Securities and Exchange Commission of Pakistan (SECP) has stated that the election of the directors of companies can take place in annual general meeting in October/April instead of December/June. "However the director elect will take office after the expiry/completion of 3 year term of the (sitting) director". The SECP in a circular No 03 of 2005 clarified that election can be held before the expiry of 3-year tenure. The AGM can be called even 2 or 3 months before expiry of the 3-year period for the election of the directors.
The directors-elect can become effective directors and sit on board of directors after existing board completes the 3-year tenure. SECP maintained that this would allow the directors-elect to become familiarised with the company and code of corporate governance.
Explaining the need to issue clarification, SECP maintained that the election of directors is held in general meetings of the companies on completion of the term of office of directors every three years. Mostly the companies used to hold elections in their annual general meetings in December/June each year. However, consequent upon an amendment in section 158 of the Companies Ordinance 2002, the time period for holding of AGMs relating to the financial year closed on June 30/December 31 are required to be held up to October 31/April 30.
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