Association Not-For-Profit

An Association Not-For Profit is an organization formed for the purpose of serving a purpose of public or mutual benefit other than the pursuit or accumulation of profits. The main and basic objects of Associations are precisely provided in section 42 of the Ordinance, which are for promoting commerce, art, science, religion, sports, social services, charity or any other useful object. An Association after it has been incorporated in the Ordinance becomes a body corporate just like any other company. The Association is generally a guarantee limited company having no share capital.


In Pakistan, there are a number of laws for registration and regulation of Non-profit Associations, including the following prominent Acts/Ordinances.
  1. The Societies Registration Act, 1860.
  2. The Trusts Act, 1882.
  3. The Companies Ordinance, 1984.

The Societies Registration Act 1860

A society may be established under the Societies Registration Act, 1860, if seven or more persons join together of whom at least three must be the members of the Managing Committee. To establish a society a Memorandum and Rules and Regulations of Association must be printed. These documents must contain clauses which not only state the objectives for which the society is being established, but also how it will operate. This is considered to be one of the more lenient Acts with respect to registration requirements and to accounting and audit regulations.

The Memorandum of Association must include the following:
  • The name and registered address of the society.
  • The names, addresses and occupation of each present member of the Managing Committee.
  • Rules and Regulations of the society or Articles of Association duly signed by all office bearers.
  • In the case of an educational society, the academic certificates of all the subscribers must be produced.
  • Copies of the National Identity Cards of the office bearers.
  • Rent agreement of the office premises.
In addition to the Memorandum of Association, the Rules and Regulations for governing the society must be set out and filed with the Registrar of Societies. The Rules and Regulations, certified by not less than 3 members of the Managing Committee, must contain obligatory clauses relating to:
  • Membership
  • General Body and Managing Committee
  • Meetings and quorum
  • Notices for meetings
  • The manner of elections and removal of officers
  • Procedures relating to accounting and audit
  • Dissolution

Trusts Act 1882

A trust is a ‘gift’ of property to a person or institution providing benefit to both parties. In order to create a trust it is necessary that there should be a creator or author of the trust, a person in whom confidence is reposed, i.e. the trustee, and a person for whose benefit the trust is created i.e. the beneficiary. Beneficiaries cannot be specific individuals, but must be society generally or a particular section or class of society.

A trust is established under the Trusts Act, 1882. For this type of trust, the three conditions of a creator, trustee and beneficiary being present, are unconditional requirements. A public charitable trust is a trust which is established for the benefit of the society or at least a certain section of society. There are no particular laws relating to public trusts. However, the rules in the Trust Act of 1882 can be applied to the public and charitable trusts. In the case of public charitable trusts, the conditions governing private trusts are equally important. However, if the objectives are not clear, unlike the private trusts, these trusts would be sustained as long as there is an intention of charity.
  • There must be some trust property, whether in cash or capital assets (land or buildings)
  • The objectives of the trust must be charitable or for the benefit of society
  • The application for the registration of trust requires the following:
  • Particulars of documents creating the trust.
  • Particulars of the trustees and the beneficiaries.
  • Details of what the trust property is going to be. There is no minimum value of property for starting a trust. If the property is an immovable property then the transfer deed shall be on a stamp paper on the value of the property and it shall be registered.
  • Preparation of the trust deed, that is, i.e. declaration of having created a public charitable trust.

Companies Ordinance 1984

A nonprofit company is registered under Section 42 of the Companies Ordinance, 1984 as a public company with limited liability provided it meets the following criteria:
  • It directs, or it intends to direct its profits, if any, or any other form of income from the business carried out, in advancing its objectives.
  • It disallows the payment of any return to its members.

Registration is done through the SECP.


Enjoy all the privileges of a company limited by guarantee and is subject to all its obligations, except the use of the word "Limited” in its name.
  • Avail certain tax advantages.
  • Enhance credibility with responsibility and accountability.
  • Elevate entity status.
  • Work under defined legal frame work.
  • Have compact organizational structure.
  • Make simple corporate record.
  • Become a part of documented and regulated sector.
  • Work with full peace of mind with no internal strife and dispute.

Tax Benefits

Charities approved by the Commissioner of Income Tax are exempt from the levy of minimum tax of 0.50% of their turnover. Charitable donations, both in cash or in kind, entitle the donor to a tax credit (tax rebate) against its tax liability (subject to certain conditions).

The following heads of income are exempt from tax for any trust or charitable organisation established under any legal obligation (e.g. Muslim Waqf, Societies Registration Act 1860, Charitable Endowments Act 1890, the Social Welfare Agencies (Registration and Control) Ordinance 1961 or the Companies Ordinance 1984). The exemptions are applicable to the extent the monies are actually applied or set apart for application to the religious or charitable purposes of such organisation in Pakistan:

(a) Voluntary contributions including donations and subscriptions.
(b) Grants received from Federal, Provincial or District Governments.
(c) Foreign grants.
(d) Income from property.
(e) Profits on investments in the securities of the Federal Government.
(f) Profit on debt from scheduled banks.