This blog is written by Mr. Hafiz Muhammad Shafaat Ali, Assistant Manager, Taxation and Corporate Services. Please read this blog and provide your valued comments.
Procedure for Registration of NGO/NPO
Nonprofit organizations are organized for a public or mutual benefit other than generating profit for owners or investors. Non-profit organization may be different in size and form, nonprofit organizations share five common characteristics:
- they are organized
- Private (separate from the government)
- Non-profit-distributing and
The non-profit distributing characteristic means that – contrary to the common belief – nonprofits can generate profit but they cannot distribute it to owners or directors. The profit must all be used to support the operation of the organization.
Types of NGOs/NPOs by Law
Before an NGO can start work, it must be registered with Governement of Pakistan. There are two types of NGOs and both have different registration procedures:-
- Registered under ‘Voluntary Social Welfare Agencies‘ Ordinance 1961
- Registered under ‘Socities Act of 1860‘.
Uncommon NGO types and their respective registration acts.
- Non-Profit Company (Under ‘Companies Act 2017’)
- Cooperative Society (Under ‘Co-operative Societies act 1925)
Registration Procedure for NPO Under Section 42 of The Companies Act, 2017
- The first step is to seek availability of the proposed name for the company
- Prepare an application by the promoters or members of an association desirous of obtaining a license under section 42 of the Companies Act, 2017.
- There must be at least 3 subscribers/ members/promoters of the company and who must have sufficient skills, expertise and resources for the attainment of object of the proposed company.
- Each promoter shall contribute a reasonable amount as startup donation having regard to the circumstances of the case.
- All conditions of license shall be mentioned in the Memorandum of Association of the company.
The following information/documents are required to be submitted along with the application
- Original Bank challan of Rs.25,000/- paid as licensing fee, in the authorized branches of MCB Bank Limited/United Bank limited in favor of the Securities and Exchange Commission of Pakistan.
- Copy of letter showing that the proposed name is available.
- Draft Memorandum and Articles of Association duly signed by the promoters.
- List of promoters of the association with their occupations and addresses.
- Photo copies of CNICs of each promoter and (attested copies of passports in case of foreigners).
- A statement showing the names of companies, associations and other institutions in which the promoters of the proposed association holds any office stating the office held (position/designation) in each case.
- A declaration by a person of 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 Act and fulfill the conditions for the grant of license laid therein and these rules;
- An undertaking from each promoter to the effect that they have sufficient skills, expertise and resources for the attainment of object of the proposed association. Moreover, the said undertaking should indicate that each promoter shall contribute a reasonable amount (e.g., Rs.200,000/-) as start up donation having regard to the circumstances of the case. The amount shall be deposited in the company’s account within a period of six months of the date of its incorporation which shall be used for the attainment
- An affidavit affirming correctness of contents of the application, affirming that promoters are not defaulters of loans etc. on the stamp paper of appropriate value duly attested by an Oath Commissioner;
- An estimate of the future annual income and expenditure of the proposed company, specifying the sources of income and objects of expenditure. The statement should also reflect the aforesaid startup donation of the each subscriber.
In case of foreign promoter / donor, the following additional (five sets of each) documents needs to be provided:
- Draft Memorandum of Association
- Copies of Computerized National Identity Cards (CNICs) of all Pakistani members and in case of foreigners, copy(ies) of passport(s);
- Resume of all promoters
- Estimated Income and expenditure statement, names of foreign donors along with letters of intents from foreign donors and year wise amount of donation, and;
- A brief statement of the work already done (if any) and the work proposed to be done after incorporation as a company specifying salient features of the project(s) e.g., their location, size, duration, etc., to be undertaken in pursuance of object of the company.
- Power of Attorney (Authority Letter)on Stamp Paper of appropriate value made by all the promoters in favor 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 license.
- Resume of all promoters.
- The application needs to indicate whether the association is already in existence or not. If the association is already in existence, the following information/documents relating to the existing entity also to be furnished:
- In case, the existing entity is a society, trust, etc,:
- A copy each of the audited balance sheet, income and expenditure account and the annual report on the working of the existing entity for the financial year immediately preceding the date of the application;
- Attested copy of Certificate of registration (if it has any legal status);
- Copy of resolution regarding dissolution and taking over the assets and liabilities of the existing entity by the proposed company within three months of its incorporation;
- Attested copy of latest List of members of Board of Directors/Governors/Trustees etc of the existing entity;
- Attested copy of Latest Memorandum and Articles of Association, Charter, or Statute by which it was registered.
In case, the existing entity is already registered as a company in Pakistan:
- A copy of each of the audited balance sheet, income and expenditure account. Annual report on the working of the existing entity for the financial year immediately preceding the date of the application and
- A copy of special resolution proposing to seek license under section 42 of the Act and amendments in its memorandum and articles of association to bring it in conformity with the licensing requirments.
After obtaining license from the Commission, the Association must be incorporated under the provisions of the Act, within a period of three months from the date of the license.
Muhammad Shafaat Ali