Association Not for Profit Flashcards
Question 1: What is the primary purpose of allowing the registration of companies as “Associations Not for Profit”?
Concepts:
Limited Liability Protection: For individuals involved in socially beneficial work.
Facilitating Formation: Enabling the creation of organizations for social good.
Mnemonic: “L.L.F.” (Liability, Limited, Formation, Facilitating)
What are the key criteria for obtaining a license from the SECP to register as an “Association Not for Profit”?
Social Purpose: Must promote a beneficial social objective.
No Profit Distribution: Prohibits dividend payments to members.
Legal Compliance: Must not violate Pakistani laws and national interests.
Mnemonic: “S.N.L.” (Social, No Profit, Legal)
Can the SECP impose conditions on the license granted to an “Association Not for Profit”?
Concept: The SECP has the authority to impose conditions on the license.
Mnemonic: “S.E.C.” (SECP, Enforce, Conditions)
What is the required format for the memorandum and articles of association of an “Association Not for Profit”?
Concepts:
Table F Compliance: Must adhere to the format in Table F of the First Schedule.
SECP Approval: Requires approval from the SECP.
Mnemonic: “T.S.” (Table F, SECP)
Do “Associations Not for Profit” enjoy the same privileges and obligations as other limited companies?
Concept: “Associations Not for Profit” have the same legal standing as other limited companies.
Mnemonic: “E.O.” (Equal, Obligations)
Under what circumstances can the SECP revoke the license of an “Association Not for Profit”?
Mnemonic: “N.N.P.F.N.I.I.M.T.N.E.” (Non-compliance (License), Non-compliance (Regulations), Public Interest, Financial Defaults, National Interest, Insufficient Membership, Illegal Activities, Mismanagement, Terrorism, Non-compliance (Directives), Non-operation, Equitable Grounds)
Concepts:
Non-compliance with License Terms: Failure to adhere to the terms and conditions of the license.
Non-compliance with Regulations: Failure to meet the requirements specified in relevant regulations.
Public Interest: Actions prejudicial to public interest.
Financial Reporting Defaults: Failure to file financial statements or annual returns for two consecutive years.
National Interest: Actions against the interests of Pakistan, its sovereignty, or national security.
Insufficient Membership: Reduction of members below three.
Illegal or Fraudulent Activities: Engaging in unlawful or fraudulent activities.
Mismanagement: Mismanagement by company officials, including fraud, misfeasance, or malfeasance.
Terrorism or Money Laundering: Involvement in terrorism financing or money laundering.
Non-Compliance with Directives: Refusal to comply with directives from the SECP or Registrar.
Inactivity: Failure to carry on business or remain operational for one year.
Equitable Grounds: Other circumstances where revocation is deemed just and equitable.
Mnemonics for revocation of AOP’s license
Mnemonic: “N.N.P.F.N.I.I.M.T.N.E.” (Non-compliance (License), Non-compliance (Regulations), Public Interest, Financial Defaults, National Interest, Insufficient Membership, Illegal Activities, Mismanagement, Terrorism, Non-compliance (Directives), Non-operation, Equitable Grounds)
What procedural safeguards are in place before the SECP revokes the license of an “Association Not for Profit”?
Concept: The SECP must issue a written notice of its intention to revoke the license and provide the company with an opportunity to be heard.
Mnemonic: “N.O.H.” (Notice, Opportunity, Heard)
What are the potential consequences for an “Association Not for Profit” if its license is revoked?
Concepts:
Loss of Legal Status: The organization may lose its legal status as a company.
Operational Restrictions: May be prohibited from continuing its operations.
Reputational Damage: Can severely damage the organization’s reputation and credibility.
Legal and Financial Implications: May face legal and financial repercussions.
Mnemonic: “L.O.R.L.” (Loss of Status, Operational Restrictions, Reputational Damage, Legal Implications)
What are the immediate consequences for a “Not-for-Profit” company upon revocation of its license?
Concepts:
Cessation of Activities: The company must cease most operations, except for recovering outstanding debts.
Prohibition on Fundraising: The company cannot solicit or receive any further donations.
Mnemonic: “C.P.” (Cessation of Activities, Prohibition on Fundraising)
What happens to the assets of a “Not-for-Profit” company after its license is revoked?
Concepts:
Debt Settlement: All debts and liabilities must be settled.
Asset Transfer: Remaining assets must be transferred to another “Not-for-Profit” company with similar objectives.
Timeframe: This transfer must occur within 90 days or an extended period approved by the SECP.
Mnemonic: “D.A.T.” (Debt Settlement, Asset Transfer, Timeframe)
What are the reporting requirements for a “Not-for-Profit” company after its license is revoked?
Concepts:
Filing a Report: The company’s board must file a report with the Registrar within 15 days of complying with the asset transfer requirements.
Report Contents: The report must include relevant information and documents.
Mnemonic: “F.R.” (Filing a Report)
What happens if a “Not-for-Profit” company fails to comply with the post-revocation requirements?
Concepts:
Appointment of Administrator: The SECP can appoint an administrator to manage the company’s affairs.
Winding-Up Proceedings: The administrator will initiate the necessary proceedings for winding up the company.
Mnemonic: “A.W.” (Administrator, Winding-Up)
Are there any restrictions on the involvement of former members and officers of a revoked “Not-for-Profit” company in another similar organization?
Concepts:
Eligibility Restrictions: Members and officers of the revoked company, and their family members, are ineligible to hold positions in the successor organization for five years.
Mnemonic: “E.R.” (Eligibility Restrictions)
