The IFC Pakistan Corporate Governance Project

2 of 29

The Goal of the Pakistan CGP is to improve Corporate Governance in the Country

Provide access to capital Build better performance Develop trust & reputation

Minimize portfolio risk Add value to clients

Improve regulatory framework Build viable institutions Develop training capacity Strengthen vigilant press

Objective 1: To build the business case for good cg

among banks and companies

Objective 2: To assist investors in improving the cg practices of investee

companies

Objective 3: To build sustainable institutional

capacity for cg

3 of 29

Pakistan Corporate Governance Project

Develop equity markets Raise awareness of cg

among investors Provide institutional

investors with assessment tools

Work with exchanges to develop corporate governance assessment

tools

Assist public sector to build appropriatelegal and regulatory framework

Develop or amend laws and regulations(SECP/SBP)

Develop listing rules Introduce cg guidelines/handbooks

Help banks create demand for cg among clients Raise awareness of cg Provide banks with cg

assessment tools Train banks to assess cg

of their corporate clients

Generate demandfrom within banks & companies

Raise awarenessTrain directors and mgmt. Provide advisory services

Build Sustainable Institutional CapacityStrengthen the Pakistan Institute of Corporate GovernanceTrain press on cgSupport universities to introduce curricula, and conduct and publish research

20 of 26

4 of 29

1. MOU with SECP

2. Assist in promoting good corporate governance practices within Pakistani Companies and Financial Institutions

3. Advise Public Sector on how to improve upon legal and regulatory frameworks for Corporate Governance

4. Capacity Building of the Pakistan Institute of Corporate Governance (PICG)

Pakistan Corporate Governance Project

5 of 29

IFC will Assist PICG in Five Key Areas:

1. Setting up training and certificate/certification programmes on corporate governance for company directors, managers and secretaries

2. Building capacity for research and development to conduct surveys, issue publications and produce “best practices” manuals/handbooks.

3. Developing and providing consulting and advisory services on corporate governance to Pakistani banks and companies

4. Raising awareness of corporate governance practices through conferences, seminars, roundtables and workshops

5. Providing policy advice to the government on legal and regulatory reforms relating to corporate governance

Pakistan Corporate Governance Project

6 of 29

IFC’s interventions will be both direct on its own, and through the PICG. The idea is that PICG should be strengthened so that it becomes a leading provider of knowledge and awareness related to corporate governance practices in Pakistan

Pakistan Corporate Governance Project

7 of 29

How IFC Can Support Companies

21 of 26

8 of 29

I. Corporate Governance Improvement Plan

Objective: To demonstrably improve upon the cg practices of CompaniesStep 1 – Desk research and analysis - Legal and regulatory review- Internal company document- Questionnaire, completed by clientStep 2 – On-site assessment-interviews- Complete set of interviews with entire board, senior management and outside

stakeholders (e.g. legal counsel, external auditor)- On-site training possibleStep 3 – Assessment Report - drafting final CGA- Compare current cg structure with national and int. reference points for good

cg- Focus on 4 areas: (i) commitment; (ii) board practices; (iii) protection of

(minority) shareholder rights and stakeholders; and (iv) transparency and disclosure, including internal and external controls

22 of 26

9 of 29

Core Tool: Simple Progression Matrices

A Self-Assessmentand Client Orientation Tool

1. Acceptable 2. Extra Steps3. Major

Contributions 4. Leadership

Commitment to Good Corporate Governance

Structure and Functioning of the Board of Directors

Transparency and Disclosure

Treatment of Minority Shareholders

LEVELS

AT

TR

IBU

TE

S

PROGRESSION

Our aim is to assist companies in progressing to Level 4 in CG23 of 26

10 of 29

Corporate Governance Improvement Plan – A Preliminary Timeline

ID Task

2nd Quarter 2nd Quarter 3rd Quarter

Apr May Jun Jul Aug Sep Oct Nov Dec

1 Client completes questionnaire, sends key corporate documents                  

2 IFC conducts on-site interviews          

3 Analysis and report drafing          

4 Delivery of draf report          

5 Consultation with stakeholders          

6 Board presentation of final report          

7 Support (separate mandate)                  

4 weeks

1 w.

6 weeks

4 weeks

Ongoing

Deliverable: Final CG Improvement Plan report includes:

- Corporate governance assessment- Recommendations, prioritized according to importance- Agreed-upon action plan- Model documents

24 of 26

11 of 29

II. Corporate Governance Assessment Tool to Help Companies Minimize Porfolio Risk

Develop Corporate Governance Assessment Tool

- Based on IFC’s own tools, tailored to Pakistan’s market

Train relevant staff on corporate governance

- Comprehensive, cover all key areas of cg- Interactive training events, based on case studies

25 of 26

12 of 29

Corporate Governance Assessment Tool – A Preliminary Timeline

ID Task

2nd Quarter 2nd Quarter 3rd Quarter

Apr May Jun Jul Aug Sep Oct Nov Dec

1 Develop assessment tool                  

2 IFC conducts on-site interviews          

3 Analysis and drafing          

4 Delivery of draf assessment tool          

5 Consultation with stakeholders          

6 Presentation & delivery of final report          

7 Training                  

4 weeks

1 w.

6 weeks

4 weeks

8 weeks

Deliverable:

- Assessment manual on how to identify key corporate governnace issues

- Comprehensive training for staff

26 of 26

13 of 29

Summary and Conclusions

Put most simply, corporate governance is defined as a series of structures and processes for the direction & control of a company.

Corporate governance must not to be confused with public governance, CSR or business ethics.

Corporate governance finds its roots in the separation of ownership and control, as well as corporate crisis.

Corporate governance is regulated by and external (laws & regulations) and internal framework (charters, by-laws, etc.).

For more information, pls. visit our website under www.ifc.org/corporategovernance/

14 of 29

Thank you for your attention!

Questions?