The Securities and Exchange Commission of Pakistan (SECP), the country’s corporate and capital-markets regulator, has put in place an SECP ban on Ponzi schemes that also covers pyramid schemes, deceptive multi-level marketing (MLM) and unlawful referral marketing. The Companies (Prohibition of Unlawful Activities) Regulations, 2026 set out how such models will be identified and stopped across physical shops and digital channels, including websites, mobile applications and social media.
The rules apply to all companies, including foreign ones. They target business models in which income comes mainly from signing up new participants rather than from genuine product sales, and arrangements that use money from newer investors to pay earlier ones.
What the new rules prohibit
Under the framework, schemes that promise unrealistic or guaranteed returns, charge excessive joining fees, force compulsory inventory purchases, or hide how investors’ funds are used are barred. The regulations also catch products with little or no real market demand, misleading income or product claims, weak refund or buy-back terms, and the sale of unregistered, unapproved or illegal goods.
Pyramid structures with unclear contracts, unreasonable purchase demands, or multiple participation positions designed mainly to reward recruitment are likewise prohibited. Companies may not promote, run or facilitate these activities. Existing schemes that show the same features fall within the net, whether they operate offline or online.
Legitimate selling still allowed
The SECP has drawn a clear line for lawful trade. Direct-selling businesses remain permissible where compensation is driven chiefly by actual sales to end consumers, not by pulling in new recruits. That distinction is meant to protect ordinary commerce while closing gaps used by scam investment schemes.
SECP Chairman Dr Kabir Ahmed Sidhu said the regulations would strengthen safeguards against deceptive practices and financial exploitation. “Our objective is to promote legitimate business activities and protect the public, including from unlawful schemes operating through digital platforms,” he said. The rules were finalised after consultations with professional bodies, business organisations and other stakeholders.
Penalties and public caution
Companies, directors and officers who breach the framework may face penalties under Section 512(2) of the Companies Act, 2017. The regulator may also start further enforcement, including winding up of companies under Section 301.
The SECP has urged people to stay wary of offers that guarantee returns or promise unusually high profits, especially when rewards depend on recruiting others. It has advised investors to check a company’s credentials and regulatory standing before handing over money. The SECP ban on Ponzi schemes is intended to make those warning signs part of enforceable law, not only public advice.
Aasan alfaaz mein
SECP ne Pakistan mein Ponzi, pyramid aur illegal MLM schemes par naye qanooni qaiday lagaye hain. Ab woh business models mamnoo hain jo naye logon ko shamil karne se faida kamate hain, na ke asal cheez bechne se. Agar koi scheme bohot zyada ya guaranteed munafa aur referral reward dikhaye, to pehle company ki legality check karein. Seedha selling agar asli customers ko sales se chalta ho to woh ab bhi jaiz ho sakta hai.
