securities and exchange commission of pakistan corporate governance code 2013

8/13/2019 Securities and Exchange Commission of Pakistan Corporate Governance Code 2013

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By Arslan Nawaz

Securities and Exchange Commission of PakistanCorporate Governance Code 2013


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10. Quarterly and Monthly Financial Statements and Annual Report

(2 subsection)

11. Board orientation and learning (3 subsection)

12. Formation of Board committees (3 subsection)13. Chief Financial Officer, Company Secretary and Chief Internal

Auditor - appointment and removal (3 subsection)

14. Role and qualification of Chief Financial Officer and Company

Secretary (5 subsection)

15. Requirement to attend Board Meetings (2 subsection)

16. Financial Reporting Framework

Sections of Law


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17. Directors' report to the Shareholders (4 subsection)

18. Disclosure of Interests by Directors and Officers (3 subsection)

19. Directors' Remuneration (3 subsection)

20. Responsibility for financial reporting and corporate compliance

21. Audit Committee (9 subsection)

22. Internal Audit (4 subsection)

23. External Audit (8 subsection)

24. Compliance with the rules (3 subsection)

25. Penalty for contravention of the rules

Section of Law


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Highlights of Sections


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The Board shall consists of executive and non-executive

directors, independent directors, diversified.

The Board shall have forty percent of its total members as

independent directors

Company shall disclose in the annual report Non-executive,

Executive and Independent directors.

No Independent Director shall participate in share options

or any similar schemes of the Public Sector Company

No person shall be elected or nominated as a director of

more than five Public Sector Companies and listed

companies simultaneously, except their subsidiaries.

Composition of the Board


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The office of the chairman shall be separate, and his responsibilities

distinct, from those of the chief executive.

The chairman of the Board shall, ensure that the Board is properly

working and all matters relevant to the governance of the Public

Sector Company are placed on the agenda of Board meetings;conduct the Board meeting including fixing the agenda; and ensure

that all the directors are enabled and encouraged to fully

participate in the deliberations and decisions of the Board.

The chief executive is responsible for the management of the Public

Sector Company and for its procedures in financial and othermatters include implementation of strategies and policies approved

by the Board.

Role of the chairman and chief executive and

separation of the two positions


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A director, once appointed or elected, shall hold office for aperiod of three years, unless he resigns or is removed inaccordance with the provisions of the Ordinance.

The Board shall evaluate the candidates based on the fit and

proper criteria and the guidelines specified by theCommission for appointment to the position of the chiefexecutive.

The Board shall ensure that obligations to all shareholders arefulfilled

The Board shall ensure that professional standards andcorporate values are in place

The Board shall establish a system of sound internal control

Responsibilities, powers and functions of the

Board


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The Board shall meet at least once, each quarter of a

year.

In case of noncompliance, the same shall be

reported to the Commission with reasons ofnoncompliance, within fourteen days of the end of

the quarter in which the meeting should have been

held.

Written notices of meetings, including the agenda,duly approved by the Chairman, shall be circulated

not less than seven days before the meetings.

Meetings of the Board


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The Board shallestablish appropriatearrangements to

ensure it has access toall relevantinformation, adviceand resources

necessary to enable itto carry out its roleeffectively.

Key information to be placed for decision by

the Board


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The performance evaluation of the members of theBoard including the chairman and the chief executiveshall be undertaken for which the Board shall establish aprocess, based on specified criteria, and the chairman of

the Board shall take ownership of such an evaluation.The committees shall also carry out their evaluation onan annual basis.

The Board shall monitor and assess the performance ofsenior management on a periodic basis, at least once ayear, and hold them accountable for accomplishingobjectives, goals and key performance indicators set forthis purpose.

Performance evaluation


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Every Public Sector Company shall, within one monthof the close of first, second and third quarter of itsyear of account, prepare a profit and loss account for,and balance-sheet as at the end of, that quarter,

whether audited or otherwise, for the Board'sapproval.

Annual report including annual financial statementsshall be placed on the Public Sector Company's

website. Every Public Sector Company shall also prepare

monthly accounts, for circulation amongst the Boardmembers.

Quarterly and Monthly Financial Statements

and Annual Report


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Orientation courses shall be

held by a Public Sector

Company, to enable directors

to better comprehend the

specific context in which it

operates, including its

operations and environment,

awareness of Public Sector

Company's values andstandards of probity and

accountability as well as their

duties as directors.

Board orientation and learning


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The Board shall set up the

following committees to support it

in performing its functions

efficiently, and for seeking

assistance in the decision makingprocess, namely

A. Audit committee

B. Risk management committee

C. Human resources committee

D. Procurement committee

E. Nomination committee

Formation of Board committees


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The Board shall

appoint or remove a

chief financial officer,

a company secretaryand a chief internal

auditor.

Chief Financial Officer, Company Secretary and Chief

Internal Auditor - appointment and removal.


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The chief financial officer shall be responsible for ensuringthat appropriate advice is given to the Board on all financialmatters, for keeping proper financial records and accounts,and for maintaining an effective system of internal financial

control.The company secretary shall be responsible for ensuringthat Board procedures are followed, and that all applicablelaws, rules and regulations and other relevant statementsof best practice are complied with. Where the companysecretary is not separately appointed, the role of companysecretary may be combined with chief financial officer orany other member of senior management.

Chief Financial Officer, Company Secretary and Chief

Internal Auditor - appointment and removal.


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The chief financial

officer and the

company secretary of

a Public Sector

Company shall attend

all meetings of the

Board

Requirement to attend Board Meetings


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Every Public Sector

Company shall

adopt International

Financial Reporting

Standards.

Financial Reporting Framework


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The Board shall

submit an annual

report to the

shareholders. likefinancial statements,

corporate governance

rules compliance and

key operating and

financial data of last

six years etc.

Directors' report to the Shareholders


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Every director/officer of a Public Sector

Company, if he or his relative, is in any way,

directly or indirectly, concerned or interested in

any contract or arrangement entered into, or tobe entered into, by or on behalf of the Public

Sector Company shall disclose the nature of his

concern or interest at a meeting of thedirectors/ any forum.

Disclosure of Interests by Directors and

Officers


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There shall be aformal andtransparent

procedure for fixingthe remunerationpackages of individualdirectors. No director

shall be involved indeciding his ownremuneration.

Directors' Remuneration

R ibili f fi i l i


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No Public Sector Company shall circulate its

financial statements unless the chief executive

and the chief financial officer, present the

financial statements, duly certified under theirrespective signatures, for consideration and

approval of the audit committee and the Board.

The Board shall, after consideration andapproval, authorize the signing of financial

statements for issuance and circulation.

Responsibility for financial reporting

and corporate compliance


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The Board shall establish an audit committee, whosemembers shall be financially literate and majority of them,including its chairman, shall be Independent Non ExecutiveDirectors.

The names of members of the audit committee shall be

disclosed in each annual report of the Public SectorCompany.

The chairman of the Board as well as the chief executive ofthe Public Sector Company shall not be a member of theaudit committee.

The audit committee shall be responsible for managing therelationship of Public Sector Company with the externalauditors.

Audit Committee


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There shall be an internalaudit function in every PublicSector Company. The chiefinternal auditor, who is the

head of the internal auditfunction in the Public SectorCompany, shall beaccountable to the audit

committee and haveunrestricted access to theaudit committee.

Internal Audit


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Every Public SectorCompany shallensure that its

annual accounts areaudited by externalauditors.

External Audit


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Every Public Sector Company

shall publish and circulate a

statement along with its annual

report to set out the status ofits compliance with these rules,

and shall also file with the

Commission and the registrarconcerned such statement

along with its annual report.

Compliance with the rules


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Whoever fails or refuses to complywith, or contravenes any provision

of these rules, or knowingly and

willfully authorizes or permits such

failure, refusal or contraventionshall, in addition to any other

liability under the Ordinance, be

punishable with fine and, in the

case of continuing failure, to afurther fine, as provided in sub-

section (2) of section 506 of the

Ordinance.

Penalty for contravention of the rules


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Any Question


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Thank You

securities and exchange commission of pakistan corporate governance code 2013

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