How to register a non-profit organization (NPO) in Pakistan?

A Non-Profit Organization (NPO) in Pakistan is an entity formed to serve charitable, social, religious, educational, or public welfare purposes. NPOs in Pakistan are commonly registered as Associations not for profit under Section 42 of the Companies Act, 2017, or alternatively under other applicable laws like Societies Registration Act, 1860, or Voluntary Social Welfare Agencies Ordinance, 1961.

Among these, Section 42 registration with SECP is the most recognized and formal legal structure, especially for organizations that wish to receive grants, work with donors, or gain tax-exempt status from the Federal Board of Revenue (FBR).

This guide explains the types of NPO registrations, step-by-step SECP process, tax registration, and compliance requirements in Pakistan.

Legal Structures for NPOs in Pakistan

1. Section 42 Company (SECP)

• Incorporated under the Companies Act, 2017

• Must obtain a license from the Securities and Exchange Commission of Pakistan (SECP)

• Legal entity with limited liability but no distribution of profits

• Can receive local and foreign donations

• Eligible for tax exemptions under Income Tax Ordinance, 2001

2. Society under Societies Registration Act, 1860

• Registered with the Registrar of Societies at provincial level

• Suitable for smaller community-based organizations or educational groups

• Less structured and has no corporate status

3. Trust under Trusts Act, 1882

• Governed by provincial laws

• Ideal for family-run charitable operations or fixed-purpose institutions (e.g., orphanages, scholarships)

• Managed by trustees under a Trust Deed

4. Voluntary Social Welfare Agencies Ordinance, 1961

• Registered with the Social Welfare Department

• Appropriate for small-scale welfare, religious, and rehabilitation activities

• More relevant for volunteer-driven initiatives

Step-by-Step Guide to Register a Non-Profit Organization under Section 42

Step 1: Determine Objectives and Structure

Clearly define the charitable or public service objectives of your organization, such as:

• Education

• Health

• Environment

• Poverty alleviation

• Research and development

• Women empowerment

Decide on the number of members, structure of the Board, and governance model.

Step 2: Name Reservation with SECP

Visit the SECP eServices portal and apply for name reservation.

• Choose a name that reflects your charitable purpose

• The name must not be deceptive or resemble that of an existing organization

• Add “Foundation”, “Trust”, “Association”, or “Organization” as per SECP guidelines

• Upon approval, SECP issues a Name Reservation Certificate, valid for 60 days

Step 3: Apply for License under Section 42

Prepare and submit an application to SECP for obtaining a license to operate as a not-for-profit company.

Documents required:

• Application Letter

• Draft Memorandum of Association (MOA)

• Draft Articles of Association (AOA)

• Statement of Work and Future Plans

• Resume and CNICs of promoters

• Undertaking that profits will not be distributed

• Recommendation letter from a relevant government department (optional but helpful)

• Details of source of funds

The SECP will examine the objectives and credibility of the promoters. If satisfied, a License under Section 42 is granted.

Step 4: Incorporate the Company with SECP

Once the license is granted, proceed with company incorporation.

Documents to submit via SECP eServices:

• License under Section 42

• Name Reservation Certificate

• Scanned CNICs of all directors

• MOA and AOA signed by promoters

• Registered office address

• Form 29 – Particulars of Directors

• Form 21 – Registered Office Details

• Payment of incorporation fee (fee is reduced for NPOs)

Upon approval, SECP issues:

• Certificate of Incorporation

• SECP PIN for company profile

• Company status as “Licensed NPO under Section 42”

Step 5: Register with FBR for Tax Exemption

After incorporation, register the NPO with the Federal Board of Revenue (FBR) to obtain:

• National Tax Number (NTN)

• Approval under Section 2(36) and 100C of the Income Tax Ordinance, 2001 for tax-exempt status

Submit the following documents to the Commissioner Inland Revenue:

• Application letter

• MOA and AOA

• SECP license and incorporation certificate

• Audited financials (or forecasted financials for first year)

• Details of donations received or planned

• Bank account information

• Minutes of Board meeting

• Organizational structure and list of governing body

Upon approval, FBR will issue an NPO Tax Exemption Certificate, valid typically for 3 years (subject to renewal).

Other Registrations and Compliance

Bank Account

Open a corporate bank account in the NPO’s name. Requirements include:

• Incorporation documents

• NTN

• Board Resolution

• CNICs of signatories

• License copy

Pakistan Centre for Philanthropy (PCP) Certification (Optional)

To qualify for foreign grants and donations, or to receive donor confidence, you may apply for PCP Certification.

PCP reviews governance, transparency, and program impact of NPOs.

EOBI, Social Security, Labour Registrations (If Employees Exist)

If your NPO employs more than 5 people:

• Register with EOBI for pension contributions

• Register with Social Security Department for employee benefits

• Register with Provincial Labour Department

Donor Agency Registrations

If you plan to work with international donors, register with:

• Economic Affairs Division (EAD) for foreign funding

• NADRA/INGO Coordination Cell (for foreign NGOs)

• FBR for withholding tax agent status

Compliance Requirements After Registration

Key Features of Section 42 NPO

• No minimum capital requirement (though practical capital is usually Rs. 100,000 or more)

• Directors serve voluntarily; paid employment must be declared and justified

• Cannot distribute profits, dividends, or income to members

• Assets upon winding up must go to another NPO

• Must maintain books of account and get annual audits

Benefits of Registering an NPO under Section 42

• Legal identity and limited liability

• Eligible to receive local and foreign donations

• Tax-exempt status under FBR law

• Trusted by donors, government, and CSR departments

• Access to grants, tenders, and international partnerships

• Higher regulatory compliance ensures transparency

Common Use Cases

• Educational foundations and schools

• Health service providers, mobile clinics

• Charitable trusts for food, clothing, and housing

• Environmental and wildlife conservation NGOs

• Microfinance and social entrepreneurship programs

• Human rights and legal aid centers

Conclusion

Registering a non-profit organization in Pakistan is a structured process that ensures transparency, donor confidence, and legal recognition. Among all options, the Section 42 registration under SECP offers the most robust legal framework and access to tax exemption, government support, and international donor funding.

To ensure compliance, NPOs must maintain proper records, file annual returns, and renew licenses and tax exemptions periodically. Legal advice and experienced consultants are often helpful in drafting the founding documents and ensuring approval from SECP and FBR.