The Securities and Exchange Commission of Pakistan (SECP) has approved principles of corporate governance for non-listed companies (NLCs) to make business environment trustworthy, transparent and accountable.
The principles would change the governance paradigm for NLCs by enabling the corporate sector to adopt the best international practices, said a statement issued on Tuesday.
They are voluntary guidelines that would set out the corporate governance landscape for over 60,000 NLCs operating in Pakistan by providing a governance tool kit to improve their internal and external governance structures of these NLCs.
The principles are aimed at achieving excellence in corporate governance by promoting enabling framework for NLCs to make them more ethical and sustainable. The implementation of principles for NLCs is part of the landmark project of the SECP for corporate sector development and growth in order to meet its policy objectives as vibrant corporate sector regulator.
The International Finance Corporation (IFC), a pioneer in implementation of global corporate governance projects, is collaborative partner of the SECP in formulating best acceptable draft of principles.
The IFC provided its valuable feedback about the draft of principles proposed by the SECP that are applicable to NLCs in Pakistan.
The IFC and Center for International Private Enterprise (CIPE) has conducted a peer review of such guidelines in other international jurisdictions and by holding roundtable conferences in order to seek feedback from market participants about the draft set of principles.
Three roundtables were held in Karachi, Lahore and Islamabad which were attended by experts in the areas of accounts, finance, audit, law, corporate and governance strategy and academia.
The principles are voluntary guidelines that are applicable to NLCs in Pakistan and have two parts – principles are applicable to all NLCs except small-sized companies; principles are applicable to public interest and large-sized companies.
The principles are not applicable to public sector companies that are governed under Public Sector Companies (Corporate Governance) Rules, 2013.
The part one of the principles provides broad guidelines with regard to constitutive documents, board of directors and their meetings, remuneration of board members, internal control mechanism, training of board and general meetings whereas the part two of the principles are sophisticated corporate governance measures that are relevant to public interest and large-sized companies. These may be considered by the NLCs that are preparing themselves for future public listings.