ISLAMABAD (The Thursday Times) — The Securities and Exchange Commission of Pakistan has banned Ponzi schemes, pyramid schemes and deceptive multi-level marketing, under new rules that also cover websites, mobile apps and social media.
The Companies (Prohibition of Unlawful Activities) Regulations, 2026 apply to all companies, including foreign ones, and to existing schemes that show the same features. Companies may not promote, run or facilitate them.
What is now banned
The rules prohibit business models that earn mainly from recruiting new members and not from real product sales, and those that use money from new investors to pay earlier ones.
They also cover promises of unrealistic or guaranteed returns, excessive joining fees, compulsory stock purchases, hiding how investors’ money is used, products with little or no real demand, misleading claims about income or products, and poor refund or buy-back arrangements.
Genuine direct selling remains allowed, as long as people are paid mainly from actual sales to end customers.
What happens to those who break them
Companies, directors and officers can be penalised under the Companies Act, 2017, and the regulator can pursue other action, including having a company wound up.
“Our objective is to promote legitimate business activities and protect the public, including from unlawful schemes operating through digital platforms,” SECP Chairman Dr Kabir Ahmed Sidhu said. The regulator has advised people to check a company before investing and to be wary of schemes that promise unusually high returns.
