Directors’ on Board election: SECP to introduce concept of voting in separate categories

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) will introduce the concept of voting in separate categories for the election of independent directors and female directors on the Board of a listed company.

The commission has proposed amendments to the Listed Companies (Code of Corporate Governance) Regulations, 2019 and the Companies (Postal Ballot) Regulations, 2018 with the aim to facilitate companies listed on Pakistan Stock Exchange (PSX) in meeting regulatory requirements relating to election of independent and female directors to their boards.

The SECP Wednesday issued a document to seek feedback on proposed regulatory reforms to address the problems being faced by the listed companies in the election of independent directors and female directors. This will also strengthen corporate governance framework and to protect minority interest.

This requires amendments in the Listed Companies (Code of Corporate Governance) Regulations, 2019 and Companies (Postal Ballot) Regulations, 2018. Under the proposed model, separate voting sessions shall be held for each category i.e. Female Directors (1st Category), Independent Directors (2nd category) and Other Directors (3rd Category).

Under the proposed model, a three-tier voting structure for listed companies is being proposed whereby votes shall be casted separately for the three categories of directors i.e. female, independent and others. It shall be the discretion of the shareholders to cast their votes to any candidate in each of the three categories and number of votes for each category shall be counted separately. The model will not restrict the right of a person to be a director in multiple categories e.g. a female director can also be an independent director.

Copyright Business Recorder, 2023