The Securities and Exchange Commission of Pakistan (SECP) has introduced a noteworthy regulation that makes it obligatory for charitable and non-profit organizations to seek a Shariah opinion in the form of a Fatwa from a registered Shariah Advisor when collecting and utilizing Islamic donations. This regulatory move demonstrates the SECP’s commitment to promoting transparency and ensuring adherence to Shariah principles within the charitable sector.
Under the newly issued S.R.O. 1513(I)/2023, amending the 2018 Regulations for Associations with Charitable and Not-for-Profit Objects, the SECP has shifted the responsibility onto charitable associations. They are now mandated to obtain a Shariah opinion, in the form of a Fatwa, from a Shariah Advisor who is duly registered with the Commission.
This Fatwa must be attached to the organization’s audited financial statements, emphasizing the need for transparency and compliance with Shariah principles in financial management.
Furthermore, the regulations emphasize the importance of respecting the religious sensitivities of the public. Charitable associations are expressly prohibited from exploiting or offending the religious susceptibilities of individuals. This critical provision ensures that any Islamic donations received, which include zakat and sadaqah, are neither invested nor utilized by the association in a manner that contradicts Shariah principles.
Transparency and accountability are the cornerstones of the SECP’s regulatory framework. In line with this, the regulations dictate that charitable associations must provide a clear and comprehensive disclosure of their policies regarding the receipt, investment, and utilization of Islamic donations in their financial statements.
Additionally, the precise amount of such donations and the specific avenues where they have been utilized should also be disclosed, enhancing the transparency and accountability of these organizations.
This regulatory development has far-reaching implications for Pakistan’s charitable and non-profit sector. It makes acquiring a Shariah opinion mandatory, ensuring that Islamic donations are managed following Shariah principles and in alignment with the values of the donors and the broader community.