BACKGROUND
Before the issuance of the Provincial Trust Act 2020, the Trusts in Pakistan used to be registered under the Trust Act 1882 (a federal law) through a very simple and straightforward process.
However, in 2020, the Federal powers for legislation of Trusts transferred to each of the provinces and consequently, every province and Islamabad Capital Territory introduced their own Trust Acts titled:
- Islamabad (ICT) Trust Act 2020 &
- Punjab Trust Acts 2020,
- KPK Trust Act 2020,
- Sindh Trust Act 2020
- Baluchistan Trust Act 2020
PROBLEMS WITH THE TRUST ACTS 2020
FATF demanded Pakistan to review its Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) laws in the context of NPOs/NGOs/Trust and consequently, the government has to introduce revised laws to cater the latest requirements of this sector. Theoretically, government met the demand of FATF by introducing new laws but practically this has created numerous problems for the NPO sector in Pakistan while implementing these laws. In the next few paras, I will briefly highlight these practical problems.
Whether apply Trust registration online or offline?
Except for Sindh, no province yet issued detailed guidelines for how to register a Trust under the new Trust Act? Whether to submit an online or offline application to the Assistant Commissioner. The question is not answered in any law or guideline.
How to register a property under Trust name before creation of a Trust as legal entity?
The Trust Act 2020 requires that property must be registered in the name of Trust for the creation of the Trust in Pakistan. But the question is, how a property can be registered under the name of Trust without being forming a legal entity first?
Rules does not clearly mention information of Authors/Trustees/beneficiaries required for registration?
The provinces have not yet issued comprehensive rules to complement the Trust Act 2020 to answer how to register a Trust property? The one which is issued is very short and vague.
Is the online portal according to law?
As I mentioned earlier, the law is very vague and unclear about the quantum of information required from Trustees. The online portals seem totally against the above law. Because, it requires unnecessary in-depth personal information about properties, bank accounts, etc. of stakeholders.
You can see the below screenshot, what illogical information is demanded about the Author, Trustees, dependents of Trustees, and Beneficiaries? The Trustees who are voluntarily serving the boards of various trusts are highly reluctant and feel insecure about providing information about their CNIC dates, submitting proof of ownership of personal properties, personal bank accounts, etc.
The below screenshot is information about the personal bank account of the Author, Trustees, dependents of Trustees, and Beneficiaries.
Are the online portals for Trust registration in Pakistan operative?
There are high doubts on the activeness of the portals for online Trust registration in Pakistan under Trust Act 2020 because no concerned authority and its contact details are mentioned in the portals. No helpline is established to guide the procedure for Trust registration except Sindh.
Lack of awareness at the AC level which is the application collection authority.
Through practical experience, I learned that bureaucracy is totally ignorant of the Trust Act 2020 and the procedure for registration of the Trust because Assistant Commissioners (AC) normally deal with administrative functions of their jurisdictions instead of licensing and registrations. Devolving of Trust registration authority to the ACs are quite surprising for relevant offices.
Conclusion
At the moment, there is quite an uncertainty about the procedure for registration of Private Trusts, Public Welfare Trusts, and Specialized trusts. However, if you find out a way to register a Trust, then the thing you need to consider at first is whether your Trust Deed complies with all the requirements of FBR, PCP, PCC, EAD, and other regulatory bodies.
For more professional advice and preparation of your Trust/NPO documents feel free to contact at 0311-8500214. Leave your valuable comments as we learn from you.
Great post