Evaluation of performance: SECP asks BoDs to put in place effective mechanism

The Securities and Exchange Commission of Pakistan (SECP) has said that the board of directors shall ensure that a formal and effective mechanism is put in place for an annual evaluation of the board's own performance, members of board and of its committees.
The Frequently Asked Questions (FAQs) responded by the SECP on the Listed Companies (Code of Corporate Governance) Regulations, 2017 here on Wednesday revealed that the annual evaluation can be undertaken either in-house directly or by engaging external independent consultants and if so appointed, a statement to that effect shall be made in the directors' report disclosing name, qualifications and major terms of appointment. The only condition for such evaluation is ensuring that such individuals/team carry out their assignment objectively and independently.
The SECP has further clarified the issue whether the same person be appointed as the CFO and the Company Secretary of a listed company? The SECP responded in negative. The terms of reference of the two positions are distinct. Therefore, separate persons should handle the functions of the CFO and company secretary within a listed company.
The requirement for the auditors to initial the financial statements is for identification only. The responsibility of preparation of financial statements rests with the board in accordance with provisions of the Act, the SECP said. About the appointment of Chairman of the board of listed companies, SECP clarified that the provisions of Section 192 of the Companies Act requires that the board of a listed company shall within 14 days from the date of election of directors, appoint a chairman from among the non-executive directors.
The question arises if a foreign director on the board of a listed company has already participated in a directors' training program abroad. Will it still be mandatory for him/her to attend a) the orientation? The SECP responded that it is mandatory for the company to provide orientation to all directors -local and foreign. An orientation should cover the relevant information about the company as well as the relevant governing laws, rules and regulations. Foreign directors who have received training aboard shall be exempt from directors' training program requirement of the Regulations if the program they attended broadly covered the areas stated in the criteria specified by the SECP.
The Regulations do not restrict any full time employee in a listed company from working in a similar position in an unlisted group company. However, appropriate steps should be taken by the board of directors of the companies concerned to ensure that additional workload would not affect the quality of work performed by such employee and no conflict of interest would arise as a result of holding similar positions in two group companies.
The Regulations require the directors of the listed companies to have certification under directors' training program offered by any institution, local and/or foreign, that meet the criteria specified by the SECP. The SECP lays down the minimum criteria for the eligibility of institutions and the areas that have to be covered in the Directors' Training Program (DTP) offered by them.
The formal set of criteria to assess and evaluate the programs as well as the institutions offering these programs has been given by the SECP. For the aforesaid certification required under the Regulations, foreign directors who have already participated in a training program that broadly covers the areas listed shall be exempt from the requirement of DTP. However, SECP shall determine the sufficiency of requirements on application from the company, the SECP added.