SECP notifies regulations to curb Ponzi, pyramid and deceptive marketing schemes

The SECP has brought the Companies (Prohibition of Unlawful Activities) Regulations, 2026 into force, covering firms operating in Pakistan as well as foreign companies. Profit by Pakistan Today reported that the rules apply to schemes promoted online or through physical channels, including social media, websites and mobile apps.

The regulations bar models that rely chiefly on recruitment rewards, use later investors’ money to pay earlier participants, or advertise implausible or guaranteed returns. They also address misleading product claims, excessive entry or inventory costs, weak refund arrangements and sales of illegal goods. Direct selling remains allowed when earnings mainly come from genuine sales to consumers. Breaches can bring penalties for companies and their officers, and may lead to winding-up proceedings; the rules also cover existing schemes with unlawful features.