ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP), in order to promote best governance practices and maintain focus on core operations, has introduced maximum terms limits for the Chief Executive Officers and Independent Directors to serve in the Capital Market Infrastructure Institutions (CMIIs), ie, PSX, NCCPL, CDC and PMEX.
The SECP has issued four notifications here on Friday to amend the relevant regulations.
The SECP has introduced tenure limits upon CEO of a CMII to a maximum of three terms with the third term to be allowed only in case of exceptional performance and subject to a competitive selection process. Moreover, the tenure limits for independent directors have been capped at maximum three terms across all CMIIs.
Securities exchanges: SECP revises procedure for appointment of CEOs
Further, no individual shall serve as independent director on the board of the same CMII for more than two terms.
The CMIIs perform important public policy functions including the infrastructure, services and regulations.
It is expected that these reforms will encourage greater participation by professionals in the governance of the CMIIs and promote a culture of independence, accountability and objective decision making.
Earlier, the Chairman SECP, Mr. Akif Saeed during his meetings with the boards of directors of CMIIs last week, stressed upon the need for CMIIs to follow the highest standards of corporate governance while discussing other reforms aimed at product development, risk management, debt market development and enhanced cybersecurity.
The Commissioner SECP, Abdul Rehman Warraich stressed upon the need of appropriate distribution of responsibility between BOD and management, a transparent and equitable compensation structure, proper succession planning and ensuring boards’ independence.
Under the revised regulations, the appointment of the chief executive officer shall be made for a period of three years, which may be renewed for one more term of three years, with the prior approval of the Commission: Provided that a person may be appointed for third and final term of three years, based on exceptional performance that is substantiated by the board of directors through a rigorous review, subject to following a competitive hiring process and final review and approval by the Commission, it added.
The limits have been imposed by approving amendments to licensing regulations of CMIIs. The notifications of approved amendments are available on SECP’s website at https://www.secp.gov.pk/laws/notifications/.
Copyright Business Recorder, 2023
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