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 the draft 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) (3) They shall come into force at once. These regulations shall apply to,(a) (b) all existing companies licensed under section 42 of the Ordinance; and 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 ,1

(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 associations capable of being formed as a company with limited liability seeking license under section 42 of the Ordinance,;

(ii)

(b) (c)

Board means the board of directors of the association; 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); "Connected Person" includes,(i) (ii) (iii) (iv) a member of the association; a person who has donated any movable or immovable property to the Association; the promoters, directors, officers, agents or employees of the association; spouse, lineal ascendants or decedents, relatives, partner, employee or nominee of any person falling within any of sub-clauses (i) to (iii); any legal person in which any person falling within any of sub-clauses (i) to (iv) has an interest; or associated companies and associated undertakings of the association;

(d)

(v) (vi)

(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; Form means the form appended to these Regulations; Ordinance means the Companies Ordinance, 1984 (XLVII of 1984); "Promoter" means a person named as a subscriber to the Memorandum and Articles of Association of the Association and

(f) (g) (h)

members of the Association which has applied for the grant of a licence under section 42; (i) (j) (k) (l) Regulations means the Associations Not For Profit (Licensing and Corporate Governance) Regulations, 2013; Schedule means the schedule appended to these Regulations; "Section" means the section of the Ordinance; and 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 is repugnant 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 application and 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.

(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 applies for 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) (b) an advocate entitled to appear in High Court or Supreme Court in Pakistan; or a member of the Institute of Chartered Accountants of Pakistan (ICAP) or the Institute of Cost and Management Accountants of Pakistan (ICMAP); or a practicing Secretary who is member of a recognized institute of Secretaries in Pakistan; or 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 to disciplinary action; or A person named as subscriber, director or officer in the articles of a proposed association or a responsible officer of an Association.

(c) (d)

(e)

(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;

(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 to be 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.

(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 the Ordinance 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; 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); 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; 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; no change in the memorandum and articles of association shall be made except with the prior approval of the Commission; 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; the company shall not itself set up or otherwise engage in industrial and commercial activities or in any manner function as a trade organization; the company shall not exploit or offend the religious susceptibilities of the people;

(b)

(c)

(d)

(e) (f)

(g)

(h)

(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; the company shall state with its name, the phrase A company set up under section 42 of the Companies Ordinance, 1984, in all its letterheads, documents, signboards, and other modes of communication; 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; the company shall not appeal, solicit, receive or accept donation from foreign sources except with the prior permission, clearance or approval from the relevant public authorities as may be required under any relevant statutory regulations and laws; 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; 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; the company shall close its accounts on 30th of June each year; the company shall make no loan to or investment with, whatsoever, its connected persons; the company shall not undertake any trading activities and shall conform to relevant statutory regulations and laws; 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; the company shall comply with any other condition(s) as may be imposed by the Commission.

(j)

(k)

(l)

(m)

(n)

(o) (p) (q) (r)

(s)

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 shall make 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 and diversity 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 nonexecutive, 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.

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 businesses managed or controlled by them within the last three years preceding his appointment as director, He has been an employee of the association or any of its subsidiaries within the last three years; and 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; 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:

(ii) (iii)

(iv)

(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 supersede any 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; 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 9

(ii)

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) (iv) adequate systems and controls are in place for identification and redress of grievances arising from unethical practices. 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) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) governance, risk management and compliance issues; human resource management including preparation of a succession plan; procurement of goods and services; write-off of bad/doubtful debts, advances and receivables; capital expenditure, planning and control; investments and disinvestment of funds; borrowing of moneys; determination and delegation of financial powers; transactions or contracts with connected persons; health, safety and environment; and 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) (vi) a system of sound internal control is established, which is effectively implemented and maintained at all levels within the association; 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; the decisions on the following material transactions or significant matters are documented by a resolution passed at a meeting of the board: (a) (b) investment and disinvestment of funds where the maturity period of such investments is six months or more; determination of the nature of loans and advances made by the association and fixing a monetary limit thereof. 10

(vii)

(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 name called, 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 11

(b) (c) (d)

(e) (f) (g) (h) (i)

(j) (k) (l) (m) (n)

(o)

(p)

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; annual operations plan, cash flow projections, forecasts and strategic plan; budgets including capital, manpower and overhead budgets, along with variance analyses; analysis of utilization of the funds received from the donors for specific purposes in accordance with the terms of agreement entered into with them; matters recommended and/or reported by the committees of the board; internal audit reports, including cases of fraud, bribery, corruption, or irregularities of a material nature; management letter issued by the external auditors; details of joint venture or collaboration agreements or agreements with donors, donees, partners in projects, stakeholders, etc.; 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; status and implications of any law suit or proceedings of material nature, filed by or against the association; any show cause, demand or prosecution notice received from revenue or regulatory authorities; failure to recover material amounts of loans, advances, and deposits made by the association; any significant accidents, dangerous occurrences and instances having impact on the projects undertaken by the association; 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; 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 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. 12

(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 and connected person transactions that were made on the terms equivalent to those that prevail in arms length transaction, only if such 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) (ii) (iii) (iv) (v)

Name of related party or connected person; Nature of relationship with related party or connected person; Nature of transaction; Amount of transaction; and 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 chief financial officer, a whole-time company secretary and chief internal auditor. Provided that a Small-Sized Association may not be required to appoint a wholetime company secretary and the CFO can be entrusted with the same position. (2) The appointment, remuneration and terms and conditions of employment of the 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 three years 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 13

(b)

has a postgraduate degree in finance from a recognized university or equivalent.

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 above qualification 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) (b) (c) (d) a member of a recognized body of professional accountants; or a Certified Internal Auditor; or a Certified Fraud Examiner; or 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) (b) a copy of annual audited accounts, and 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 the company, present its state of affairs fairly, the result of its operations and its cash flows; Proper books of account of the company have been maintained;

(ii)

14

(iii)

Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment; International Financial Reporting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and any departures therefrom have been adequately disclosed and explained; The system of internal control is sound in design and has been effectively implemented and monitored; and There are no significant doubts upon the companys ability to continue as a going concern:

(iv)

(v) (vi)

Provided that where necessary, the following information shall also be annexed to the Directors Reports of the associations: (a) (b) If the association is not considered to be a going concern, the fact along with the reasons shall be disclosed; Significant deviations from last year in operating results of the association shall be highlighted and reasons thereof shall be explained; Key operating and financial data of last six years shall be summarized; 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; Significant plans and decisions, such as expansion or discontinuance of operations, shall be outlined along with future prospects, risks and uncertainties surrounding the association; 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 to annex such a statement with the directors report to the members. (g) (h) The number of board and committees meetings held during the year and attendance by each director shall be disclosed; and All business transactions with the association, carried out by its director, executive and their spouse and minor child shall also be disclosed. 15

(c) (d)

(e)

(f)

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; 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; 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 register of object related projects showing all revenues received and generated for a particular object and expenditures incurred for each of such object;

(b)

(c)

(d)

(3) The association shall furnish to the Commission as well as the registrar concerned a certified copy of the associations certificate from the NPO Certification Agency 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. 16

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 a Procurement 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) (b) (c) recommending human resource management policies to the board; recommending to the board the selection, evaluation, compensation (including retirement benefits) and succession planning of the CEO; recommending to the board the selection, evaluation, compensation (including retirement benefits) of CFO, Company Secretary and Chief internal auditor; and consideration and approval on recommendations of CEO on such matters for key management positions who report directly to CEO or COO.

(d)

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 are discussed. 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. 17

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 Committee carry 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) following: The terms of reference of the Audit Committee shall also include the (a) (b) determination of appropriate measures to safeguard the associations assets; review of annual financial statements of the association, prior to their approval by the Board, focusing on: (i) (ii) (iii) (iv) (v) (vi) (vii) (c) major judgmental areas; significant adjustments resulting from the audit; the going concern assumption; any changes in accounting policies and practices; compliance with applicable accounting standards and guidelines; compliance with statutory and regulatory requirements; and significant related party and connected person transactions.

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); review of management letter issued by external auditors and managements response thereto; ensuring coordination between the internal and external auditors of the association; 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; 18

(d) (e) (f)

(g)

consideration of major findings of internal investigations of activities characterized by fraud, corruption and abuse of power and management's response thereto; ascertaining that the internal control systems including financial and operational controls, accounting systems for timely and appropriate recording of purchases and sales, receipts and payments, assets and liabilities and the reporting structure are adequate and effective; review of the associations statement on internal control systems prior to endorsement by the Board and internal audit reports; remitting any matter to the external auditors or to any other external body in consultation with the CEO; determination of compliance with relevant statutory requirements; monitoring compliance with the best practices of corporate governance and identification of significant violations thereof; and consideration of any other issue or matter as may be assigned by the Board.

(h)

(i) (j) (k) (l) (m)

(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 the proceedings 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 directors 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 19

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 of the 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 20

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 its behalf 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.

21

Form-N1 [See regulation 4(5)] To, Securities & Exchange Commission of Pakistan .. Subject: APPLICATION FOR GRANT OF LICENCE UNDER SECTION 42 OF THE COMPANIES ORDINANCE, 1984

1. Name

Proposed Name and Object(s) of the association

Object(s)

2.

Payment details

Name of Bank Branch Fee Paid Date of Receipt Receipt No.

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 Registration authority State whether company, society, trust, etc.

4.

Particulars of subscribers/directors: CNIC No. or passport No. (in case of foreign national) (b) Fathers/ Husbands Name Usual residential address Nationality

Name in Full

(a)

(c)

(d)

(e)

22

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 the proposed 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 8. Date

Year

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 annexureIII; 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 that the 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 (Licensing and Corporate Governance) Regulations, 2013, as specified in annexure-V; f. Power of Attorney (Authority Letter) on Stamp Paper of appropriate value made by all the subscribers 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 to collect licence as specified in annexure-VI. g. Printed copy of Memorandum and Articles of Association following the standard format provided as Form-2 of the Regulations; h. Copies CNICs/passport (in case of foreign national) i. Copy of availability 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 in case the application is submitted through eService.) k. If the association is already in existence, the following is also annexed with regard to the existing entity -

i. a copy each of the audited balance-sheet, income and expenditure account and the 23

ii.

iii. iv. v. vi.

annual report on the working of the association for the financial year immediately preceding the date of the application; Copy of resolution passed by the existing entity regarding dissolution and taking over the 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 alter its memorandum and articles of association to adopt to the licensing requirements shall be annexed instead); Statement of reasons for conversion of status of the existing entity into the proposed company; Attested copy of Certificate of Registration (if it has any legal status); Attested copy of list of members of board of directors/governing body of the existing entity. Attested copy of Memorandum and Articles of Association, Charter, or Statute by which it was registered.

24

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 such office 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]

25

Annexure-II STATEMENT OF ESTIMATED FUTURE ANNUAL INCOME AND EXPENDITURE

INCOME Donations and Grants - Local Donations and Grants - Foreign Members donations Start-up Members donations Other Other sources, specify, if any Previous years surplus(deficit) B/F Total funds available for the year EXPENDITURE Registration and Legal fee Expenditures on object related projects: Project 1 (specify) Project 2 (specify), if any Project 3 (specify), if any, etc. Administrative and operational expenditures Total Expenditures Income over Expenditures: Surplus/(Deficit), if any Notes to the above estimates are attached.

Notes 1 2

Year 1

Year 2

Year 3

3 4

Year 1

Year 2

Year 3

5 6 7 8

Signature ______________________ Name _________________________ [To be signed by the person presenting documents]

26

Notes to the statement of estimates

Note 1: Donations and Grants - Local Year 1 Source 1 (specify) Source 1 (specify), if any Source 1 (specify), if any Total 1.2 1.1 0,000,000 0,000,000 0,000,000 0,000,000 Year 2 0,000,000 0,000,000 0 0000,000 Year 3 0,000,000 0,000,000 0 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 Grants Foreign Year 1 Source 1 (specify) Source 1 (specify), if any Total 2.1 0,000,000 0,000,000 0,000,000 Year 2 0,000,000 0,000,000 0000,000 Year 3 0,000,000 0,000,000 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]

27

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]

28

Annexure-IV AFFIDAVIT / UNDERTAKING

I, Mr. _________________________ son of __________________, CNIC number ______________________ resident of _______________________ and subscriber of ___________________________________ [the proposed company] do hereby, solemnly affirm and testify that the contents of the application under section 42 of the Companies Ordinance, 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 the proposed company; and (b) I shall contribute a reasonable amount but not less than Rs.______________/- as startup 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 overdue loans or installments outstanding towards banks or other financial institutions; (e) neither I nor companies in which I am a director or major shareholder have defaulted in paying taxes as on the date of application; (f) I have not been a sponsor, director or chief executive of a defaulting cooperative finance society or finance company; (g) I have never been convicted of fraud or breach of trust or of an offence involving moral turpitude or removed from services for misconduct; (h) I have neither been adjudged an insolvent nor have defaulted in making payments to my creditors; (i) the funds raised shall be spent for objects of the proposed company and for other lawful purposes; (j) I am fully aware of the affairs of the proposed company particularly the application under section 42 of the Companies Ordinance, 1984; and (k) Whatsoever stated in the application and accompanied documents is true and nothing 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.

29

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 / a Chartered Accountant / a Cost and Management Accountant practicing in Pakistan and am engaged in the formation of the proposed association, namely, /] am a person named in the Articles 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 am satisfied that the same are drawn up in conformity with the provisions of the Ordinance and fulfill 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 Address Date: . Place:

Witness to the signature: Signature: Full Name, Fathers/ Husbands Name (in Block Letters) CNIC Number, Occupation and Full Address

Attested by an Oath Commissioner [under his Stamp]

Note: To be made on stamp paper of requisite amount and duly attested by an Oath Commissioner.

30

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, to present 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 Notary Public [under his Stamp]

31

Form-N2 [See Regulation 4(5)]

A company set up under 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 .... . In order to achieve its object, the Company shall exercise the following powers: (1) To appeal, solicit or accept contributions, donations, grants and gifts, in cash or in kind, from lawful sources and to apply the same or income thereof for the objects of the Company: Provide that in the event of revocation of licence under section 42, the company shall not appeal, solicit or accept contributions, donations, grants and gifts, in cash or in kind, from any source other than its members. To open and operate bank accounts in the name of the Company and to draw, make, accept, endorse, execute and issue promissory notes, bills, cheques and other instruments. To acquire, alter, improve, charge, take on lease, exchange, hire, sell, let or otherwise dispose of any movable or immovable property and any rights and privileges whatsoever for any of the objects or purposes specified herein above. Provided that the Company shall not undertake the business of real estate or housing schemes. To borrow or raise money, with or without security, required for the purposes of the company upon such terms and in such manner as may be determined by the company for the promotion of its objects.

IV.

(2)

(3)

(4)

32

(5)

To mortgage the assets of the company and / or render guarantee for the performance of any contract made, discharge of any obligation incurred or repayment of any moneys borrowed by the Company. 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 for the use and purposes of the company. To nominate delegates and advisors to represent the Company at conferences, government bodies and other gatherings. To co-operate with other charitable trusts, societies, associations, institutions or companies formed for all or any of these objects and statutory authorities operating for similar purposes and to exchange information and advice with them. To pay out of the funds of the company the costs, charges and expenses of and incidental to the formation and registration of the Company. To invest the surplus moneys of the company not immediately required in such a manner as may from time to time be determined by the company. To create, establish, administer and manage funds including endowment fund conducive for the promotion of the objects of the company. To enter into agreements, contracts and arrangements with organizations, institutions, bodies and individuals for the purpose of carrying out the functions and activities of the Company. To take such actions as are considered necessary to raise the status or to promote the efficiency of the company. 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 to any of the objects of or to the work done by the Company, subject to the permission, if required of the relevant authorities To do all other such lawful acts and things as are incidental or conducive to the attainment of the above objects or any one of them.

(6)

(7)

(8)

(9)

(10)

(11)

(12)

(13)

(14)

(15)

V.

The Company shall achieve the above said objects subject to the following conditions:(1) The company shall be formed as a public company limited by guarantee and not having a share capital. 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.

(2)

33

(3)

A subscriber or director who has quit 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. No change in the Memorandum and Articles of Association shall be made except with the prior approval of the Securities and Exchange Commission of Pakistan. 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. The company shall not itself set up or otherwise engage in industrial and commercial activities or in any manner function as a trade organization. The company shall not exploit or offend the religious susceptibilities of the people. The subscribers to the Memorandum and Articles of Association of the Company shall continue to be the members of the Company unless allowed by the Commission on application to quit as members; The company shall state with its name, the phrase A company set up under section 42 of the Companies Ordinance, 1984, in all its letterheads, documents, sign boards, and other modes of communication. 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. The company shall not appeal, solicit, receive or accept funds, grants, contributions, donations or gifts, in cash or in kind, from foreign sources except with the prior permission, clearance or approval from the relevant public authorities as may be required under any relevant statutory regulations and laws. 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; The company, on having multiple objects, shall keep separate books of account and record of all the funds, grants, contributions, donations, gifts whether in cash or in kind received with respect to each object and all such funds, grants, contributions, donations, gifts, received with respect to a particular object shall be applied solely for the promotion of that particular object and no other object, if any, of the company; The company shall close its accounts on 30th of June each year;

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

(12)

(13)

(14)

34

(15)

The company shall make no loan to or investment with, whatsoever, its connected persons; The company shall not undertake any trading activities and shall conform to relevant statutory regulations and laws; The company shall comply with the code of corporate governance as prescribed by the Commission for associations not for profit; 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; and The company shall comply with any other condition(s) as may be imposed by the Commission from time to time.

(16)

(17)

(18)

(19)

VI.

The territories to which the object of the company shall extend are declared to include whole of Pakistan. The liability of the members is limited. Every member of the company undertakes that he shall contribute to the assets of the Company in the event of its being wound up while he is a member or within one year afterwards, for payment of the debts or liabilities of the Company contracted before he ceases to be a member and the costs, charges and expenses of winding up and for adjustment of the rights of the contributories among themselves such amount as may be required but not exceeding Rs.100,000/(Rupees One Hundred Thousand Only). In the case of winding up or dissolution of the Company, any surplus assets or property, after the satisfaction of all debts and liabilities, shall not be paid or disbursed among the members, but shall be given or transferred to some other company established under section 42 of the Companies Ordinance, 1984, having similar or identical objects to those of the Company to be decided by the members of the Company in their general meeting by a special resolution, and with the approval of Commissioner of Income Tax under section 61 read with section 2(36) of the Income Tax Ordinance, 2001, under intimation to the Securities and Exchange Commission of Pakistan, within three months.

VII. VIII.

IX.

35

We, the several, persons whose names and addresses are subscribed below are desirous 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)
AB nnnnnnnnnnnn-n

Father's/ Husband 's Name in full

Nationality(ies ) with any former Nationality

Occupatio n

Residentia l Address in full

Signature

1.

AB

GH

Pakistani

Resident Director, Household Appliances Ltd., Lahore Advocate

14-A, Street No.2, Sadaf Colony, Quetta. -do-

2.

CD

nnnnnnnnnnnn-n

IJ

Pakistani

3. ABC Ltd

Company

through

House No 176, Street No.204, F10/1, Islamabad

EF.

nnnnnnnnnnnn-n

KL

Pakistani

Director, ABC Ltd

14-A, Street No.2, Sadaf Colony, 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

36

A company set up under 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 of Pakistan. (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 to section 147 of the Ordinance. (m) THE REGISTRAR means the Registrar of Companies. (n) THE REGULATIONS means the Associations Not For Profit (Licensing and Corporate Governance) Regulations, 2013. (o) THE SEAL means the Common Seal of the company. (p) SECRETARY means the Company Secretary of the company.

37

(q) YEAR used in the context of financial matters shall mean financial year of the company. (r) Expressions referring to writing shall be construed as including references to typewriting, printing, lithography, photography and other modes of representing or reproducing words in visible form. (s) Words importing the singular number include the plural number and vice versa and words importing the masculine gender include the feminine gender. (t) Unless the context otherwise requires words or expressions contained in these Articles shall be of the same meaning as in the Ordinance or any statutory modification thereof in force at the date at which these Articles become binding on 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 be given) but the minimum number of members shall not be, at any time, less than three (3). However, the directors may, from time to time, whenever the company or the business of the company requires, increase the number of members. The company in general meeting may from time to time lay down the qualifications and conditions subject to which any person or class of persons shall be admitted to membership of the company. The rights and privileges of a member shall not be transferable and shall cease on his death or otherwise ceasing to be a member. The subscribers to the memorandum and such other persons as the directors shall admit to membership shall be members of the company. 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 be seconded by an existing member whereupon the board of directors shall decide the matter of his admission as member or otherwise within three months of making of such application. No minor or lunatic shall be admitted as a member of the company. Every person, upon applying for admission to membership, shall sign an undertaking 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. The Board shall subject to the Articles, accept or reject any application for admission to membership. The Boards decision shall be final and it shall not be liable to give any reasons thereof.

3.

4. 5. 6.

8.

9.

38

CESSATION / EXPULSION FROM MEMBERSHIP 10. A member renders himself liable to expulsion or suspension by the Board if: (a) (b) (c) (d) (e) he refuses or neglects to give effect to any decision of the Board; or he infringes any of the regulations of the Articles; or 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 he is held by the Committee of the company to have been guilty of any act discreditable to a member of the company; or he is acting or is threatening to act in a manner prejudicial to the interest or functioning 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 and after giving an opportunity of hearing, annul or modify the decision of the board with regard to expulsion of the member by resolution supported by two-thirds majority. The person expelled shall be reinstated as a member from the date of the resolution of the general meeting annulling the decision of the Board. Termination of membership shall occur automatically: (a) (b) in the event of the death of a member; and in the event a member fails to pay any amount due by him to the company within three (3) months after such obligation has become due. GENERAL MEETINGS AND PROCEEDINGS

12.

13.

ANNUAL GENERAL MEETING: A general meeting to be called annual general meeting, shall be held, in accordance with the provisions of section 158, within eighteen (18) months from the date of incorporation of the company and thereafter once at least in every calendar year within a period of four (4) months following the close of its financial year and not more than fifteen (15) months after the holding of its preceding annual general 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 general meeting 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), as is 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 is served or deemed to be served, but inclusive of the day for which notice is given)

39

specifying the place, the day and the hour of meeting and, in case of special business, the general nature of that business, shall be given in the manner provided by the Ordinance for the general meeting, to such persons as are, under the Ordinance or the Articles of the company, entitled to receive such notices from the company but the accidental omission to give notice to or the non-receipt of notice 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 is transacted at an annual general meeting with the exception of the consideration of the accounts, balance sheet and the reports of the director and auditors, the election of directors, the appointment of and the fixing of remuneration of the auditors 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 voting power present in person but being not less than two (2) members, is present at that 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 not present, the meeting, if called upon the requisition of members, shall be dissolved and in any other case, it shall stand adjourned to the same day in the next week at the same time and place and if at the adjourned meeting a quorum is not present within 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 general meeting of the company, but if he is not present within fifteen minutes after the time appointed for the meeting, or is unwilling to act as chairman, any of the directors present may be elected to be the chairman and if none of the directors present is willing to act as chairman, the members present shall choose one of their 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 but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting is adjourned for thirty (30) days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.

40

22.

VOTING: At any general meeting a resolution put to the vote to the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded. Unless a poll is so demanded, a declaration by the chairman 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 the book 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 or against that resolution.

23.

DEMAND FOR POLL: A poll may be demanded in accordance with the provisions of section 167 of the Ordinance.

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 to be 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 shall be taken at once.

26.

CASTING VOTE: In the case of an equality of votes, whether on a show of hands or on a poll, the chairman 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 and upon 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 meeting or adjourned meeting at which the vote objected to is given and tendered, and every 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, whose decision shall be final and conclusive. MANAGEMENT AND ADMINISTRATION

29. 30.

There shall be, for the overall management of the companys affairs, a Board of directors, which will be elected from amongst the members. One term of the Board of directors would be for three years.

41

31. 32.

No person shall be appointed as a director if he is ineligible to hold office of director of a company under section 187 of the Ordinance. No member / person shall hold more than one office in the company, such as those of Chief Executive / director or company secretary. FIRST DIRECTORS: The subscribers to the Memorandum of Association shall be the first directors of the company whose names are given below and they shall hold office until the election of directors in the first Annual General Meeting, subject to the provisions of sections 174 and 176 of the Ordinance. i. ------------------------ii. ------------------------iii. -------------------------

33.

34.

NUMBER OF DIRECTORS: The number of directors shall not be less than three (3) and not more than ( ). The company may, however, determine through Special Resolution, such other number not being less than three (3), before the election of the directors. A retiring director shall be eligible for re-election. The board of directors of the company shall always have majority of its directors as independent directors.

35.

PROCEDURE FOR ELECTION OF DIRECTORS: (i) The directors of the company shall be elected in accordance with provisions of sub sections (1) to (4) of section 178 of the Ordinance, in the following manner: (a) (b) (c) The directors of the company shall be elected by the members of the company in general meeting; A member shall have such number of votes as is equal to number of directors to be elected; A member may give all his votes to a single candidate or divide them between more than one of the candidates in such a manner as he may choose; and

(d)

(ii)

The candidate who gets the highest number of votes shall be declared elected as director and then the candidate who gets the next highest number of votes shall be so declared and so on until the total number of directors to be elected has been so elected. If the number of persons who offer themselves to be elected is not more than the number of directors fixed by the directors under sub-section (1) of section 178, all persons who offered themselves shall be deemed to have been elected as directors.

36.

CASUAL VACANCY AND ALTERNATE OR SUBSTITUTE DIRECTORS: (a) Any casual vacancy occurring among the directors shall be filled up by the directors within ninety days of the vacancy and the person so appointed

42

shall hold office for the remainder of the term of director in whose place he is appointed. (b) An existing director may, with the approval of the board of directors, appoint an alternate director to act for him during his absence from Pakistan of not less than three months. The alternate director so appointed shall ipso facto vacate office if and when the director appointing him returns to Pakistan.

37.

REMOVAL OF DIRECTOR: The company may remove a director through a resolution passed in a general meeting of members with 3/4th majority of total vote rights.

38.

CHAIRMAN OF THE BOARD: The directors may elect one of their members as the Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board but, if at any meeting the chairman is not present within ten minutes after the time appointed for holding the same or is unwilling to act as chairman, the directors present may choose one of their member to be chairman of the meeting. DUTIES AND POWERS OF THE BOARD

39.

The Board shall conduct and manage all the business affairs of the company, exercise all the powers, authorities and discretion of the company, obtain or oppose the application by others for all concessions, grants, charters and legislative acts and authorization from any government or authority, enter into such contracts and do all such other things as may be necessary for carrying on the business of the company, except only such of them as under the statutes and Articles are expressly directed to be exercised by general meetings and (without in any way prejudicing or limiting the extent of such general powers) shall have the following special powers and duties: (a) To present to the general meeting of the company any matters which the directors feel are material to the company, its objects or interests or affecting the interests of members and make suitable recommendations regarding such matters. To regulate, through articles, the admission of members. To appoint, remove or suspend the legal advisors, bankers, or other officers on such terms and conditions as they shall think fit and as may be agreed upon. To appoint any qualified person as a first auditor(s) subject to provisions of the Ordinance; To determine the remuneration, terms and conditions and powers of such appointees and from time to time, revoke such appointments and name another person of similar status to such office except for the auditor in which case the relevant provisions of the Ordinance shall be followed.

(b) (c)

(d)

(e)

43

(f)

To delegate, from time to time, to any such appointee all or any of the powers and authority of the Board and to reconstitute, restrict or vary such delegations. To agree upon and pay any expenses in connection with the companys objects and undertakings and pay all the expenses incidental to the formation and regulation of the company. To constitute from time to time committee(s) from among themselves or coopt other persons for the purpose and delegate to them such functions and powers as the Board may see fit to carry out the objects of the company. Subject to the provisions of section 196 of the Ordinance, the directors may exercise all the powers of the company to borrow and mortgage or charge its undertaking, property and assets (both present and future) or issue securities, whether outright security for any debt, liability or obligation of the company. PROCEEDINGS OF THE BOARD

(g)

(h)

(i)

40.

The Board shall meet at least once every quarter of the year, subject thereto meetings of the Board shall be held at such time as the directors shall think fit. All meetings of the Board shall be held at the registered office of the Company or at such other place as the Board shall from time to time determine. The meetings of the Board shall be called by the chairman on his own accord or at the request of the Chief Executive (or any three directors) by giving at least seven (7) days notice to the members of the Board. At least twenty five percent of the total number of directors or two (2) directors whichever is higher, for the time being of the company, shall constitute a quorum. Note : If the number of directors as mentioned in clause 33 are more than three, then the following standard clause is proposed in place of above which will fulfill the requirements of income tax rules for tax exemption.

41.

At least one-third (1/3rd) of the total number of directors or four (4) directors whichever is higher, for the time being of the company, shall constitute a quorum. 42. Except as otherwise provided by these Articles, every question at meetings of the Board shall be determined by a majority of votes of the directors present, each director having one vote. In case of an equality of votes or tie, the chairman shall have a casting vote in addition to his original vote as a director. Minutes of the proceedings of every meeting of the Board and a record of attendance of the directors thereat shall be recorded by the Secretary in a book kept for that purpose. These shall be signed by the chairman of the meeting at which they are read. MEETING THROUGH TELE OR VIDEO CONFERENCE: The directors may hold their meetings through tele/video conferencing in emergent situations where it is not possible for them to be physically present at the venue of

43.

44.

44

the meeting, provided that the minutes of such meeting are approved and signed subsequently by all directors who participated in such meeting, requirements of the requisite quorum and other legal formalities relating to holding of such meetings have been observed and tele/video recording of the proceedings of the meeting are kept for the purpose of the record. 45. RESOLUTION THROUGH CIRCULATION A resolution in writing signed by all directors for the time being entitled to receive notice of the meeting of directors or affirmed by them in writing shall be as valid and effectual as if it had been passed at a meeting of the directors duly convened and held. 46. CHIEF EXECUTIVE: The directors may appoint a person to be the Chief Executive of the company and vest in him such powers and functions as they deem fit in relation to the management and administration of the affairs of the company subject to their general supervision and control. The Chief Executive, if not already a director, shall be deemed to be a director of the company and be entitled to all the rights and privileges and subject to all the liabilities of that office. 47. QUALIFICATION OF THE CHIEF EXECUTIVE: No person who is not eligible to become a director of the company under section 187 of the Ordinance, shall be appointed or continue as the Chief Executive of the company. 48. REMOVAL OF CHIEF EXECUTIVE: The directors by passing resolution by not less than three-fourths of the total number of directors for the time being or the company may by a Special Resolution passed in a general meeting remove a Chief Executive before the expiry of his term in office. 49. MINUTE BOOKS: The directors shall cause minutes to be duly entered in a book or books provided for the purpose of: (a) all resolutions and proceedings of General Meeting(s) and the meeting(s) of directors and Committee(s) of directors, and every member present at any General Meeting and every director present at any meeting of directors or Committee of directors shall put his signature in a book to be kept for that purpose; recording the names of the persons present at each meeting of the directors and of any committee of the directors, and the general meeting; and all orders made by the directors and Committee(s) of directors.

(b)

(c)

45

SECRETARY 50. The Secretary shall be appointed (or removed) by the Chairman of the company with the approval of the Board. The Secretary shall be responsible for all secretarial functions and shall ensure compliance with respect to requirements of the Ordinance concerning the meetings and record of proceedings of the Board, committees and the general meeting of members, review the applications for admission to membership and the recommendations accompanying the same to ensure that they are in the form prescribed, ensure that all notices required by these Articles or under the Ordinance are duly sent and that all returns required under the Ordinance are duly filed with concerned Company Registration Office. COMMITTEES: The directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit and they may from time to time revoke such delegation. Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may from time to time be imposed on it by the directors. 53. CHAIRMAN OF COMMITTEE MEETINGS: A committee may elect a chairman of its meetings, but, if no such chairman is elected, or if at any meeting the chairman is not present within ten (10) minutes after the time appointed for holding the same or is unwilling to act as chairman, the members present may choose one of them to be the chairman of the meeting. 54. PROCEEDINGS OF COMMITTEE MEMBERS: A committee may meet and adjourn as it thinks proper. Questions arising at any meeting shall be determined by a majority of votes of the members present. In case of an equality of votes, the chairman shall have and exercise a second or casting vote. 55. VALIDITY OF DIRECTORS ACTS: All acts done by any meeting of the directors or of a committee of directors, or by any person acting as a director, shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of such directors or persons acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a director. 56. THE SEAL: The directors shall provide for the safe custody of the seal, which shall not be affixed to any instrument except by the authority of a resolution of the Board or by a committee of directors authorized in that behalf by the directors, and two directors or one director and the Secretary of the company shall sign every instrument to which the seal shall be affixed.

51.

52.

46

57.

DISPUTE RESOLUTION: In the event that a dispute, claim or controversy arises between the company, its management or its members or between the members inter-se, or the directors inter-se, all steps shall be taken to settle the dispute and resolve the issue through mediation by an accredited mediator before taking recourse to formal dispute resolution such as arbitration or litigation. FINANCES

58.

The funds of the Company shall be applied in defraying the expenses and shall be applicable in or towards the acquisition by purchase, lease or otherwise and furnishing and maintenance of suitable premises and assets for the use of the Company and shall be subject to the general control and direction of the Board. No person, except persons duly authorized by the Board and acting within the limits of the authority as conferred, shall have authority to sign any cheque or to enter into any contract so as thereby to impose any liability on the Company or to pledge the assets of the Company. ACCOUNTS

59.

60.

BOOKS OF ACCOUNT: The directors shall cause to be kept proper books of account as required under section 230 of the Ordinance so that such books of account shall be kept at the registered office or at such other place as the directors think fit as provided in the said section 230 and shall be open to inspection by the directors during business hours.

61.

INSPECTION BY MEMBERS: The directors shall from time to time determine the time and places for inspection of the accounts and books of the company by the members not being directors, and no member (not being a director) shall have any right to inspect any account and book or papers of the company except as conferred by law or authorized by the directors or by the company in general meeting.

62.

ANNUAL ACCOUNTS: The directors shall as required by section 233 of the Ordinance cause to be prepared and to be laid before the company in Annual General Meeting such Balance Sheet and Income and Expenditure Account and Cash Flow Statement duly audited and reports as are required under the Ordinance.

63.

COPY OF ACCOUNTS TO BE SENT TO MEMBERS: A copy of balance sheet and profit and loss account and the Cash flow statement alongwith the reports of directors and Auditors of the company shall, at least twenty-one (21) clear days before the holding of the General Meeting, be sent to all the members and the persons entitled to receive notices of general meetings, in

47

the manners in which notices are to be given as provided in section 50 of the Ordinance. 64. AUDIT: Auditors shall be appointed and their duties regulated in accordance with sections 252- 254 or 256-258 of the Ordinance. 65. NOTICE TO MEMBERS: Notice shall be given by the company to members and auditors of the company and other persons entitled to receive notice in accordance with section 50 of the Ordinance. 66. INDEMNITY: Every officer or agent for the time being of the company may be indemnified out of the assets of the company against any liability incurred by him in defending any proceedings, whether civil or criminal, arising out of his dealings in relation to the affairs of the company, except those brought by the company against him in which judgment is given in his favour or in which he is acquitted, or in connection with any application under section 488 in which relief is granted to him by the Court. 67. SECRECY: Every director, secretary, auditor, trustee, member of a committee, officer, servant, agent, accountant, or other person employed in the business of the Company shall observe strict secrecy representing all transactions of the Company, and the state of account with individuals and in matters relating thereto and shall not reveal any of the matters which may come to his knowledge in the discharge of his duties except when required so to do by the directors or the Company in general meeting or by a court of law, and except so far as may be necessary in order to comply with any of the provisions herein contained.

WINDING UP 68. In the case of winding up or dissolution of the Company, any surplus assets or property, after the satisfaction of all debts and liabilities, shall not be paid or disbursed among the members, but shall be given or transferred to some other company established under section 42 of the Companies Ordinance, 1984, having similar or identical objects to those of the Company to be decided by the members of the Company in their general meeting by a special resolution, and with the approval of Commissioner of Income Tax under section 61 read with section 2(36) of the Income Tax Ordinance, 2001, under intimation to the Securities and Exchange Commission of Pakistan, within three months.

69.

SUPPLEMENTARY PROVISIONS RELATING TO TAX: The company shall abide by and adhere to the following rules:

48

(i) (ii)

The company shall get its annual accounts audited from a firm of Chartered Accountants. The company shall, in the event of its dissolution, after meeting all liabilities, transfer all its assets to an Institution, fund, trust, society or organization, which is an approved non-profit organization, and intimation of such transfer will be given to Commissioner, Federal Board of Revenue, within three months of the dissolution. The company shall utilize its money, property or income or any part thereof, solely for promoting its objects. The company shall not pay or transfer any portion of its money, property or income, directly by way of dividend, bonus or profit, to any of its members(s) or the relative or relatives of member or members. The company shall maintain its banks accounts with a scheduled bank or in a post office or national saving organization, National Bank of Pakistan or national commercialized banks. The company shall regularly maintain its books of accounts in accordance with generally accepted accounting principles and permit their inspection to the interested members of the public, without any hindrance, at all reasonable times. Without prejudice to the powers conferred on the Commission under section 42 of the Companies Ordinance, 1984, the association shall not change its memorandum and articles of association without approval of Commissioner, Income Tax, if it has been approved by him as a non-profit organization. The company shall restrict the surpluses or monies validly set apart, excluding restricted funds, upto twenty five percent (25%) of the total income of the year. Provided that such surpluses or monies set apart are invested in Government Securities, a collective investment scheme authorized or registered under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003, mutual funds, a real estate investment trust approved and authorized under Real Estates Investment Trust Regulations, 2008 or scheduled banks.

(iii) (iv)

(v)

(vi)

(vii)

(viii)

49

We, the several, persons whose names and addresses are subscribed below are desirous of being formed into a Company in pursuance of these Articles of Association:Name and surname (present & former) in full (in Block Letters) CNIC No. (in case of foreigner, Passport No)
nnnnn-nnnnnnnAB n

Father's/ Husband's Name in full GH

Nationality(ies) with any former Nationality

Occupation

Residential Address in full

Signature

1. AB

Pakistani

Resident Director, Household Appliances Ltd., Lahore Advocate Company

14-A, Street No.2, Sadaf Colony, Quetta.

2. CD

nnnnn-nnnnnnnn

IJ

Pakistani

-doHouse No 176, Street No.204, F10/1, Islamabad

3. ABC Ltd

through

EF.

nnnnn-nnnnnnnn

KL

Pakistani

Director, ABC Ltd

14-A, Street No.2, Sadaf Colony, 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

50

Form-N3 (See regulation 5(2))

LICENCE
UNDER SECTION 42 OF THE COMPANIES ORDINANCE, 1984

Whereas it has been proved to the satisfaction of the Securities and Exchange Commission of Pakistan (the Commission) that an association to be named as -

_______________________________
capable of being formed as a public company under the Companies Ordinance, 1984, is being formed with the primary object ______________________________________________________________________ _________________________________________________________ and it intends to (a) apply its profits and income towards those objects and (b) prohibit the payment of any dividend or profit to its members. 2. Now, therefore, in pursuance of sub-section (1) of section 42 of the Companies

Ordinance, 1984, the Commission is pleased to grant this licence to the said Association and direct that it may be registered as a public company with limited liability and not having a share capital without addition of the words "(Guarantee) Limited" to its name. 3. 4. This licence is granted subject to the conditions as mentioned overleaf. Given under my hand at Islamabad this _______day of ___________, Two

Thousand and____________.

Commissioner

51

Form-N4 (See regulation 18(4)) XYZ ASSOCIATION STATEMENT OF SOURCE AND APPLICATION OF FUNDS FOR THE YEAR ENDED _________ PKR. SOURCE Notes 20X2 (Current Year) 0,000,000 1 2 3 0,000,000 0,000,000 0,000,000 0,000,000 4 5 6 7 0,000,000 0,000,000 0,000,000 0,000,000 0,000,000 20X1 (Previous Year) 0,000,000 0,000,000 0,000,000 0,000,000 0,000,000 0,000,000 0,000,000 0,000,000 0,000,000 0,000,000

Donation-Foreign: Source 1 (specify) Source 2 (specify) Source 3 (specify) etc. Donation-Local: Source 1 (specify) Source 2 (specify) Source 3 (specify) etc. Other, if any (specify) Total Donations (A) APPLICATION Project-wise Expenditure: Project 1 (specify) Project 2 (specify) Project 3 (specify) etc. Administrative and operational expenditures Capital expenditure Total Expenditure (B) Excess/(Shortfall) of Funds (A-B) 8 9 10 11 12

0,000,000 0,000,000 0,000,000 0,000,000 0,000,000 0,000,000 0,000,000 0,000,000

0,000,000 0,000,000 0,000,000 0,000,000 0,000,000 0,000,000 0,000,000 0,000,000

Note 1: There may be further descriptive disclosure to elaborate the item. Note 2: There may be further descriptive disclosure to elaborate the item. Notes 3, 4, 5, 6, 7, 8, etc., can be drawn on the above pattern.

52

Form-N5 (See regulation 20)

Secretarial Compliance Certificate Name of company

To Company Registration Office Securities and Exchange Commission of Pakistan I being the Secretary of [1] certify, to the best of my knowledge and belief, that I am qualified to be appointed as the Company Secretary of an association and that the secretarial and corporate compliance requirements of the Companies Ordinance, 1984, memorandum and articles of association of[1] .. and the Associations Not For Profit (Licensing and Corporate Governance) Regulations, 2013, have been duly complied with for the year ending .. *, and that nothing has been concealed or withheld in this regard. Date: Place: Signature (s) (Name (s) in block letters) CNIC number

* State exceptions in case of non-compliance. [1] Insert name of the company Note: The declaration need not be (a) signed before a magistrate or an officer competent to administer oaths; or (b) stamped as an affidavit

53

Form-N6 (See regulation 23)

Statement of Compliance with the Associations Not for Profit (Licensing & Corporate Governance) Regulations, 2013 Name of company Year ending. This statement is being presented to comply with the requirements of the Corporate Governance contained in regulation 10 to regulation 24 of the Associations Not For Profit (Licensing and Corporate Governance) Regulations, 2013 (the Regulations) for the purpose of establishing a framework of good governance, whereby an association is managed in compliance with the best practices of corporate governance. The association has applied the principles contained in Chapter III of the Regulations in the following manner: 1. The association has majority of its directors as non-executive directors and encourages directors representing donors and other stakeholders on its board of directors. At present the board includes: Category Independent Directors Non-executive Directors Directors representing donors Directors representing other stakeholders Executive Directors Names

2. The independent directors meet the criteria of independence under regulation 9(2)(a) of the Regulations. 3. All the resident directors of the association are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock exchange. 4. A casual vacancy occurring on the board on .. was filled up by the directors within .. days.

54

5. The association has prepared a Code of Conduct and has ensured that appropriate steps have been taken to disseminate it throughout the association along with its supporting policies and procedures. 6. The board has developed a vision/mission statement, overall corporate strategy and significant policies of the association. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained. 7. All the powers of the board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO and other executive directors, have been taken by the board/members. 8. The meetings of the board were presided over by the Chairman and, in his absence, by a director elected by the board for this purpose and the board met at least once every quarter in a year. Written notices of the board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. 9. The board arranged . orientation programs for its directors during the year.

10. The board has approved [1] appointment of CFO, Company Secretary and chief internal auditor, including their remuneration and terms and conditions of employment. 11. The directors report for this year has been prepared in compliance with the requirements of the Regulation and fully describes the salient matters required to be disclosed. 12. The financial statements of the company were duly endorsed by CEO and CFO before approval of the board. 13. The association has complied with all the corporate and financial reporting requirements of the CCG. 14. The board has formed an Audit Committee. It comprises . members, of whom are non-executive independent directors and the chairman of the committee is a/an . director. 15. The meetings of the audit committee were held at least once every quarter, including before and after completion of external audit of the association and as required by the Regulations. The terms of reference of the committee have been formed and advised to the committee for compliance. 16. The board has formed a Procurement Committee [2]. It comprises..members, of whomare non-executive independent directors and the chairman of the committee is a/an ...director. 55

17. The board has formed an HR and Remuneration Committee [2]. It comprises..members, of whomare non-executive directors and the chairman of the committee is a/an ...director. 18. The statutory auditors of the association have confirmed that they have been given a satisfactory rating under the quality control review program of the ICAP, that they or any of the partners of the firm, their spouses and minor children are neither member nor connected person with the association and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP. 19. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. 20. We confirm that all other material principles enshrined in the Regulations have been complied with [3] except for the following, toward which reasonable progress is being made by the company to seek compliance by the end of next accounting year.

Signature (s) (Name (s) in block letters) Chairman /CEO Note: Any exception to the above shall be adequately noted with reasons. _____________________ [1] in case of new appointments made after these Regulations have taken effect [2] Not applicable in case of Small-sized Associations [3] Delete if not applicable

56