Association Not For Profit (Chapter 1) Flashcards
When the group of persons required themselves to be registered as a limited company but do not want to include a limited company in their name they have to register as a?
Association Not For Profit
Condition/Criteria for grant of license as “Association Not For Profit”
Commission may grant license to a company ( for a specified period) as ANFP if it satisfies the following conditions,
- It is to be formed as a public limited company for useful social object e.g. promoting science, art, commerce, education, religion, sports, health, social welfare, charity or any other useful object.
- It prohibits payments of dividends to its members.
- It applies its profit and other income in promoting its object.
- Its objects and activities are not against the law and national interest of Pakistan.
- Its MOA and AOA shall be in accordance with the specified form and approved by the Commission.
The commission may also impose additional conditions, and such conditions shall be inserted in MOA and AOA of the company.
Privileges and Obligation of an ANFP?
On registration such association shall enjoy all the privileges and Obligation of a limited company however it does not have to add the word “limited” or “guarantee limited”in its name.
Revocation of license of Association Not For Profit?
License granted to Association Not For Profit may be revoked anytime in writing by commission:
- If management has failed to comply with terms and conditions subject to which a license is granted, or
- If the affairs of the company are against public interest, or
- If the company has failed to file with the registrar its financial statements or annual returns for 2 consecutive years, or
- If the company acts against the law or national interest of Pakistan, or
- Number of members is reduced below 3, or
- If:
a) company has conducted unlawful or fraudulent activities, or
b) it’s management has failed to maintain proper account or commit fraud, or
c) It’s management is involved in terrorist financing or money laundering, or
d) management refuses to act according to requirements of the Memorandum or Article or Companies Act, or Directions of Registrar and Commission, or
e) Company is not carrying on its business or is not in Operation for one year, or - It is just and equitable to revoke license.
However, before revocation, Commission shall:
- Give written notice to company of it’s intention to do so, and
- Provide an Opportunity of being heard.
Effects of revocation of license of ANFP
Or
Requirements to be completed by company on revocation.
If license of the association is revoked by commission:
- Company shall stop all of his operation except recovery of amounts receivable, if any.
- Company shall not ask or receive donations from any source.
- Within 90 days from revocation of license (or such extended period as may be allowed by the Commission), all the assets of the company shall be transferred to another company (after payment of liabilities) which is registered as association not for profit, preferably with similar objects.
However, company can retain reasonable expenses for voluntary winding up of company or making application to registrar for removing its name from his records.
Report to registrar after revocation of license
After compliance with the requirements to be completed by company on revocation, company shall file a report to registrar within 15 days which shall include specified information and documents.
Proceedings for winding up
Within 30 days of acceptance of the report by registrar, board of directors shall start proceedings for voluntary winding up of company or making application to registrar for removing its name from his records.
Appointment of administrator in case of the management of ANFP doesn’t start the proceedings of winding up
If company fails to meet with the requirements to be completed on revocation by company, report to registrar, and proceedings for winding up within the specified or extended period (if allowed), commission may:
- Appoint an administrator to manage affairs of the company and,
- initiate necessary proceedings for winding up of a company.
The restrictions on members and officers of the association not for profit.
If due to revocation of license net assets of the company are transferred to another company, members and officers (or their family members) of the first company, whose license is revoked, shall not hold any office in the later company, in which the assets are transferred, for 5 years from the date of transfer of assets.
In how many years, the license of Association Not For Profit is revoked, if the financial statements and annual returns are not submitted to the registrar?
2 years
The license of Association Not For Profit is revoked, if the number of members are below
3
After revocation of license the association not for profit needs to transfer its assets to another association not for profit, preferably with the similar objects, in how many days ?
Within 90 days from revocation of license ( or such extended period as may be allowed by commission)
After compliance with the requirements for revocation of license, the association not for profit needs to submit a report to registrar within how many days?
Within 15 days which shall include specified information and documents.
In how many days the BODs of ANFP shall starts proceedings for voluntary winding up, or making application to registrar for removing its name from his records?
Within 30 days of acceptance of the report by registrar
If ANFP fails to meet with the requirements for revocation of license or report to registrar or proceedings for winding up, which authority?, hire which designated officer?, for continue the proceedings of winding up?
The Commission shall hire the administrator to manage the affairs of ANFP and initiate the necessary proceedings for winding up of ANFP.
