Administrative order best way for dealing corporate governance of PSEs: SECP chief

Muhammad Ali, Chairman Securities and Exchange Commission of Pakistan (SECP), has said that an administrative order would effectively work for the enforcement of code of corporate governance for public sector enterprises (PSEs).
During question-answer session of the roundtable on 'Code of Corporate Governance for Public Sector Enterprises' organised by Pakistan Institute of Corporate Governance (PICG) in collaboration with the Centre for International Private Enterprise (CIPE), Muhammad Ali explained the ways and means for proper implementation of the code of corporate governance for public sector enterprises. He said that the debate is going on whether the governance of the public sector companies should be done through regulations, administrative order or legislation. Ideally, an administrative order would be the best way for dealing with the governance of the public sector companies. Later, the government should ultimately do the necessary legislation for this purpose. However, the regulations would not be effective for dealing with the issue of implementation of the code of corporate governance for public sector enterprises.
Muhammad Ali, the SECP Chairman, emphasised the need for assessing the appropriateness of the legal framework under which the corporate governance code for PSEs is going to be issued. The draft regulations for the PSEs have been formulated by the SECP, with a view to improve efficiency of the government owned enterprises and reducing the burden on national exchequer incurred annually to maintain these commercial entities in operating condition.
The roundtable was organised by the Securities and Exchange of Commission, Economic Reforms Unit of the Ministry of Finance, the Center for International Private Enterprise (CIPE) and the Pakistan Institute of Corporate Governance (PICG).
Around 120 participants from various ministries and public sector companies, including senior bureaucrats, PSCs key executives, CEOs, accountants/professionals and lawyers attended the roundtable.
During the session, highly interactive and detailed deliberations were made on the draft regulations. The participants shared their views on the major provisions, including the composition of the board, the role of independent directors, separation between the offices of chief executive and chairman, fit and proper criteria for directors, disclosure and transparency requirements etc.
The organisers are grateful to the stakeholders who attended the roundtable for their invaluable contribution. After further deliberations in light of these roundtables, the recommendations on the draft regulations will be finalised by the task force formed by the government for corporate governance of public sector enterprises.
Syed Asad Ali Shah, Dr Shamshad Akhtar, Dr Khaqan Najeeb and other speakers made various concrete recommendations to optimize their transparency and accountability and improve efficiency as a way forward to improve the public sector enterprises' governance.
Other speakers at the roundtable said that the issue of SOEs is a global and almost every country has faced this problem when the government owned businesses become heavy financial burden.
Meanwhile, international experts told the participants about Finland where the SOEs accounted for major share of government financing up to early 1980s but after corporate restructuring more sectors have been opened to competitive businesses.
It was informed that in Finland a maximum of one government official can be in the board of a PSE, while the role of politicians has been nullified, the government being the majority share holder makes policy decisions and sets targets whereas the operational matters are decided by the boards.
Closing the session, Chairman SECP Muhammad Ali said that constant up-gradation of laws would help bring more transparency and competition in the PSEs.