Islamabad, June 08, 2016 (PPI-OT): The Securities and Exchange Commission of Pakistan (SECP), International Finance Corporation (IFC), and Centre for International Private Enterprise (CIPE) are collaborative partners to create awareness on Principles of Corporate Governance for Non-listed Companies (Principles).
As part of mutual agreement, a third roundtable has been conducted by the SECP in collaboration with IFC in Islamabad to create awareness about Principles. Taking advantage of large participation from corporate sector, the SECP also arranged stakeholders’ consultative session on draft Companies Bill, 2016.
The roundtable conference was attended by distinguished guests, including renowned corporate governance practitioner Mr. Zaffar Khan, former chairman of Pakistan Telecommunication Company Limited, and representatives from industry, accounting and trade bodies, and academia.
Ms. Maheen Fatima, an SECP director, highlighted the significance of proposed Principles for family owned and small businesses. She said that proposed Principles would formulate procedures and shall refine corporate governance practices. While appreciating the IFC and CIPE for providing a debating forum for the consultative process, she stated that feedback from the participants would be taken into consideration while finalizing the proposed Principles.
Mr. Khawar Ansari, of the IFC, said that family bondsand structures were sound in Pakistan. He was of the opinion that in view of our social structure the proposed Principles will meet the need to define some standard rules of practice to run corporate matters of small and medium enterprises and non-listed companies. He informed the participants that Dubai is one of the pioneers to implement Principles of Corporate Governance for SMEs and after every two years top 100 SMEs list is published in order of merit for compliance. Therefore, he proposed that in order to encourage compliance some sort of enforcement or compliance mechanism be devised in order to encourage industry acceptability. Mr. Zaffar Khan shared his experience about corporate governance practices and encouraged that female representation be encouraged on the boards of corporate entities.
Mr. Mohsin Chaudhary, of the IFC and Hammad Siddiqui, of the CIPE, highlighted international practices and benefits accrued through following corporate governance principles.
While briefing the participants onproposed Companies Bill, 2016, Mr. Jawed Hussain, an SECP executive director, said that new company law is facilitative and would encourage the corporate sector growth due to reduced costs of documentation, ease of enforcement, quick access to information and by extensive use of technology. In light of stakeholders’ comments, the SECP has adopted a holistic approach to draft Companies Bill, he stated. He highlighted key changes being introduced in Companies Bill.
Participants took keen interest in the proposed reforms being introduced through Companies Bill, and asked questions about enforcement mechanism, filing regime, valuer’s regime, the SECP’s collaboration with bodies such as the Intellectual Property Organization and the FBR.
The roundtable concluded with agreement to strengthen corporate governance regime
for non-listed companies and recommendations on following priorities:
(a) Authority matrix for shareholders and board members be defined in the light of
legal provisions and should be part of the constitutive documents.
(b) Paper boards be discouraged and instead boards should play effective role in discharging their duties to shareholders and other stakeholders of the corporates.
(c) Remuneration benchmarking for executives and boards be made in order to retain productive employees and board members.
(d) Formal arrangement must be put in place to encourage internal control and risk management functions to avoid legal and reputational risks.
(e) Chairman of board of directors must ensure holding of general meetings to encourage a dialogue between shareholders and directors.
(f) Induction trainings of board members be encouraged to familiarize new members with the roles, functions and working environment of companies.
For more information, contact:
Shakil Ahmad Chaudhary
Head, Internal and External Communication
Securities and Exchange Commission of Pakistan (SECP)
NIC Building, 63 Jinnah Avenue, Islamabad
Tel: +92-51-9214005 or +92-51-9214009 (Ext. 378)