Federal authority objects to merger with PHAF, cites legal issues

ISLAMABAD: The Federal Government Employees Housing Authority has expressed reservations and raised legal concerns about the proposed merger with the Pakistan Housing Authority Foundation.

In a letter addressed to Javed Akbar Sheikh, Director of Policy at the Ministry of Housing and Construction, the authority’s Deputy Director of Administration, Ahmad Hassan, said that, legally, the merger of the two institutions is not possible.

The Cabinet Committee on State-Owned Enterprises (SOEs) had decided on August 27 to review the proposal to merge the Pakistan Housing Authority Foundation (PHA) into the Federal Government Employees Housing Authority (FGEHA). To assess this merger, the Ministry of Housing has also formed a committee under the chairmanship of an additional secretary. However, before this committee’s meeting, the Federal Government Employees Housing Authority had already sent a letter to the ministry declaring the merger proposal impractical.

In the letter, the authority stated that it had sought legal advice from a consultant regarding the merger proposal. The consultant advised that the legal framework does not permit the merger of the two institutions. The authority argued that the Federal Government Employees Housing Authority is a statutory body established under the FGEHA Act 2020, to develop housing schemes for federal government employees. In contrast, the PHA Foundation is a non-profit organisation established under Section 42 of the Companies Act 2017, aimed at providing housing to low-income groups.

Under the Companies Act 2017, mergers can only occur between companies registered with the SECP, whereas the Federal Government Employees Housing Authority is a statutory body, not a company. Therefore, legally, its merger with the PHA Foundation is not feasible. The letter also mentioned a similar past proposal to merge the National Construction Limited with FGEHA, which was not approved by SECP.

Additionally, the Companies Act 2017 sets certain conditions for the merger of non-profit organisations, which must be adhered to. If a company is to be closed, it must either be merged into a company established for that purpose or be sold.