KARACHI: A firm of external auditors or any partner in the firm of external auditors is ineligible to hold shares of companies listed at bourses in the country, according to an official of the Securities and Exchange Commission of Pakistan (SECP) at a workshop titled “The role of executive and non-executive directors in the light of the code of corporate governance” organised by the Management Association of Pakistan (MAP) here Tuesday.
“The spouse of an auditor, his or her children could not at any time hold, purchase, sell or take any position in the shares of a listed company or any of its associated companies or undertakings,” said the official.
In case a firm or a partner or his or her spouse or minor child owns shares in a listed company, being the audit client, prior to the appointment as auditors, such a listed company shall take measures to ensure that the auditors disclose the interest to the listed company within 14 days of appointment and divest themselves of such interest not later than 90 days.
The directors of the company are also liable to disclose their interest in holding the company’s shares, under the SECP’s recently introduced regulatory framework for listed securities.
“Where any director, CEO or executive of a listed company or their spouses sell, buy or take any position, whether directly or indirectly, in shares of the listed company of which he or she is a director, the CEO or executive, as the case may, shall immediately notify in writing the company secretary of his or her intentions,” he said. “Such a director, CEO or executive, as the case may be, shall also deliver a written record of the price, number of shares, form of share certificates and nature of transaction to the company secretary within four days of effecting the transaction. The notice of the director, CEO or executive, as the case may be, shall be presented by the company secretary at the meeting of the board of directors immediately subsequent to such transaction.”
In the event of a default by a director, CEO or executive, a written notice or written record must be delivered and the company secretary shall place the matter before the board of directors in its immediate next meeting.
The listed company will also have to determine a closed period prior to the announcement of interim or final results and any business decision, which may materially affect the market price of its shares. No director, CEO or executive shall, directly or indirectly, deal in the shares of the listed company in any manner during the closed period.