KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has issued additional FAQs to Listed Companies (Code of Corporate Governance) 2017 (“the Regulations”). The aforesaid FAQs have been placed on the website of the SECP.
The Regulations, issued in November 2017, are effective from January 01, 2018 thereby replacing the Code of Corporate Governance 2012 (Code). For facilitation of stakeholders, certain matters, in particular, relating to the term of independent directors, eligibility for appointment of CFO and head of internal audit, criteria for institutions desirous of holding Directors’ training program were explained by issuing FAQs in December 2017. The said FAQs were well received by stakeholders.
After the effective date of Regulations, in view of certain practical issues and during interaction with stakeholders, SECP was requested for clarity on certain matters affecting compliance and disclosure under the Regulations. SECP has now issued certain additional FAQs pertaining to the mode of participation of directors in general meeting, matters affecting disclosures in the statement of compliance with the Regulations and election of independent directors.
Through the additional FAQs, SECP clarifies that foreign directors can attend the general meeting through video-conferencing. Recognising the fact that applicability of two set of laws ie Code 2012 and the Regulations in the same financial year might affect the disclosure understatement of compliance by Board, such companies are allowed to follow either of the statement of compliance while giving additional disclosure for clarity.
Moreover, the most persistent query regarding the election of independent director has been elaborately explained in light of the requirements of Act. Emphasis has been made on relevant disclosure in the statement of material facts in a notice of election of directors for information of members and role of chairman to ensure that mandatory requirement of electing independent director/s is aptly communicated to members and that specific slot/s for independent directors is not be filled-up by unqualified nominees.
It is viewed that FAQs shall provide ease in understanding the context of Regulations and relevant clauses of the Companies Act, 2017. SECP believes that the responsibility of governance rests with the respective company, therefore it is expected that companies adopt inclusive approach towards the Regulation in line with best practices in corporate governance.
