SECP launches consultation on regulations targeting MLM and pyramid schemes

The Securities and Exchange Commission of Pakistan (SECP) has initiated broad stakeholder consultations on the Draft Companies (MLM, Referral Marketing, Pyramid & Ponzi Schemes) Regulations, 2026, seeking to address unlawful and deceptive marketing structures operating in the country.

According to the regulator, Pakistan currently lacks clear legal definitions for multi-level marketing, referral marketing, pyramid and Ponzi schemes, creating regulatory gaps that expose consumers and investors to financial harm.

The proposed regulations are designed to differentiate legitimate direct selling businesses from fraudulent operations. They also aim to strengthen consumer protection and establish a clear enforcement mechanism under the Companies Act, 2017.

Speaking at the consultative session, SECP Commissioner Muzzafar Ahmed Mirza said, “These regulations will provide clear definitions, protect consumers, and curb schemes that exploit regulatory gaps.”

The SECP said the initiative reflects its commitment to transparent rule-making, market integrity and enhanced investor protection, while ensuring that genuine businesses operate within a defined regulatory framework.