KARACHI: Federal Minister for Finance Dr. Abdul Hafeez Shaikh launched the Code of Corporate Governance, 2012 at a formal ceremony organised by the Securities and Exchange Commission of Pakistan (SECP), here Tuesday.
The launch ceremony was held in collaboration with the Center for International Private Enterprise (CIPE), which has been supportive of SECP's initiative throughout the process of revising the Code.
The launch ceremony was attended by a large number of participants from various segments of corporate sector including prominent market associations, corporates, capital market institutions and commercial and investment banks, non-bank finance companies, lawyers, regulators, auditors, institutions and media.
The Code sets a minimum benchmark in terms of governance standards, brings consistency in the corporate practices and promotes transparency through enhanced disclosure requirements. The Code will result in availability of enhanced information to markets' participants and hence will provide better protection of the rights of all investors, particularly minority shareholders.
Governance standards are dynamic and changing with the development of constantly evolving corporate sector and financial markets. This calls for a constant review of governance framework to keep pace with globally set benchmarks. In an endeavor to align our governance regime with enhanced requirements of present times and global best practices, the SECP mandated the Institute of Corporate Governance to initiate work on review of the Code.
The SECP, while finalising the Code, conducted a thorough consultative process which included holding of three roundtables, a number of bilateral meetings with stakeholders, written and verbal comments and suggestions received from a wide range of stakeholders. While finalising the Code, due consideration was given to all the suggestions received, keeping in the view the global developments in corporate governance and the overall objective of raising the standards of corporate governance in the country.
The Code, 2012 requires at least one independent director while preference is for 1/3rd of the total members of the board to be independent directors.
Criteria for assessment of independence have been substantially expanded.
Maximum number of executive directors has been decreased from 75% to 1/3rd of elected directors including CEO while the number of directorships has been decreased from 10 to 7 that a director can hold at the same time.
In the new Code requirement of board evaluation has been introduced while office of the Chairman and CEO has been separated. The Chairman shall now be elected from amongst the non-executive directors of a listed company.
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