The Securities and Exchange Commission of Pakistan (SECP) has unveiled a landmark proposal aimed at introducing a legal framework for the licensing and regulation of Waqf management companies. The proposed amendment to the Companies Act, 2017 seeks to formalize the governance of Waqf in Pakistan, allowing companies to be licensed under a new Section 42A to manage Waqf assets as not-for-profit entities.
According to the SECP, the initiative is designed to corporatize the administration of Waqf, bringing it under a regulated structure that is both transparent and accountable. The proposal requires these entities to manage Waqf assets strictly in line with Shariah principles and the declared objectives of each Waqf. This is the first time that Pakistan has moved toward a dedicated legal and regulatory framework for Waqf management, drawing from international best practices in Islamic finance, fiduciary governance, and social impact investment.
The introduction of Waqf management companies is expected to open new avenues for Islamic social finance in the country. The framework enables modern applications of Waqf such as cash Waqf and investment Waqf, allowing charitable purposes to be supported through income generated from financial assets. Furthermore, the SECP has highlighted the potential for Waqf-linked Sukuk and specialized Waqf mutual funds, which would create a new segment of Islamic finance in Pakistan’s regulated capital markets. These tools could help mobilize larger pools of capital for development and welfare projects.
To ensure accountability and safeguard the sanctity of Waqf, the proposed framework includes a range of regulatory requirements. The declared objectives of a Waqf will remain immutable, ensuring that the original intent of the endowment cannot be altered or substituted. The preservation of the Waqf corpus will be mandatory, with strict prohibitions on selling, pledging, or encumbering the assets, except in cases explicitly allowed under the Waqf’s objectives.
In addition, Waqf management companies will be required to maintain strong governance structures, robust reporting mechanisms, and fiduciary controls that reflect the religious and charitable nature of their responsibilities. Compliance with Shariah principles will be a fundamental requirement, and SECP has proposed mandatory oversight by qualified Shariah advisors. Regular monitoring and regulatory audits will also form part of the compliance framework.
The regulator has clarified that any failure to comply with the framework will result in penalties and sanctions as provided under the law, ensuring accountability across the sector. By instituting such safeguards, SECP aims to build confidence among donors, beneficiaries, and the broader public that Waqf assets are being managed responsibly and transparently.
This initiative is part of SECP’s broader strategy to revive Islamic social finance institutions and integrate them into Pakistan’s regulated financial system. By channeling Waqf assets through structured and professionally managed entities, the regulator hopes to maximize their potential for public benefit while upholding religious obligations.
The proposed legal framework reflects a shift toward modernizing traditional Islamic financial instruments while preserving their foundational principles. If implemented effectively, it could unlock new opportunities for social development financing and set Pakistan on a path to becoming a regional leader in Islamic social finance innovation.
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