Associations Not For Profit (NFP) Regulations 2013

7/30/2019 Associations Not For Profit (NFP) Regulations 2013

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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 thedraft 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 ,-


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(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


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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 isrepugnant 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 applicationand 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.


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(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 appliesfor 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 todisciplinary 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;


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(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 tobe 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.


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(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 theOrdinance 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;


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(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 itsletterheads, 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 orapproval 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.


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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 shallmake 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 anddiversity considered relevant in the context of the associations 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.


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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 businessesmanaged 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 supersedeany 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


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appropriate steps to disseminate code of conduct throughout the

association along with supporting policies and procedures and these

may be put on the associations 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 boards

own performance;

(vii) the decisions on the following material transactions or significantmatters 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.


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(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 namecalled, 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


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or default in payment of public deposit), TFCs, Sukuks or any other

debt instrument. Full details of the associations failure to meet

obligations shall be provided in the associations 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.


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(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 andconnected person transactions that were made on the terms equivalent to those that prevail

in arms length transaction, only ifsuch 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 chieffinancial 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 ofthe 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 threeyears 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


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(b) has a postgraduate degree in finance from a recognized university orequivalent.

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 abovequalification 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 thecompany, 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;


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(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 financialstatements 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 companys 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 toannex 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.


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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 receipts 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 associations certificate from the NPO CertificationAgency 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.


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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 aProcurement 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 arediscussed.

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.


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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 Committeecarry 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 associationsassets;

(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

managements 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;


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(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 appropriaterecording of purchases and sales, receipts and payments, assets and

liabilities and the reporting structure are adequate and effective;

(i) review of the associations 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 corporategovernance 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 theproceedings 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 d irectors 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


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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 ofthe 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


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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 itsbehalf 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.


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Form-N1

[See regulation 4(5)]

To,Securities & Exchange Commission of Pakistan..

Subject: APPLICATION FOR GRANT OF LICENCE UNDER SECTION 42 OF THECOMPANIES 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. (incase of foreignnational)

Fathers/ Husbands

Name

Usual residential

address

Nationality

(a) (b) (c) (d) (e)


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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 theproposed 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)

Fathers/ Husbands 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 thatthe 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 (Licensingand Corporate Governance) Regulations, 2013, as specified in annexure-V;

f. Power of Attorney (Authority Letter) on Stamp Paper of appropriate value made by all thesubscribers 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 tocollect licence as specified in annexure-VI.

g. Printed copy of Memorandum and Articles of Association following the standard formatprovided as Form-2 of the Regulations;

h. Copies CNICs/passport (in case of foreign national)i. Copy ofavailability 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 incase the application is submitted through eService.)

k. If the association is already in existence, the following is also annexed with regard to theexisting entity -

i. a copy each of the audited balance-sheet, income and expenditure account and the


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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 overthe 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 alterits 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 proposedcompany;

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 bywhich it was registered.


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Annexure-I

RESUME

Subscribers 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 suchoffice 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]


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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 donationsStart-up

Members donationsOther 3

Other sources, specify, if any 4

Previous years 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 operationalexpenditures

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]


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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 GrantsForeign

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]


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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]


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Annexure-IV

AFFIDAVIT / UNDERTAKING

I, Mr. _________________________ son of __________________, CNIC number______________________ resident of _______________________ and subscriber of

___________________________________ [the proposed company] do hereby, solemnlyaffirm and testify that the contents of the application under section 42 of the CompaniesOrdinance, 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 theproposed company; and

(b) I shall contribute a reasonable amount but not less than Rs.______________/- asstartup donation to the proposed company. The same shall be deposited in the

companys 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 overdueloans or installments outstanding towards banks or other financial institutions;

(e) neither I nor companies in which I am a director or major shareholder havedefaulted in paying taxes as on the date of application;

(f) I have not been a sponsor, director or chief executive of a defaulting cooperativefinance society or finance company;

(g) I have never been convicted of fraud or breach of trust or of an offence involvingmoral turpitude or removed from services for misconduct;

(h) I have neither been adjudged an insolvent nor have defaulted in making payments tomy creditors;

(i) the funds raised shall be spent for objects of the proposed company and for otherlawful purposes;

(j) I am fully aware of the affairs of the proposed company particularly the applicationunder section 42 of the Companies Ordinance, 1984; and

(k) Whatsoever stated in the application and accompanied documents is true andnothing 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.


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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 / aChartered Accountant / a Cost and Management Accountant practicing in Pakistan and amengaged in the formation of the proposed association, namely,

/] am a person named in theArticles 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 amsatisfied that the same are drawn up in conformity with the provisions of the Ordinance andfulfill 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 AddressDate: .

Place:

Witness to the signature:

Signature: Full Name, Fathers/ Husbands

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 OathCommissioner

[under his Stamp]


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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, topresent 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,

Fathers/ Husbands 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 NotaryPublic

[under his Stamp]


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Form-N2[See Regulation 4(5)]

A comp any set up und er 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, incash or in kind, from lawful sources and to apply the same or incomethereof for the objects of the Company: Provide that in the event ofrevocation of licence under section 42, the company shall not appeal, solicitor accept contributions, donations, grants and gifts, in cash or in kind, fromany source other than its members.

(2) To open and operate bank accounts in the name of the Company and todraw, 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 orotherwise dispose of any movable or immovable property and any rightsand privileges whatsoever for any of the objects or purposes specifiedherein above. Provided that the Company shall not undertake the businessof real estate or housing schemes.

(4) To borrow or raise money, with or without security, required for thepurposes of the company upon such terms and in such manner as may bedetermined by the company for the promotion of its objects.


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(5) To mortgage the assets of the company and / or render guarantee for theperformance of any contract made, discharge of any obligation incurred orrepayment 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 forthe use and purposes of the company.

(7) To nominate delegates and advisors to represent the Company atconferences, 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 andstatutory authorities operating for similar purposes and to exchangeinformation and advice with them.

(9) To pay out of the funds of the company the costs, charges and expenses ofand incidental to the formation and registration of the Company.

(10) To invest the surplus moneys of the company not immediately required insuch a manner as may from time to time be determined by the company.

(11) To create, establish, administer and manage funds including endowmentfund 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 thefunctions and activities of the Company.

(13) To take such actions as are considered necessary to raise the status or topromote 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 toany of the objects of or to the work done by the Company, subject to thepermission, if required of the relevant authorities

(15) To do all other such lawful acts and things as are incidental or conducive tothe attainment of the above objects or any one of them.

V. The Company shall achieve the above said objects subject to the followingconditions:-

(1) The company shall be formed as a public company limited by guaranteeand not having a share capital.

(2) Payment of remuneration for services or otherwise to its members, or theirfamily members whether holding an office in the company or not, shall beprohibited.


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(3) A subscriber or director who has quit as member of the company, whetherholding an office in the company or not, shall not be eligible to receiveremuneration for services or otherwise.

(4) No change in the Memorandum and Articles of Association shall be madeexcept with the prior approval of the Securities and Exchange Commission

of Pakistan.

(5) Patronage of any government or authority, express or implied, shall not beclaimed unless such government or authority has signified its consentthereto in writing.

(6) The company shall not itself set up or otherwise engage in industrial andcommercial activities or in any manner function as a trade organization.

(7) The company shall not exploit or offend the religious susceptibilities of thepeople.

(8) The subscribers to the Memorandum and Articles of Association of theCompany shall continue to be the members of the Company unless allowedby the Commission on application to quit as members;

(9) The company shall state with its name, the phrase A company set upunder 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 towardsthe promotion of objects of the company and no portion thereof shall bedistributed, 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 sourcesexcept with the prior permission, clearance or approval from the relevantpublic authorities as may be required under any relevant statutoryregulations 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 thecompany shall be maintained in scheduled bank(s) in Pakistan;

(13) The company, on having multiple objects, shall keep separate books ofaccount and record of all the funds, grants, contributions, donations, giftswhether in cash or in kind received with respect to each object and all suchfunds, grants, contributions, donations, gifts, received with respect to aparticular object shall be applied solely for the promotion of that particularobject and no other object, if any, of the company;

(14) The company shall close its accounts on 30th of June each year;


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(15) The company shall make no loan to or investment with, whatsoever, itsconnected persons;

(16) The company shall not undertake any trading activities and shall conform torelevant statutory regulations and laws;

(17) The company shall comply with the code of corporate governance asprescribed by the Commission for associations not for profit;

(18) Notwithstanding anything stated in any object clause, the company shallobtain such other licences, permissions, or approvals of the relevant publicauthorities as may be required under any relevant statutory regulations andlaws 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 imposedby the Commission from time to time.

VI. The territories to which the object of the company shall extend are declared toinclude 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 ofthe Company in the event of its being wound up while he is a member or withinone year afterwards, for payment of the debts or liabilities of the Companycontracted before he ceases to be a member and the costs, charges and expensesof winding up and for adjustment of the rights of the contributories amongthemselves 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 orproperty, after the satisfaction of all debts and liabilities, shall not be paid ordisbursed among the members, but shall be given or transferred to some othercompany established under section 42 of the Companies Ordinance, 1984, havingsimilar or identical objects to those of the Company to be decided by the membersof the Company in their general meeting by a special resolution, and with theapproval of Commissioner of Income Tax under section 61 read with section 2(36)of the Income Tax Ordinance, 2001, under intimation to the Securities andExchange Commission of Pakistan, within three months.


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We, the several, persons whose names and addresses are subscribed below aredesirous 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 Namein full

Nationality(ies) with any

formerNationality

Occupation

Residential Address

in full

Signature

1. AB nnnnn-nnnnnnn-n

GH Pakistani ResidentDirector,Household

AppliancesLtd.,Lahore

14-A,StreetNo.2,SadafColony,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 No176, StreetNo.204, F-10/1,Islamabad

14-A,StreetNo.2,SadafColony,Quetta.

Dated the. day of, 20..

Witness to above signatures

Signature

Full Name (in Block Letters)

Fathers/ Husbands name

Nationality

Occupation

CNIC NO

Full Address


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A comp any set up un der 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 ofPakistan.

(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 tosection 147 of the Ordinance.

(m) THE REGISTRAR means the Registrar ofCompanies.

(n) THE REGULATIONS means the Associations Not For Profit (Licensing andCorporate Governance) Regulations, 2013.

(o) THE SEAL means the Common Seal of the company.

(p) SECRETARY means the Company Secretary of the company.


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(q) YEAR used in the context of financial matters shall mean financial year of thecompany.

(r) Expressions referring to writing shall be construed as including references totypewriting, printing, lithography, photography and other modes of representingor reproducing words in visible form.

(s) Words importing the singular number include the plural number and vice versaand words importing the masculine gender include the feminine gender.

(t) Unless the context otherwise requires words or expressions contained in theseArticles shall be of the same meaning as in the Ordinance or any statutorymodification thereof in force at the date at which these Articles become bindingon 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 begiven) but the minimum number of members shall not be, at any time, less thanthree (3). However, the directors may, from time to time, whenever the company orthe business of the company requires, increase the number of members.

3. The company in general meeting may from time to time lay down the qualificationsand conditions subject to which any person or class of persons shall be admitted tomembership of the company.

4. The rights and privileges of a member shall not be transferable and shall cease onhis death or otherwise ceasing to be a member.

5. The subscribers to the memorandum and such other persons as the directors shalladmit 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 beseconded by an existing member whereupon the board of directors shall decidethe matter of his admission as member or otherwise within three months of makingof such application. No minor or lunatic shall be admitted as a member of thecompany.

8. Every person, upon applying for admission to membership, shall sign anundertaking 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 foradmission to membership. The Boards decision shall be final and it shall not beliable to give any reasons thereof.


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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 actdiscreditable to a member of the company; or

(e) he is acting or is threatening to act in a manner prejudicial to the interest orfunctioning 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 andafter giving an opportunity of hearing, annul or modify the decision of the boardwith regard to expulsion of the member by resolution supported by two-thirdsmajority. The person expelled shall be reinstated as a member from the date of theresolution 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 companywithin 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, inaccordance with the provisions of section 158, within eighteen (18) months fromthe date of incorporation of the company and thereafter once at least in everycalendar year within a period of four (4) months following the close of its financialyear and not more than fifteen (15) months after the holding of its preceding annualgeneral 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 generalmeeting 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), asis 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 isserved or deemed to be served, but inclusive of the day for which notice is given)


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specifying the place, the day and the hour of meeting and, in case of specialbusiness, the general nature of that business, shall be given in the mannerprovided by the Ordinance for the general meeting, to such persons as are, underthe Ordinance or the Articles of the company, entitled to receive such notices fromthe company but the accidental omission to give notice to or the non-receipt ofnotice 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 istransacted at an annual general meeting with the exception of the consideration ofthe accounts, balance sheet and the reports of the director and auditors, theelection of directors, the appointment of and the fixing of remuneration of theauditors 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 votingpower present in person but being not less than two (2) members, is present atthat 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 notpresent, the meeting, if called upon the requisition of members, shall be dissolvedand in any other case, it shall stand adjourned to the same day in the next week atthe same time and place and if at the adjourned meeting a quorum is not presentwithin 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 generalmeeting of the company, but if he is not present within fifteen minutes after thetime appointed for the meeting, or is unwilling to act as chairman, any of thedirectors present may be elected to be the chairman and if none of the directorspresent is willing to act as chairman, the members present shall choose one oftheir 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 butno business shall be transacted at any adjourned meeting other than the businessleft unfinished at the meeting from which the adjournment took place. When ameeting is adjourned for thirty (30) days or more, notice of the adjourned meetingshall be given as in the case of an original meeting. Save as aforesaid, it shall notbe necessary to give any notice of an adjournment or of the business to betransacted at an adjourned meeting.


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22. VOTING:

At any general meeting a resolution put to the vote to the meeting shall be decidedon a show of hands unless a poll is (before or on the declaration of the result of theshow of hands) demanded. Unless a poll is so demanded, a declaration by thechairman 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 thebook 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 oragainst that resolution.

23. DEMAND FOR POLL:

A poll may be demanded in accordance with the provisions of section 167 of theOrdinance.

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 tobe 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 shallbe taken at once.

26. CASTING VOTE:

In the case of an equality of votes, whether on a show of hands or on a poll, thechairman 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 andupon 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 meetingor adjourned meeting at which the vote objected to is given and tendered, andevery 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, whosedecision shall be final and conclusive.

MANAGEMENT AND ADMINISTRATION

29. There shall be, for the overall management of the companys affairs, a Board ofdirectors, which will be elected from am

Documents

Associations Not For Profit (NFP) Regulations 2013