ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) Wednesday officially declared Multi-Level Marketing (MLM) schemes, referral marketing, Pyramid and Ponzi Schemes illegal in Pakistan. In this regard, the SECP has strictly prohibited companies from carrying out unlawful activities of Multi-Level Marketing (MLM), referral marketing, Pyramid and Ponzi Schemes. The SECP has issued S.R.O. 2440 (I)/ 2025 to introduce draft Companies (Multi-Level Marketing, Referral Marketing, and Pyramid & Ponzi Schemes) Regulations, 2025. The SECP has warned that any company found to be engaged in any unlawful activity prohibited under these regulations shall be liable to be wound up. Prohibition of MLM: No company shall promote or carrying on of any scheme or business, including where income or benefits are derived primarily from the recruitment of new members rather than genuine sale of goods to end-consumers and where there is little or no evidence of bonafide product sales to ultimate users, or where products are merely incidental or absent altogether. No company shall promote or carrying on of any scheme or business, where there is no clear, accessible, and equitable policy for the repurchase, refund, or return of unsold products; and/or where products sold are unregistered, unapproved, or constitute illegal imports or smuggled goods. This shall not restrict bonafide direct selling activities where compensation is primarily derived from actual product sales to end consumers. Prohibition of Ponzi Schemes: No company shall promote or carrying on of any scheme or business that pays returns to earlier investors from funds contributed by new investors, rather than profits from commercial, trading, or business activity; offers high, fixed, or guaranteed returns with little or no identifiable risk. No company shall promote or carrying on of any scheme or business that has no identifiable underlying business, asset, or revenue-generating activity; and/or conceals, misrepresents or withholds information regarding the use or deployment of investor funds. Copyright Business Recorder, 2025