KARACHI (October 01, 2009) – As the code of Corporate Governance of Pakistan is being reviewed, the business case of board committees other than audit committees need to be discussed urgently and comprehensively, recommends ACCA Pakistan’s exploratory discussion paper “Looking Beyond Audit Committees”.
The paper commissioned by ACCA Pakistan Corporate Governance sub-committee aims to be a worthwhile contribution to initiating a discussion on whether board efficiency and effectiveness can be enhanced by delegating some of its work load to board committees like remuneration committee, corporate governance committee and ethics committee. To launch the discussion paper, a discussion forum was held in Karachi. The panelists included Dr Afra Sajjad, Head of Education and Policy Development, ACCA Pakistan, Fuad Azam Hashimi, CEO Pakistan Institute of Corporate Governance, Moin Fuda, Country Director, Center for International Private Enterprise, Khursheed Kotwal, Corporate Finance Director Unilever Pakistan and Haroon Tabraze, Chairman ACCA Pakistan Corporate Governance sub-committee (South).
Dr Afra Sajjad, Head of Education and Policy Development of ACCA Pakistan says: “The challenge for post economic meltdown business world is to win the trust of the stakeholders by demonstrating transparency and accountability. The boards have to play an instrumental role in leading businesses to be ethically efficient and effective. ACCA exploratory discussion paper Looking beyond Audit Committees endeavours to initiate discussion on the business case of having board committees other than audit committees in Pakistan. This hopefully would result in recommendations surfacing, whether the regulators and business world in Pakistan need to look beyond audit committees to ensure that the business world in Pakistan is at par with best practices of board committees around the world.”
The discussion paper outlines the business case for the following board committees:
Nomination Committee The responsibilities of nomination committee includes succession planning, performance assessment of directors, identifying and nominating for the approval of board, candidates to fill board vacancies. The discussion paper recommends development of best practice guidance on nominations committees and its coverage within the SECP Code of Corporate Governance to an equivalent extent to the present treatment on audit committees.
Remuneration Committee – Consequent to the focus on executive remuneration, the discussion paper recommends that even though the Code of Corporate Governance does not require setting up of remuneration committees, the business case for remuneration committee need to be critically evaluated from the perspective of transparency and effectiveness of remuneration and incentive policies by the regulators and the business world. The remuneration committee is responsible for reviewing and recommending to the Board of Directors all remuneration policies for directors and senior management of a business.
Ethics Committee The discussion paper suggests that the establishment of a high level Ethics Committee can be seen as an essential part of embedding ethical values throughout an organisation through its reports.
Corporate Governance Committee – The setting up of a Corporate Governance committee would strengthen corporate governance practices as the board would be assisted by a committee dedicated specifically to ensuring and monitoring corporate governance practices.