audit Committee for
appointment of an auditor or otherwise shall be included in the directors’ report. In case of
a recommendation for appointment of an auditor other than the retiring auditor the reasons
for the same shall be included in the directors’ report.
(4) No association shall appoint its auditors to provide services in addition to
audit except in accordance with the regulations and shall require the auditors to observe
20
applicable IFAC guidelines in this regard and shall ensure that the auditors do not perform
management functions or make management decisions, responsibility for which remains
with the Board and the management.
(5) An Association which is not a Small-sized Association shall change its
external auditors every five years.
(6) No association shall appoint a person as an external auditor or as a person
involved in the audit of the association who is a close relative, i.e., spouse, parents,
dependents and non-dependent children, of the director, CEO, CFO, or an internal auditor
of the association.
(7) Every association shall require external auditors to furnish a Management
Letter to its Board within 45 days of the date of auditors’ report:
Provided that any matter deemed significant by the external auditor shall be
communicated in writing to the board prior to the approval of the audited accounts by the
board.
23. Compliance with the Regulations.-(1) All associations shall publish and
circulate a statement in the format set out in Form-N6, along with their annual reports to set
out the status of their compliance with the requirements of best practices of corporate
governance. The statement shall be specific and deemed to be supported by the necessary
evidence held by the association making the said statement.
(2) All associations shall ensure that the statement of compliance with the best
practices of corporate governance is reviewed and certified by statutory auditors, where
such compliance can be objectively verified, before its publication. Statutory auditors of
the association shall ensure that any non-compliance with the requirements of these
Regulations is highlighted in their review report.
24. Relaxation of the Regulation: Where the Commission is satisfied that it is
not practicable to comply with any requirement of these Regulations in a particular case or
class of cases, the Commission may, for reasons to be recorded, relax such requirement
subject to such conditions as it may deem fit.
CHAPTER IV
MISCELLANEOUS
25. Compliance Visits and Inspection.- (1) The Commission may appoint and
authorize in writing one or more persons including officer of the Commission and
outsourced professional as inspector (the inspector) to visit the projects and useful work
being carried on by an association licensed and registered by the Commission and inspect
any or all of its statutory books including books of account, registers, minute books and
any other records in order to ascertain compliance with the provisions of these regulations,
the Ordinance, orders or directions given by the Commission and to assess whether funds
21
have been applied properly and the business of the association licensed and registered by
the Commission is being carried on in accordance with the provisions of its memorandum
and articles of association.
(2) The inspector shall have access to the premises occupied by association
licensed under section 42 and register with the Commission or any other person on its
behalf and may examine any books, record, documents and computer-data in possession of
the association or any other person and obtain copies of documents or other materials
which, in the opinion of the inspector, are relevant.
(3) The inspector shall submit his report to the Commission within the time and
according to the terms of reference specified in the order.
(4) The Commission shall communicate findings of the inspection to the
association and provide a reasonable opportunity of being heard to the association before
taking any action under the law in the light of any findings of the inspection.
(5) On receipt of explanation, if any, from the association inspected under these
Regulations, the Commission may require such association to take such measures as it may
deem fit to ensure compliance with the legal framework and in the overall interest of public
and the not for profit sector in Pakistan.
26. Penalties.- Whoever fails or refuses to comply with, or contravenes any
provision of these Regulations, or knowingly and willfully authorises or permits such
failure, refusal or contravention shall, in addition to any other liability under the Ordinance,
he shall be punishable with fine which may extend to five hundred thousand rupees and,
where the contravention is a continuing one , with a further fine which may extend to ten
thousand rupees for every day after the first during which such contravention continues.
22
Form-N1
[See regulation 4(5)]
To,
Securities & Exchange Commission of Pakistan
…………………………………………….………….
Subject: APPLICATION FOR GRANT OF LICENCE UNDER SECTION 42 OF THE
COMPANIES ORDINANCE, 1984
1. Proposed Name and Object(s) of the association
Name
Object(s)
2. Payment details
Name of Bank
Branch
Fee Paid Receipt No.
Date of Receipt
3. Whether the association is already in existence - Yes No
If the association is already in existence, state the following:
Name of existing entity
Object(s)
Entity registered as State whether company, society, trust, etc.
Registration authority
4. Particulars of subscribers/directors:
Name in Full CNIC No. or
passport No. (in
case of foreign
national)
Father’s/ Husband’s
Name
Usual residential
address
Nationality
(a) (b) (c) (d) (e)
23
5. All other information as prescribed by the note below is attached.
6. It is requested to kindly grant licence under section 42 of the Companies Ordinance, 1984 to the
proposed association with the object as may be approved having regard to the information stated above.
7. Signatures of the authorized representative:
Signature
Full Name (in Block Letters)
Father’s/ Husband’s name
Nationality
CNIC No.
Full Address
Day Month Year
8. Date
NOTE:
The application shall be accompanied by the following information/documents/statements:
a. ‘Resume’ of each of the subscribers as specified in annexure-I;
b. A ‘statement of estimated future annual income and expenditure’ along with ‘notes’ giving
detailed breakup of the estimates of the proposed company as specified in annexure-II;
c. A ‘brief statement of the work already done or proposed to be done’ as specified in annexure-
III;
d. An ‘affidavit/undertaking’ on the stamp paper of appropriate value from each subscriber as
specified in annexure-IV;
e. A ‘declaration of compliance’ by a person specified in sub-rule (2) of rule 4 to the effect that
he has scrutinized the application and the accompanying documents, and that he is satisfied that
the same are drawn up in conformity with the provisions of the Ordinance and fulfill the
conditions for the grant of licence laid therein and these Associations Not For Profit (Licensing
and Corporate Governance) Regulations, 2013, as specified in annexure-V;
f. ‘Power of Attorney’ (Authority Letter) on Stamp Paper of appropriate value made by all the subscribers in favour of a person to present the application before the Commission on their behalf, and to make other amendments, additions, corrections etc., in the documents and also to collect licence as specified in annexure-VI.
g. Printed copy of Memorandum and Articles of Association following the standard format provided as Form-2 of the Regulations;
h. Copies CNICs/passport (in case of foreign national)
i. Copy of availability of name letter issued by Company Registration Office indicating that the proposed name is available;
j. Original paid Challan or other prescribed receipt. (Challan or receipt need not be attached in
case the application is submitted through eService.)
k. If the association is already in existence, the following is also annexed with regard to the existing entity -
i. a copy each of the audited balance-sheet, income and expenditure account and the
24
annual report on the working of the association for the financial year immediately
preceding the date of the application;
ii. Copy of resolution passed by the existing entity regarding dissolution and taking over
the assets and liabilities of the existing entity by the proposed company upon its
incorporation, etc. (In case of an existing company, copy of special resolution to alter
its memorandum and articles of association to adopt to the licensing requirements shall
be annexed instead);
iii. Statement of reasons for conversion of status of the existing entity into the proposed
company;
iv. Attested copy of Certificate of Registration (if it has any legal status);
v. Attested copy of list of members of board of directors/governing body of the existing
entity.
vi. Attested copy of Memorandum and Articles of Association, Charter, or Statute by
which it was registered.
25
Annexure-I
RESUME
Subscriber’s Name:
CNIC No.
National Tax Number:
Date of Birth / Age:
Postal Address:
Permanent Address:
Email / Telephone/ Fax No.
Educational Qualifications:
Experience Detail:
a. Now Working As (describing offices held presently with the name(s) of the companies/
/associations/institutions/ business entities, etc., and work responsibilities related to each such
office held also indicating length of period of such experience with reference dates):
1. ______________________________________________________________________
2. ______________________________________________________________________
3. ______________________________________________________________________
b. Previous Experience relating to Main Objects of the Association now being formed:
1. ______________________________________________________________________
2. ______________________________________________________________________
3. ______________________________________________________________________
c. Other Experience:
1. ______________________________________________________________________
2. ______________________________________________________________________
3. ______________________________________________________________________
[Note: If needed, the space for experience details may be expanded.]
Signature: ________________________
Name: ________________________
[To be signed by the subscriber himself /herself or the authorized person presenting documents]
26
Annexure-II
STATEMENT OF ESTIMATED FUTURE ANNUAL INCOME AND EXPENDITURE
INCOME Notes Year 1 Year 2 Year 3
Donations and Grants - Local 1
Donations and Grants - Foreign 2
Members’ donations – Start-up
Members’ donations – Other 3
Other sources, specify, if any 4
Previous year’s surplus(deficit) B/F
Total funds available for the year
EXPENDITURE Year 1 Year 2 Year 3
Registration and Legal fee
Expenditures on object related projects:
Project 1 (specify) 5
Project 2 (specify), if any 6
Project 3 (specify), if any, etc. 7
Administrative and operational
expenditures
8
Total Expenditures
Income over Expenditures:
Surplus/(Deficit), if any
Notes to the above estimates are attached.
Signature ______________________
Name _________________________
[To be signed by the person presenting documents]
27
Notes to the statement of estimates
Note 1: Donations and Grants - Local
Year 1 Year 2 Year 3
Source 1 (specify) 1.1 0,000,000 0,000,000 0,000,000
Source 1 (specify), if any 0,000,000 0,000,000 0,000,000
Source 1 (specify), if any 1.2 0,000,000 0 0
Total 0,000,000 0000,000 0,000,000
1.1: There can be further descriptive/break up notes to elaborate the item.
1.2: There can be further descriptive breakup note to elaborate the item.
Note: Letters of consent/ letters of intent can be attached to support the above statement.
Note 2: Donations and Grants – Foreign
Year 1 Year 2 Year 3
Source 1 (specify) 2.1 0,000,000 0,000,000 0,000,000
Source 1 (specify), if any 0,000,000 0,000,000 0,000,000
Total 0,000,000 0000,000 0,000,000
2.1: There can be further descriptive/breakup notes to elaborate the item.
Note: Letters of consent/ letters of intent can be attached to support the above statement.
Notes 3, 4, 5, 6, 7, 8, etc., can be drawn on the above pattern and annexed.
Signature ______________________
Name _________________________
[To be signed by the person presenting documents]
28
Annexure-III
BRIEF STATEMENT OF THE WORK ALREADY DONE BY THE
ASSOCIATION OR
PROPOSED TO BE DONE AFTER ITS BEING GRANTED THE LICENCE
AND REGISTRATION UNDER SECTION 42 OF THE
COMPANIES ORDINANCE, 1984
[As required under the Associations Not For Profit (Licensing and Corporate
Governance) Regulations, 2013]
Work already done (salient features), if any:
1.
2.
3.
Work Proposed to be done (outlining salient features and the mechanism to achieve the object):
1.
2.
3.
Etc.
Signature ______________________
Name _________________________
[To be signed by the person presenting documents]
29
Annexure-IV
AFFIDAVIT / UNDERTAKING
I, Mr. _________________________ son of __________________, CNIC number
______________________ resident of _______________________ and subscriber of
___________________________________ [the ‘proposed company’] do hereby, solemnly
affirm and testify that the contents of the application under section 42 of the Companies
Ordinance, 1984 and annexed documents are true and correct to the best of my knowledge
and belief and declare that:
(a) I have sufficient skills, expertise and resources for the attainment of object of the
proposed company; and
(b) I shall contribute a reasonable amount but not less than Rs.______________/- as
startup donation to the proposed company. The same shall be deposited in the
company’s account within a period of six months of its incorporation which shall be
used for the attainment of its object(s) and shall not be refundable to the
subscribers, directly or indirectly.
(c) I have not been associated with any illegal banking business, deposit taking or
financial dealings;
(d) I and the companies in which I am director or major shareholder have no overdue
loans or installments outstanding towards banks or other financial institutions;
(e) neither I nor companies in which I am a director or major shareholder have
defaulted in paying taxes as on the date of application;
(f) I have not been a sponsor, director or chief executive of a defaulting cooperative
finance society or finance company;
(g) I have never been convicted of fraud or breach of trust or of an offence involving
moral turpitude or removed from services for misconduct;
(h) I have neither been adjudged an insolvent nor have defaulted in making payments to
my creditors;
(i) the funds raised shall be spent for objects of the proposed company and for other
lawful purposes;
(j) I am fully aware of the affairs of the proposed company particularly the application
under section 42 of the Companies Ordinance, 1984; and
(k) Whatsoever stated in the application and accompanied documents is true and
nothing has been concealed in the application.
DEPONENT
(Signature)
Note: To be made on stamp paper of requisite amount and duly attested by an Oath Commissioner.
30
Annexure-V
DECLARATION OF COMPLIANCE
WITH THE REQUIREMENTS OF THE COMPANIES ORDINANCE, 1984
AND THE ASSOCIATION NOT FOR PROFIT (LICENSING AND CORPORATE
GOVERNANCE) REGULATIONS, 2013
[As required under the Associations Not For Profit (Licensing and Corporate Governance)
Regulations, 2013]
I, …………………………………………………… son/daughter/widow of …………….
…………………….………………... do solemnly and sincerely declare:-
i) that I [am an Advocate entitled to appear before a High Court / Supreme Court / a
Chartered Accountant / a Cost and Management Accountant practicing in Pakistan and am
engaged in the formation of the proposed association, namely,
…………………………………………………………… /] am a person named in the
Articles of Association as a director/officer of the proposed association, namely,
……………………………………………………………..; and
ii) that I have scrutinized the application and the accompanying documents, and that I am
satisfied that the same are drawn up in conformity with the provisions of the Ordinance and
fulfill the conditions for the grant of licence laid therein and the Associations Not For Profit
(Licensing and Corporate Governance) Regulations, 2013.
Signature: ……………………
Full Name (in Block Letters),
Designation, CNIC Number,
and Full Address
Date: …………………….
Place: ……………………
Witness to the signature:
Signature: ……………………
Full Name, Father’s/ Husband’s
Name (in Block Letters)
CNIC Number, Occupation and Full Address
Note: To be made on stamp paper of requisite amount and duly attested by an Oath Commissioner.
Attested by an Oath
Commissioner
[under his Stamp]
31
Annexure-VI
POWER OF ATTORNEY / AUTHORITY LETTER
We, the following persons, being subscribers/ directors of the (proposed) company,
namely, ………………………………………………………... do hereby appoint and
authorize Mr. / Ms …………………………. son of …………….………. resident of
…………………………………………………… whose signatures are given below, to
present us before the Securities and Exchange Commission of Pakistan to submit
application/ papers for licence under section 42 of the Companies Ordinance, 1984, and to
make necessary amendments required by the SECP, to collect licence, and to sign and give
necessary explanation on our behalf in relation to the above and the allied matters.
Sr. Name of subscriber/director Signature
Signature: …………………
[Authorized Representative]
Full Name with CNIC Number
Witness to the signatures:
Signature: ……………………
Full Name, CNIC Number,
Father’s/ Husband’s Name,
Occupation and Full Address
Date: ……………………. Place: ……………………
Note: To be made on stamp paper of requisite amount and duly attested by an Notary Public.
Attested by Notary
Public
[under his Stamp]
32
Form-N2
[See Regulation 4(5)]
A company set up under section 42 of the Companies Ordinance, 1984
MEMORANDUM OF ASSOCIATION
OF
XYZ FOUNDATION I. The name of the Company is “XYZ FOUNDATION”.
II. The Registered Office of the Company will be situated in the Province of Punjab.
III. The object for which the Company is established is to ………………………….... ……………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….
IV. In order to achieve its object, the Company shall exercise the following powers:
(1) To appeal, solicit or accept contributions, donations, grants and gifts, in
cash or in kind, from lawful sources and to apply the same or income thereof for the objects of the Company: Provide that in the event of revocation of licence under section 42, the company shall not appeal, solicit or accept contributions, donations, grants and gifts, in cash or in kind, from any source other than its members.
(2) To open and operate bank accounts in the name of the Company and to
draw, make, accept, endorse, execute and issue promissory notes, bills, cheques and other instruments.
(3) To acquire, alter, improve, charge, take on lease, exchange, hire, sell, let or
otherwise dispose of any movable or immovable property and any rights and privileges whatsoever for any of the objects or purposes specified herein above. Provided that the Company shall not undertake the business of real estate or housing schemes.
(4) To borrow or raise money, with or without security, required for the
purposes of the company upon such terms and in such manner as may be determined by the company for the promotion of its objects.
33
(5) To mortgage the assets of the company and / or render guarantee for the performance of any contract made, discharge of any obligation incurred or repayment of any moneys borrowed by the Company.
(6) To purchase, sell, exchange, take on lease, hire or otherwise acquire lands,
construct, maintain or alter any building and any other moveable or immovable properties or any right or privileges necessary or convenient for the use and purposes of the company.
(7) To nominate delegates and advisors to represent the Company at conferences, government bodies and other gatherings.
(8) To co-operate with other charitable trusts, societies, associations,
institutions or companies formed for all or any of these objects and statutory authorities operating for similar purposes and to exchange information and advice with them.
(9) To pay out of the funds of the company the costs, charges and expenses of
and incidental to the formation and registration of the Company. (10) To invest the surplus moneys of the company not immediately required in
such a manner as may from time to time be determined by the company. (11) To create, establish, administer and manage funds including endowment
fund conducive for the promotion of the objects of the company. (12) To enter into agreements, contracts and arrangements with organizations,
institutions, bodies and individuals for the purpose of carrying out the functions and activities of the Company.
(13) To take such actions as are considered necessary to raise the status or to
promote the efficiency of the company.
(14) To conduct, hold and arrange symposia, seminars, conferences, lectures, workshops and dialogue and to print, publish and prepare journals, magazines, books, circulars, reports, catalogues and other works relating to any of the objects of or to the work done by the Company, subject to the permission, if required of the relevant authorities
(15) To do all other such lawful acts and things as are incidental or conducive to
the attainment of the above objects or any one of them. V. The Company shall achieve the above said objects subject to the following
conditions:-
(1) The company shall be formed as a public company limited by guarantee and not having a share capital.
(2) Payment of remuneration for services or otherwise to its members, or their
family members whether holding an office in the company or not, shall be prohibited.
34
(3) A subscriber or director who has quit as member of the company, whether holding an office in the company or not, shall not be eligible to receive remuneration for services or otherwise.
(4) No change in the Memorandum and Articles of Association shall be made
except with the prior approval of the Securities and Exchange Commission of Pakistan.
(5) Patronage of any government or authority, express or implied, shall not be
claimed unless such government or authority has signified its consent thereto in writing.
(6) The company shall not itself set up or otherwise engage in industrial and
commercial activities or in any manner function as a trade organization. (7) The company shall not exploit or offend the religious susceptibilities of the
people. (8) The subscribers to the Memorandum and Articles of Association of the
Company shall continue to be the members of the Company unless allowed by the Commission on application to quit as members;
(9) The company shall state with its name, the phrase “A company set up
under section 42 of the Companies Ordinance, 1984”, in all its letterheads, documents, sign boards, and other modes of communication.
(10) The income and any profits of the company, shall be applied solely towards
the promotion of objects of the company and no portion thereof shall be distributed, paid or transferred directly or indirectly by way of dividend, bonus or otherwise by way of profit to the members of the company or their family members.
(11) The company shall not appeal, solicit, receive or accept funds, grants, contributions, donations or gifts, in cash or in kind, from foreign sources except with the prior permission, clearance or approval from the relevant public authorities as may be required under any relevant statutory regulations and laws.
(12) The company shall receive all funds through proper banking channels i.e., through crossed cheque, pay-order, bank draft etc., and all accounts of the company shall be maintained in scheduled bank(s) in Pakistan;
(13) The company, on having multiple objects, shall keep separate books of account and record of all the funds, grants, contributions, donations, gifts whether in cash or in kind received with respect to each object and all such funds, grants, contributions, donations, gifts, received with respect to a particular object shall be applied solely for the promotion of that particular object and no other object, if any, of the company;
(14) The company shall close its accounts on 30th of June each year;
35
(15) The company shall make no loan to or investment with, whatsoever, its connected persons;
(16) The company shall not undertake any trading activities and shall conform to relevant statutory regulations and laws;
(17) The company shall comply with the code of corporate governance as prescribed by the Commission for associations not for profit;
(18) Notwithstanding anything stated in any object clause, the company shall obtain such other licences, permissions, or approvals of the relevant public authorities as may be required under any relevant statutory regulations and laws for the time being in force, to carry out its specific object; and
(19) The company shall comply with any other condition(s) as may be imposed by the Commission from time to time.
VI. The territories to which the object of the company shall extend are declared to
include whole of Pakistan. VII. The liability of the members is limited. VIII. Every member of the company undertakes that he shall contribute to the assets of
the Company in the event of its being wound up while he is a member or within one year afterwards, for payment of the debts or liabilities of the Company contracted before he ceases to be a member and the costs, charges and expenses of winding up and for adjustment of the rights of the contributories among themselves such amount as may be required but not exceeding Rs.100,000/- (Rupees One Hundred Thousand Only).
IX. In the case of winding up or dissolution of the Company, any surplus assets or
property, after the satisfaction of all debts and liabilities, shall not be paid or disbursed among the members, but shall be given or transferred to some other company established under section 42 of the Companies Ordinance, 1984, having similar or identical objects to those of the Company to be decided by the members of the Company in their general meeting by a special resolution, and with the approval of Commissioner of Income Tax under section 61 read with section 2(36) of the Income Tax Ordinance, 2001, under intimation to the Securities and Exchange Commission of Pakistan, within three months.
36
We, the several, persons whose names and addresses are subscribed below are desirous of being formed into a Company in pursuance of this Memorandum of Association:-
Name and surname (present & former) in full
(in Block Letters)
CNIC No. (in case of foreigner, Passport
No)
Father's/ Husband's Name
in full
Nationality(ies) with any
former Nationality
Occupation
Residential Address
in full
Signature
1. AB AB nnnnn-nnnnnnn-n
GH Pakistani Resident Director, Household Appliances Ltd., Lahore
14-A, Street No.2, Sadaf Colony, Quetta.
2. CD nnnnn-nnnnnnn-n
IJ Pakistani Advocate -do-
3. ABC Ltd
through
EF.
nnnnn-nnnnnnn-n
KL
Pakistani
Company
Director,
ABC Ltd
House No 176, Street No.204, F-10/1, Islamabad
14-A, Street No.2, Sadaf Colony, Quetta.
Dated the……………………. day of………………………, 20..…
Witness to above signatures
Signature Full Name (in Block Letters) Father’s/ Husband’s name Nationality Occupation CNIC NO Full Address
37
A company set up under section 42 of the Companies Ordinance, 1984
ARTICLES OF ASSOCIATION
OF
XYZ FOUNDATION
PRELIMINARY
1. In these Articles, unless the context or the subject matter otherwise requires:
(a) “ARTICLES” means the articles of association of the company. (b) “BOARD” means the board of directors of the company.
(c) “CHIEF EXECUTIVE” means the Chief Executive of the company.
(d) “THE COMMISSION” means the Securities and Exchange Commission of Pakistan.
(e) “THE COMPANY” means XYZ FOUNDATION.
(f) “THE DIRECTORS” mean the Directors for the time being of the company. (g) “INDEPENDENT DIRECTOR” means a director as defined in regulation 9(2)(a)
of the Regulations.
(h) “MEMORANDUM” means the memorandum of association of the company. (i) “THE OFFICE” means the Registered Office for the time being of the company.
(j) “THE ORDINANCE” means the Companies Ordinance, 1984. (k) “PERSON” includes an individual, company, corporation and body corporate.
(l) “THE REGISTER” means the Register of the members to be kept pursuant to
section 147 of the Ordinance.
(m) “THE REGISTRAR” means the Registrar of Companies.
(n) “THE REGULATIONS” means the Associations Not For Profit (Licensing and Corporate Governance) Regulations, 2013.
(o) “THE SEAL” means the Common Seal of the company.
(p) “SECRETARY” means the Company Secretary of the company.
38
(q) “YEAR” used in the context of financial matters shall mean financial year of the company.
(r) Expressions referring to writing shall be construed as including references to
typewriting, printing, lithography, photography and other modes of representing or reproducing words in visible form.
(s) Words importing the singular number include the plural number and vice versa
and words importing the masculine gender include the feminine gender.
(t) Unless the context otherwise requires words or expressions contained in these Articles shall be of the same meaning as in the Ordinance or any statutory modification thereof in force at the date at which these Articles become binding on the company.
MEMBERSHIP
2. The number of members with which the company proposes to be registered is --------(number of members with which the company is going to be incorporated is to be given) but the minimum number of members shall not be, at any time, less than three (3). However, the directors may, from time to time, whenever the company or the business of the company requires, increase the number of members.
3. The company in general meeting may from time to time lay down the qualifications and conditions subject to which any person or class of persons shall be admitted to membership of the company.
4. The rights and privileges of a member shall not be transferable and shall cease on his death or otherwise ceasing to be a member.
5. The subscribers to the memorandum and such other persons as the directors shall admit to membership shall be members of the company.
6. One person shall have the right to hold one membership.
ADMISSION TO MEMBERSHIP
7. The application for seeking membership of the company shall be required to be seconded by an existing member whereupon the board of directors shall decide the matter of his admission as member or otherwise within three months of making of such application. No minor or lunatic shall be admitted as a member of the company.
8. Every person, upon applying for admission to membership, shall sign an undertaking that he will, if admitted, so long as he is a member, duly observe the Articles of the company for the time being in force.
9. The Board shall subject to the Articles, accept or reject any application for admission to membership. The Board’s decision shall be final and it shall not be liable to give any reasons thereof.
39
CESSATION / EXPULSION FROM MEMBERSHIP
10. A member renders himself liable to expulsion or suspension by the Board if:
(a) he refuses or neglects to give effect to any decision of the Board; or
(b) he infringes any of the regulations of the Articles; or
(c) he is declared by a court of competent jurisdiction to have committed a fraud, or to be bankrupt, or to be insane or otherwise incompetent; or
(d) he is held by the Committee of the company to have been guilty of any act discreditable to a member of the company; or
(e) he is acting or is threatening to act in a manner prejudicial to the interest or functioning of the company or any other institute, body corporate, society, association or institution in which the company has an interest.
11. The company in general meeting may, on an appeal of the aggrieved member and after giving an opportunity of hearing, annul or modify the decision of the board with regard to expulsion of the member by resolution supported by two-thirds majority. The person expelled shall be reinstated as a member from the date of the resolution of the general meeting annulling the decision of the Board.
12. Termination of membership shall occur automatically:
(a) in the event of the death of a member; and
(b) in the event a member fails to pay any amount due by him to the company within three (3) months after such obligation has become due.
GENERAL MEETINGS AND PROCEEDINGS
13. ANNUAL GENERAL MEETING:
A general meeting to be called annual general meeting, shall be held, in accordance with the provisions of section 158, within eighteen (18) months from the date of incorporation of the company and thereafter once at least in every calendar year within a period of four (4) months following the close of its financial year and not more than fifteen (15) months after the holding of its preceding annual general meeting as may be determined by the directors.
14. OTHER GENERAL MEETINGS:
All other meetings of the members of the company other than an annual general meeting shall be called “Extraordinary General Meetings”.
15. EXTRAORDINARY GENERAL MEETINGS:
The directors may, whenever they think fit, call an Extraordinary General Meeting, and Extraordinary General Meetings shall also be called on such requisition(s), as is provided by section 159 of the Ordinance.
16. NOTICE OF GENERAL MEETINGS:
Twenty one (21) days’ notice at least (exclusive of the day on which the notice is served or deemed to be served, but inclusive of the day for which notice is given)
40
specifying the place, the day and the hour of meeting and, in case of special business, the general nature of that business, shall be given in the manner provided by the Ordinance for the general meeting, to such persons as are, under the Ordinance or the Articles of the company, entitled to receive such notices from the company but the accidental omission to give notice to or the non-receipt of notice by any member shall not invalidate the proceedings at any general meeting.
17. SPECIAL BUSINESS:
All business that is transacted at an extra ordinary general meeting and that is transacted at an annual general meeting with the exception of the consideration of the accounts, balance sheet and the reports of the director and auditors, the election of directors, the appointment of and the fixing of remuneration of the auditors shall be deemed special business.
18. QUORUM:
No business shall be transacted at any general meeting unless a quorum of members representing not less than twenty five percent (25%) of the total voting power present in person but being not less than two (2) members, is present at that time when the meeting proceeds to business.
19. EFFECT OF QUORUM NOT BEING PRESENT:
If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if called upon the requisition of members, shall be dissolved and in any other case, it shall stand adjourned to the same day in the next week at the same time and place and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the members present, shall be a quorum.
20. CHAIRMAN OF MEETING:
The chairman of the Board of directors, shall preside as chairman at every general meeting of the company, but if he is not present within fifteen minutes after the time appointed for the meeting, or is unwilling to act as chairman, any of the directors present may be elected to be the chairman and if none of the directors present is willing to act as chairman, the members present shall choose one of their number to be the chairman.
21. ADJOURNMENT:
The chairman may, with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting is adjourned for thirty (30) days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.
41
22. VOTING:
At any general meeting a resolution put to the vote to the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded. Unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book of the proceedings of the company shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against that resolution.
23. DEMAND FOR POLL:
A poll may be demanded in accordance with the provisions of section 167 of the Ordinance.
24. MANNER OF TAKING POLL:
If a poll is duly demanded, it shall be taken in accordance with the manner laid down in section 168 of the Ordinance and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.
25. TIME OF TAKING POLL:
A poll demanded on the election of chairman or on a question of adjournment shall be taken at once.
26. CASTING VOTE:
In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll takes place, shall have and exercise a second or casting vote.
27. VOTES OF MEMBERS:
On a show of hands every member present in person shall have one vote and upon a poll every member present in person shall have one vote.
28. OBJECTION TO VOTE:
No objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given and tendered, and every vote not disallowed at such meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the chairman of the meeting, whose decision shall be final and conclusive.
MANAGEMENT AND ADMINISTRATION
29. There shall be, for the overall management of the company’s affairs, a Board of
directors, which will be elected from amongst the members.
30. One term of the Board of directors would be for three years.
42
31. No person shall be appointed as a director if he is ineligible to hold office of director of a company under section 187 of the Ordinance.
32. No member / person shall hold more than one office in the company, such as those of Chief Executive / director or company secretary.
33. FIRST DIRECTORS:
The subscribers to the Memorandum of Association shall be the first directors of the company whose names are given below and they shall hold office until the election of directors in the first Annual General Meeting, subject to the provisions of sections 174 and 176 of the Ordinance.
i. ------------------------- ii. ------------------------- iii. -------------------------
34. NUMBER OF DIRECTORS:
The number of directors shall not be less than three (3) and not more than ( ). The company may, however, determine through Special Resolution, such other number not being less than three (3), before the election of the directors. A retiring director shall be eligible for re-election. The board of directors of the company shall always have majority of its directors as independent directors.
35. PROCEDURE FOR ELECTION OF DIRECTORS:
(i) The directors of the company shall be elected in accordance with provisions of sub sections (1) to (4) of section 178 of the Ordinance, in the following manner:
(a) The directors of the company shall be elected by the members of the company in general meeting;
(b) A member shall have such number of votes as is equal to number of directors to be elected;
(c) A member may give all his votes to a single candidate or divide them between more than one of the candidates in such a manner as he may choose; and
(d) The candidate who gets the highest number of votes shall be declared elected as director and then the candidate who gets the next highest number of votes shall be so declared and so on until the total number of directors to be elected has been so elected.
(ii) If the number of persons who offer themselves to be elected is not more than the number of directors fixed by the directors under sub-section (1) of section 178, all persons who offered themselves shall be deemed to have been elected as directors.
36. CASUAL VACANCY AND ALTERNATE OR SUBSTITUTE DIRECTORS:
(a) Any casual vacancy occurring among the directors shall be filled up by the directors within ninety days of the vacancy and the person so appointed
43
shall hold office for the remainder of the term of director in whose place he is appointed.
(b) An existing director may, with the approval of the board of directors, appoint
an alternate director to act for him during his absence from Pakistan of not less than three months. The alternate director so appointed shall ipso facto vacate office if and when the director appointing him returns to Pakistan.
37. REMOVAL OF DIRECTOR:
The company may remove a director through a resolution passed in a general meeting of members with 3/4th majority of total vote rights.
38. CHAIRMAN OF THE BOARD:
The directors may elect one of their members as the Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board but, if at any meeting the chairman is not present within ten minutes after the time appointed for holding the same or is unwilling to act as chairman, the directors present may choose one of their member to be chairman of the meeting.
DUTIES AND POWERS OF THE BOARD
39. The Board shall conduct and manage all the business affairs of the company,
exercise all the powers, authorities and discretion of the company, obtain or oppose the application by others for all concessions, grants, charters and legislative acts and authorization from any government or authority, enter into such contracts and do all such other things as may be necessary for carrying on the business of the company, except only such of them as under the statutes and Articles are expressly directed to be exercised by general meetings and (without in any way prejudicing or limiting the extent of such general powers) shall have the following special powers and duties: (a) To present to the general meeting of the company any matters which the
directors feel are material to the company, its objects or interests or affecting the interests of members and make suitable recommendations regarding such matters.
(b) To regulate, through articles, the admission of members. (c) To appoint, remove or suspend the legal advisors, bankers, or other
officers on such terms and conditions as they shall think fit and as may be agreed upon.
(d) To appoint any qualified person as a first auditor(s) subject to provisions of
the Ordinance;
(e) To determine the remuneration, terms and conditions and powers of such appointees and from time to time, revoke such appointments and name another person of similar status to such office except for the auditor in which case the relevant provisions of the Ordinance shall be followed.
44
(f) To delegate, from time to time, to any such appointee all or any of the
powers and authority of the Board and to reconstitute, restrict or vary such delegations.
(g) To agree upon and pay any expenses in connection with the company’s
objects and undertakings and pay all the expenses incidental to the formation and regulation of the company.
(h) To constitute from time to time committee(s) from among themselves or co-
opt other persons for the purpose and delegate to them such functions and powers as the Board may see fit to carry out the objects of the company.
(i) Subject to the provisions of section 196 of the Ordinance, the directors may
exercise all the powers of the company to borrow and mortgage or charge its undertaking, property and assets (both present and future) or issue securities, whether outright security for any debt, liability or obligation of the company.
PROCEEDINGS OF THE BOARD
40. The Board shall meet at least once every quarter of the year, subject thereto meetings of the Board shall be held at such time as the directors shall think fit. All meetings of the Board shall be held at the registered office of the Company or at such other place as the Board shall from time to time determine. The meetings of the Board shall be called by the chairman on his own accord or at the request of the Chief Executive (or any three directors) by giving at least seven (7) days notice to the members of the Board.
41. At least twenty five percent of the total number of directors or two (2) directors whichever is higher, for the time being of the company, shall constitute a quorum.
Note : If the number of directors as mentioned in clause 33 are more
than three, then the following standard clause is proposed in place of above which will fulfill the requirements of income tax rules for tax exemption.
“At least one-third (1/3rd) of the total number of directors or four (4) directors whichever is higher, for the time being of the company, shall constitute a quorum.”
42. Except as otherwise provided by these Articles, every question at meetings of the Board shall be determined by a majority of votes of the directors present, each director having one vote. In case of an equality of votes or tie, the chairman shall have a casting vote in addition to his original vote as a director.
43. Minutes of the proceedings of every meeting of the Board and a record of attendance of the directors thereat shall be recorded by the Secretary in a book kept for that purpose. These shall be signed by the chairman of the meeting at which they are read.
44. MEETING THROUGH TELE OR VIDEO CONFERENCE:
The directors may hold their meetings through tele/video conferencing in emergent situations where it is not possible for them to be physically present at the venue of
45
the meeting, provided that the minutes of such meeting are approved and signed subsequently by all directors who participated in such meeting, requirements of the requisite quorum and other legal formalities relating to holding of such meetings have been observed and tele/video recording of the proceedings of the meeting are kept for the purpose of the record.
45. RESOLUTION THROUGH CIRCULATION
A resolution in writing signed by all directors for the time being entitled to receive notice of the meeting of directors or affirmed by them in writing shall be as valid and effectual as if it had been passed at a meeting of the directors duly convened and held.
46. CHIEF EXECUTIVE:
The directors may appoint a person to be the Chief Executive of the company and vest in him such powers and functions as they deem fit in relation to the management and administration of the affairs of the company subject to their general supervision and control. The Chief Executive, if not already a director, shall be deemed to be a director of the company and be entitled to all the rights and privileges and subject to all the liabilities of that office.
47. QUALIFICATION OF THE CHIEF EXECUTIVE:
No person who is not eligible to become a director of the company under section 187 of the Ordinance, shall be appointed or continue as the Chief Executive of the company.
48. REMOVAL OF CHIEF EXECUTIVE:
The directors by passing resolution by not less than three-fourths of the total number of directors for the time being or the company may by a Special Resolution passed in a general meeting remove a Chief Executive before the expiry of his term in office.
49. MINUTE BOOKS:
The directors shall cause minutes to be duly entered in a book or books provided for the purpose of:
(a) all resolutions and proceedings of General Meeting(s) and the meeting(s) of directors and Committee(s) of directors, and every member present at any General Meeting and every director present at any meeting of directors or Committee of directors shall put his signature in a book to be kept for that purpose;
(b) recording the names of the persons present at each meeting of the directors and of any committee of the directors, and the general meeting; and
(c) all orders made by the directors and Committee(s) of directors.
46
SECRETARY
50. The Secretary shall be appointed (or removed) by the Chairman of the company with the approval of the Board.
51. The Secretary shall be responsible for all secretarial functions and shall ensure
compliance with respect to requirements of the Ordinance concerning the meetings and record of proceedings of the Board, committees and the general meeting of members, review the applications for admission to membership and the recommendations accompanying the same to ensure that they are in the form prescribed, ensure that all notices required by these Articles or under the Ordinance are duly sent and that all returns required under the Ordinance are duly filed with concerned Company Registration Office.
52. COMMITTEES:
The directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit and they may from time to time revoke such delegation. Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may from time to time be imposed on it by the directors.
53. CHAIRMAN OF COMMITTEE MEETINGS:
A committee may elect a chairman of its meetings, but, if no such chairman is elected, or if at any meeting the chairman is not present within ten (10) minutes after the time appointed for holding the same or is unwilling to act as chairman, the members present may choose one of them to be the chairman of the meeting.
54. PROCEEDINGS OF COMMITTEE MEMBERS:
A committee may meet and adjourn as it thinks proper. Questions arising at any meeting shall be determined by a majority of votes of the members present. In case of an equality of votes, the chairman shall have and exercise a second or casting vote.
55. VALIDITY OF DIRECTORS’ ACTS:
All acts done by any meeting of the directors or of a committee of directors, or by any person acting as a director, shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of such directors or persons acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a director.
56. THE SEAL:
The directors shall provide for the safe custody of the seal, which shall not be affixed to any instrument except by the authority of a resolution of the Board or by a committee of directors authorized in that behalf by the directors, and two directors or one director and the Secretary of the company shall sign every instrument to which the seal shall be affixed.
47
57. DISPUTE RESOLUTION:
In the event that a dispute, claim or controversy arises between the company, its management or its members or between the members inter-se, or the directors inter-se, all steps shall be taken to settle the dispute and resolve the issue through mediation by an accredited mediator before taking recourse to formal dispute resolution such as arbitration or litigation.
FINANCES 58. The funds of the Company shall be applied in defraying the expenses and shall be
applicable in or towards the acquisition by purchase, lease or otherwise and furnishing and maintenance of suitable premises and assets for the use of the Company and shall be subject to the general control and direction of the Board.
59. No person, except persons duly authorized by the Board and acting within the limits of the authority as conferred, shall have authority to sign any cheque or to enter into any contract so as thereby to impose any liability on the Company or to pledge the assets of the Company.
ACCOUNTS
60. BOOKS OF ACCOUNT:
The directors shall cause to be kept proper books of account as required under section 230 of the Ordinance so that such books of account shall be kept at the registered office or at such other place as the directors think fit as provided in the said section 230 and shall be open to inspection by the directors during business hours.
61. INSPECTION BY MEMBERS:
The directors shall from time to time determine the time and places for inspection of the accounts and books of the company by the members not being directors, and no member (not being a director) shall have any right to inspect any account and book or papers of the company except as conferred by law or authorized by the directors or by the company in general meeting.
62. ANNUAL ACCOUNTS:
The directors shall as required by section 233 of the Ordinance cause to be prepared and to be laid before the company in Annual General Meeting such Balance Sheet and Income and Expenditure Account and Cash Flow Statement duly audited and reports as are required under the Ordinance.
63. COPY OF ACCOUNTS TO BE SENT TO MEMBERS:
A copy of balance sheet and profit and loss account and the Cash flow statement alongwith the reports of directors and Auditors of the company shall, at least twenty-one (21) clear days before the holding of the General Meeting, be sent to all the members and the persons entitled to receive notices of general meetings, in
48
the manners in which notices are to be given as provided in section 50 of the Ordinance.
64. AUDIT:
Auditors shall be appointed and their duties regulated in accordance with sections 252- 254 or 256-258 of the Ordinance.
65. NOTICE TO MEMBERS:
Notice shall be given by the company to members and auditors of the company and other persons entitled to receive notice in accordance with section 50 of the Ordinance.
66. INDEMNITY:
Every officer or agent for the time being of the company may be indemnified out of the assets of the company against any liability incurred by him in defending any proceedings, whether civil or criminal, arising out of his dealings in relation to the affairs of the company, except those brought by the company against him in which judgment is given in his favour or in which he is acquitted, or in connection with any application under section 488 in which relief is granted to him by the Court.
67. SECRECY:
Every director, secretary, auditor, trustee, member of a committee, officer, servant, agent, accountant, or other person employed in the business of the Company shall observe strict secrecy representing all transactions of the Company, and the state of account with individuals and in matters relating thereto and shall not reveal any of the matters which may come to his knowledge in the discharge of his duties except when required so to do by the directors or the Company in general meeting or by a court of law, and except so far as may be necessary in order to comply with any of the provisions herein contained.
WINDING UP
68. In the case of winding up or dissolution of the Company, any surplus assets or property, after the satisfaction of all debts and liabilities, shall not be paid or disbursed among the members, but shall be given or transferred to some other company established under section 42 of the Companies Ordinance, 1984, having similar or identical objects to those of the Company to be decided by the members of the Company in their general meeting by a special resolution, and with the approval of Commissioner of Income Tax under section 61 read with section 2(36) of the Income Tax Ordinance, 2001, under intimation to the Securities and Exchange Commission of Pakistan, within three months.
69. SUPPLEMENTARY PROVISIONS RELATING TO TAX:
The company shall abide by and adhere to the following rules:
49
(i) The company shall get its annual accounts audited from a firm of Chartered Accountants.
(ii) The company shall, in the event of its dissolution, after meeting all liabilities, transfer all its assets to an Institution, fund, trust, society or organization, which is an approved non-profit organization, and intimation of such transfer will be given to Commissioner, Federal Board of Revenue, within three months of the dissolution.
(iii) The company shall utilize its money, property or income or any part thereof, solely for promoting its objects.
(iv) The company shall not pay or transfer any portion of its money, property or income, directly by way of dividend, bonus or profit, to any of its members(s) or the relative or relatives of member or members.
(v) The company shall maintain its banks accounts with a scheduled bank or in a post office or national saving organization, National Bank of Pakistan or national commercialized banks.
(vi) The company shall regularly maintain its books of accounts in accordance with generally accepted accounting principles and permit their inspection to the interested members of the public, without any hindrance, at all reasonable times.
(vii) Without prejudice to the powers conferred on the Commission under section 42 of the Companies Ordinance, 1984, the association shall not change its memorandum and articles of association without approval of Commissioner, Income Tax, if it has been approved by him as a non-profit organization.
(viii) The company shall restrict the surpluses or monies validly set apart, excluding restricted funds, upto twenty five percent (25%) of the total income of the year. Provided that such surpluses or monies set apart are invested in Government Securities, a collective investment scheme authorized or registered under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003, mutual funds, a real estate investment trust approved and authorized under Real Estates Investment Trust Regulations, 2008 or scheduled banks.
50
We, the several, persons whose names and addresses are subscribed below are desirous of being formed into a Company in pursuance of these Articles of Association:-
Name and surname (present & former) in full (in Block Letters)
CNIC No. (in case of
foreigner, Passport No)
Father's/ Husband's
Name in full
Nationality(ies) with any former
Nationality
Occupation Residential Address in
full
Signature
1. AB AB nnnnn-nnnnnnn-n
GH Pakistani Resident Director, Household Appliances Ltd., Lahore
14-A, Street No.2, Sadaf Colony, Quetta.
2. CD nnnnn-nnnnnnn-n
IJ Pakistani Advocate -do-
3. ABC Ltd
through
EF.
nnnnn-nnnnnnn-n
KL
Pakistani
Company
Director,
ABC Ltd
House No 176, Street No.204, F-10/1, Islamabad
14-A, Street No.2, Sadaf Colony, Quetta.
Dated the……………………. day of………………………, 20...…
Witness to above signatures
Signature Full Name (in Block Letters) Father’s/ Husband’s name Nationality Occupation CNIC NO Full Address
51
Form-N3
(See regulation 5(2))
LICENCE
UNDER SECTION 42 OF THE COMPANIES ORDINANCE, 1984
Whereas it has been proved to the satisfaction of the Securities and Exchange
Commission of Pakistan (the “Commission”) that an association to be named as-
_______________________________
capable of being formed as a public company under the Companies Ordinance, 1984, is
being formed with the primary object
______________________________________________________________________
_________________________________________________________
and it intends to (a) apply its profits and income towards those objects and (b) prohibit
the payment of any dividend or profit to its members.
2. Now, therefore, in pursuance of sub-section (1) of section 42 of the Companies
Ordinance, 1984, the Commission is pleased to grant this licence to the said Association
and direct that it may be registered as a public company with limited liability and not
having a share capital without addition of the words "(Guarantee) Limited" to its name.
3. This licence is granted subject to the conditions as mentioned overleaf.
4. Given under my hand at Islamabad this _______day of ___________, Two
Thousand and____________.
Commissioner
52
Form-N4
(See regulation 18(4))
XYZ ASSOCIATION
STATEMENT OF SOURCE AND APPLICATION OF FUNDS
FOR THE YEAR ENDED _________
PKR.
SOURCE Notes 20X2
(Current Year)
20X1
(Previous Year)
Donation-Foreign: 0,000,000 0,000,000
Source 1 (specify) 1 0,000,000 0,000,000
Source 2 (specify) 2 0,000,000 0,000,000
Source 3 (specify) etc. 3 0,000,000 0,000,000
Donation-Local: 0,000,000 0,000,000
Source 1 (specify) 4 0,000,000 0,000,000
Source 2 (specify) 5 0,000,000 0,000,000
Source 3 (specify) etc. 6 0,000,000 0,000,000
Other, if any (specify) 7 0,000,000 0,000,000
Total Donations (A) 0,000,000 0,000,000
APPLICATION
Project-wise Expenditure: 0,000,000 0,000,000
Project 1 (specify) 8 0,000,000 0,000,000
Project 2 (specify) 9 0,000,000 0,000,000
Project 3 (specify) etc. 10 0,000,000 0,000,000
Administrative and operational expenditures 11 0,000,000 0,000,000
Capital expenditure 12 0,000,000 0,000,000
Total Expenditure (B) 0,000,000 0,000,000
Excess/(Shortfall) of Funds (A-B) 0,000,000 0,000,000
Note 1: There may be further descriptive disclosure to elaborate the item.
Note 2: There may be further descriptive disclosure to elaborate the item.
Notes 3, 4, 5, 6, 7, 8, etc., can be drawn on the above pattern.
53
Form-N5
(See regulation 20)
Secretarial Compliance Certificate
Name of company …………………………………………………………………………
To
Company Registration Office
Securities and Exchange Commission of Pakistan
I ………………………………… being the Secretary of [1] ……………………………
certify, to the best of my knowledge and belief, that I am qualified to be appointed as the
Company Secretary of an association and that the secretarial and corporate compliance
requirements of the Companies Ordinance, 1984, memorandum and articles of association
of[1] …………………………….. and the Associations Not For Profit (Licensing and
Corporate Governance) Regulations, 2013, have been duly complied with for the year
ending …………………..……… *, and that nothing has been concealed or withheld in
this regard.
Date: Place:
Signature (s)
(Name (s) in block letters)
CNIC number
* State exceptions in case of non-compliance.
[1] Insert name of the company
Note: The declaration need not be –
(a) signed before a magistrate or an officer competent to administer oaths; or
(b) stamped as an affidavit
54
Form-N6
(See regulation 23)
Statement of Compliance with the Associations Not for Profit (Licensing & Corporate
Governance) Regulations, 2013
Name of company …………………………………………………………………………
Year ending……………………………………………………….
This statement is being presented to comply with the requirements of the Corporate
Governance contained in regulation 10 to regulation 24 of the Associations Not For Profit
(Licensing and Corporate Governance) Regulations, 2013 (the Regulations) for the purpose
of establishing a framework of good governance, whereby an association is managed in
compliance with the best practices of corporate governance.
The association has applied the principles contained in Chapter III of the Regulations in the
following manner:
1. The association has majority of its directors as non-executive directors and
encourages directors representing donors and other stakeholders on its board of directors.
At present the board includes:
Category
Names
Independent Directors
Non-executive Directors
Directors representing donors
Directors representing other
stakeholders
Executive Directors
2. The independent directors meet the criteria of independence under regulation
9(2)(a) of the Regulations.
3. All the resident directors of the association are registered as taxpayers and none of
them has defaulted in payment of any loan to a banking company, a DFI or an NBFI or,
being a member of a stock exchange, has been declared as a defaulter by that stock
exchange.
4. A casual vacancy occurring on the board on ………….. was filled up by the
directors within ………….. days.
55
5. The association has prepared a “Code of Conduct” and has ensured that appropriate
steps have been taken to disseminate it throughout the association along with its supporting
policies and procedures.
6. The board has developed a vision/mission statement, overall corporate strategy and
significant policies of the association. A complete record of particulars of significant
policies along with the dates on which they were approved or amended has been
maintained.
7. All the powers of the board have been duly exercised and decisions on material
transactions, including appointment and determination of remuneration and terms and
conditions of employment of the CEO and other executive directors, have been taken by
the board/members.
8. The meetings of the board were presided over by the Chairman and, in his absence,
by a director elected by the board for this purpose and the board met at least once every
quarter in a year. Written notices of the board meetings, along with agenda and working
papers, were circulated at least seven days before the meetings. The minutes of the
meetings were appropriately recorded and circulated.
9. The board arranged ………. orientation programs for its directors during the year.
10. The board has approved [1] appointment of CFO, Company Secretary and chief
internal auditor, including their remuneration and terms and conditions of employment.
11. The directors’ report for this year has been prepared in compliance with the
requirements of the Regulation and fully describes the salient matters required to be
disclosed.
12. The financial statements of the company were duly endorsed by CEO and CFO
before approval of the board.
13. The association has complied with all the corporate and financial reporting
requirements of the CCG.
14. The board has formed an Audit Committee. It comprises ……. members, of whom
……… are non-executive independent directors and the chairman of the committee is a/an
……………. director.
15. The meetings of the audit committee were held at least once every quarter,
including before and after completion of external audit of the association and as required
by the Regulations. The terms of reference of the committee have been formed and advised
to the committee for compliance.
16. The board has formed a Procurement Committee [2]. It comprises……..members,
of whom……are non-executive independent directors and the chairman of the committee is
a/an ………..….director.
56
17. The board has formed an HR and Remuneration Committee [2]. It
comprises……..members, of whom……are non-executive directors and the chairman of
the committee is a/an ………..….director.
18. The statutory auditors of the association have confirmed that they have been given a
satisfactory rating under the quality control review program of the ICAP, that they or any
of the partners of the firm, their spouses and minor children are neither member nor
connected person with the association and that the firm and all its partners are in
compliance with International Federation of Accountants (IFAC) guidelines on code of
ethics as adopted by the ICAP.
19. The statutory auditors or the persons associated with them have not been appointed
to provide other services except in accordance with the regulations and the auditors have
confirmed that they have observed IFAC guidelines in this regard.
20. We confirm that all other material principles enshrined in the Regulations have
been complied with [3] except for the following, toward which reasonable progress is being
made by the company to seek compliance by the end of next accounting year.
Signature (s)
(Name (s) in block letters)
Chairman /CEO
Note: Any exception to the above shall be adequately noted with reasons.
_____________________
[1] in case of new appointments made after these Regulations have taken effect
[2] Not applicable in case of Small-sized Associations
[3] Delete if not applicable