KARACHI (February 16 2007): The Board of Directors of Karachi Stock Exchange (KSE) has asked the MD, KSE, M A Lodhi to resign from the post or otherwise his removal would be recommended to the SECP despite a vigorous defence from the incumbent, reliable sources said on Thursday.

In the meeting, MD KSE, while defending his position, said that he had performed well for the betterment of the KSE and had taken many good decisions for good corporate governance at the KSE. He said that his clear stands for good governance were disliked by the SECP and the nominated directors.

Regarding the issue of chairman's office, he clarified that he stood by the earlier directive of the SECP to disallow the elected member chairman from maintaining an office at KSE. "I referred the board's recommendation to allow the present chairman to have an office. To my surprise the SECP reversed its earlier directive," he added.

Further he said even as a nominated director his work was greatly appreciated by successive chairmen such as Feroze Kassim, Arif and Lakhani. Last year the nominated directors who are displeased with his performance have not even bothered to attend the board meetings. Out of 14 meetings held last year average attendance (including chairman) is not more than 5. Even at these meetings most of them had left half way into the meeting. How can they assess my performance? He queried.

Lodhi apprised the board that the chairman had accepted a proxy from a nominated director to vote on his behalf on administrative matters. He said proxies are only accepted at annual and extraordinary general body meetings. What a fine setup for good corporate governance is being practiced at the exchange, he lamented.

Lodhi also reportedly placed before the board the communication between him and SECP regarding permitting the nominated directors to undertake share transaction on their behalf. He said SECP once again had reversed its earlier decision disallowing the same with a caveat not to buy and sell shares 10 days before the meeting of the board of directors.

Traditionally the elected chairman of KSE enjoyed executive powers. Under the SECP's reform programme the office of a professional CE was created. The first three Managing Directors Noman Ahmed, Shahid Ghaffar and Moin Fudda had a tense and acrimonious relationship with member directors. Lodhi is the first MD to run a foul with nominated directors.

The board also approved the half-yearly accounts and evolved the mechanism to allow institutional investors undertake transactions without margin under certain limits. A formula based on institutions paid-up capital and credit rating was adopted for recommendation to SECP. Source said that another meeting of the board of directors of KSE is expected to be held on Friday, February 16.

Copyright Business Recorder, 2007