Islamabad, March 09, 2013 (PPI-OT): Following are the Salient Features of the Public Sector Companies (Corporate Governance) Rules, 2013 launched in the presence of Federal Minister for Finance Senator Saleem H Mandviwalla here at a local hotel today.
“Applicability The Rules would be applicable, after ninety days of their promulgation, on all public sector companies which are directly or indirectly controlled, beneficially owned or not less than fifty percent of the voting securities of which are held by the Government, including associations not for profit under section 42 of the Companies Ordinance, 1984.
Board Composition and Dynamics The Board shall have 40% of its total members as independent directors within two years of the notification of the Rules and shall have a majority of independent directors subsequently.
No person shall be elected or nominated as a director of more than five Public Sector Companies, simultaneously, including listed companies.
A director, once appointed / elected, shall hold office for a period of three years in accordance with the provisions of the Ordinance, unless he resigns or is removed in accordance with the provisions of the Ordinance.
The Chairman of the Board shall be elected by the Board from amongst the independent directors.
The Board shall recommend at least three individuals to the Govt. for appointment as chief executive, and shall appoint the chief executive after receiving concurrence of the Govt., in line with the provisions of the Ordinance.
Formation of Special Committees of the Board of Directors The formation of special committees of the board of directors in the PSCs is recommended so as to reinforce the competency of the Board of Directors, and in underpinning their critical responsibility in important matters. These include human resources committee, nomination committee, procurement committee, risk management committee and audit committee. Separation of the Chair from the CEO:
The position of the Chairman and CEO are proposed to be separated to achieve an appropriate balance of power, increasing accountability and improving the board’s capacity for decision making independent of management.
Chief Financial Officer, Company Secretary and Chief Internal Auditor – appointment and removal:
Every Public Sector Company shall appoint a chief financial officer, company secretary and chief internal auditor, as per qualification criteria specified in the Rules. Formulation and compliance with a ‘Code of Conduct’ The board shall prepare, circulate and implement a standard of conduct for its directors and employees, that must entail the adoption of the three fundamental principles of probity and propriety; objectivity, integrity and honesty; and relationship with the stakeholders. Capacity building of board of directors:
Directors are encouraged to have certification under an appropriate director training/education program offered by any institution, local or foreign. Orientation courses shall be held by all PSCs for the directors.
Corporate, financial reporting and accounting framework All PSCs shall adopt International Financial Reporting Standards. Directors’ report to the members shall also include detailed disclosures specific to the PSC operations based on its social mandate.
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