Government Cracks Down on Illegal Use of Trade Body Titles
The Directorate General of Trade Organizations (DGTO), operating under the Ministry of Commerce, recently issued a stern warning. This directive targets individuals and groups illegally using protected trade body titles such as “Federation,” “Chamber,” and “Association.” Consequently, this move aims to safeguard the business community from misleading practices and market confusion.
DGTO: Sole Authority for Trade Body Regulation
The DGTO unequivocally reminded the public of its status as the sole regulatory authority. Mandated by the Trade Organizations Act, 2013 (TOA 2013), the Directorate is responsible for licensing and overseeing all trade bodies across Pakistan. Furthermore, Section 3(1) of the Act strictly prohibits any organization from operating as a trade body without proper federal government licensing.
Prohibited Use of Protected Titles
Under Section 5(3) of TOA 2013, the use of terms like “Federation,” “Chamber,” or “Association” in an entity’s name or title is strictly forbidden. This prohibition applies unless the entity is officially licensed and registered with the DGTO. Therefore, any unauthorized usage of these illegal trade body titles constitutes a violation of the law.
Addressing Market Confusion and Misconceptions
The regulator has observed a concerning trend: various groups and individuals are operating illegal bodies. They achieve this by misusing these protected titles, thereby misleading the business community and fostering significant market confusion. Additionally, the DGTO clarified a common misconception regarding Section 5(3) exemptions. This exemption applies exclusively to organizations formed for promoting Art, Science, Religion, Charity, or Sports. Significantly, it does not extend to groups involved in Trade, Commerce, Industry, or Services.
Immediate Action and Penalties for Non-Compliance
All unauthorized entities are unequivocally directed to cease and desist immediately from using these protected titles. Non-compliance will trigger strict penal actions under TOA 2013. These penalties include substantial fines, personal liability, and potential disqualification from any registered trade organization. Consequently, adherence to these regulations is crucial to avoid severe legal repercussions.
Guidance for the Business Community
The DGTO strongly advises the business community to avoid membership in unlicensed bodies, as such entities possess no legal standing. Businesses are urged to diligently verify the license status of any trade body with the DGTO. This verification should occur before engaging in membership, dealing, or any official interactions. By doing so, businesses can ensure they operate within legal frameworks and protect themselves from potential risks associated with illegal trade body titles.
