Punjab clears four-year logjam on 'Employee Benefit Trust'

June 29, 2026 (MLN): Punjab has enacted a legislative fix to one of Pakistan's most persistent corporate compliance headaches, promulgating the Punjab Trusts (Amendment) Act, 2026 to break a registration deadlock that had paralysed thousands of employer-managed benefit funds since amendments to the Punjab / Sindh Trust Act, 2020 took effect in 2022, according to a regulatory brief published by tax and corporate advisory firm Hemani & Associates.

The amendment formally designates the Director General, Labour Welfare under the Labour and Human Resource Department as the mandated regulator for issuing No Objection Certificates (NOCs) required to register Provident Funds, Gratuity Funds, Superannuation Funds, and Employees Benefit Trust, filling an institutional gap that had left neither the Securities and Exchange Commission of Pakistan (SECP) nor the Federal Board of Revenue (FBR) with a clear mandate to grant such approvals.

Four Years of Regulatory Vacuum

The problem traces to the 2022 amendments to the Punjab / Sindh Trust Act, 2020, which tightened registration requirements for specialised trusts but failed to assign NOC-issuing authority to any specific regulator. With neither the SECP nor the FBR empowered to act, entities seeking to establish or renew mandatory benefit funds found themselves in legal limbo, unable to satisfy statutory registration requirements and accumulating administrative backlogs that, in some cases, exposed employers to compliance risk.

Sindh had previously moved to close the same gap through its own legislative intervention, and Punjab's amendment now mirrors that resolution for entities operating in the province.

Key Provisions of the 2026 Amendment

The amendment introduces three substantive changes to Punjab's trust registration framework:

Designated Regulator: The Director General, Labour Welfare is now the mandated authority for issuing, refusing, or cancelling NOCs for specialised trusts, providing a single institutional point of contact where none previously existed.

Formalised Procedures: Any refusal or cancellation of an NOC must be supported by recorded written reasons, and affected parties must be afforded an opportunity for a hearing before a decision is finalised — introducing procedural safeguards absent under the earlier framework.

New Appellate Mechanism: The amendment creates a two-track appeals structure. Entities aggrieved by an NOC refusal or cancellation may appeal to the Controlling Authority within 30 days. Trustees aggrieved by other decisions of the Director General may appeal to the Senior Member, Board of Revenue, Punjab, within the same 30-day window.

Compliance Implications

For corporate employers and HR professionals in Punjab, the amendment removes the primary procedural barrier to fulfilling statutory trust registration obligations. Organisations that deferred registration pending regulatory clarity now have a defined pathway and a designated authority to approach.

Hemani & Associates, a Karachi-based tax, corporate, legal, and advisory firm, flagged the development in a professional circular, noting that the amendment provides "the long-awaited framework necessary for organisations to finally fulfil their statutory registration requirements and reduce reliance on judicial intervention." The firm advised stakeholders to review the full text of the 2026 Act for specific compliance obligations.

The change is expected to clear a significant backlog of pending trust registrations across the province and reduce the volume of writ petitions that employers had been filing in the Lahore High Court to compel registration in the absence of a functioning NOC mechanism.

Copyright Mettis Link News