KARACHI (January 15 2003) : Sadia Khan, Commissioner at Securities Exchange Commission of Pakistan (SECP), dispelling the future agenda, said, the Commission would soon develop a 'Corporate Governance Index' to rate the companies and would further strengthen audit practices, enforcing International Accounting Standards.
Management Association of Pakistan organised on Tuesday a seminar on 'the role of the executive and non-executive directors in the light of the code of corporate governance'.
Sadia Khan presented her paper at the seminar instead of SECP Chairman Khalid Mirza, who was out country.
She said the main objectives of the regulator were to protect the rights of minority shareholders, unit holders and depositors and to enhance the performance of sectors under SEC purview.
Sadia said that corporate governance introduced was aimed to facilitating integration of our markets with global markets, strengthening the role of equity, curbing insider trading, improving disclosure standards and protection of investor interests.
Another focus of the governance was to regulate the stock market, like installing independent professional managing directors, independent non-executive directors, chairman to be elected by the board and code of conduct for brokers.
She said that the code sought to create institutional framework that encourages participants of the governance system to contribute towards better corporate performance through an alignment of their objectives.
She said that directors owe a fiduciary duty to their company.
They must at all times act honestly and diligently, acting in good faith and in the company's best interests.
Their role is to supervise management, participate in the direction of the company's business affairs and ensure that the interests of all shareholders are taken into account by the board.
The future agenda of the SEC is to clarify, reinforce and enhance standards of corporate governance: issue practice notes or guidance notes and period review of impact.
Continue to issue rules and regulations under various laws administered by it to ensure transparency, due process and accountability.
Strengthen its own capacity to monitor enterprise conduct and performance.
Efforts to set up Institute of Directors to arrange courses, impart training and create awareness.
Develop a Corporate Governance Index to rate companies and further strengthen audit practices and enforce international accounting standards.
Ebrahim Sidat in his presentation said that the 'Code of Corporate Governance illustrates to include the following as being significant policies:- risk management, human resource management including preparation of a succession plan, procurement of goods and services, marketing, determination of terms of credit and discount to customers, write-off of bad/doubtful debts, advances and receivables and acquisition/disposal of fixed assets.
He said that risk management should be visualised only in the context of an adverse phenomenon, unfavourable happenings and circumstances.
Missed opportunities and failure to cause to happen or exploit potential good events is also an integral part of risk management.
Masood Ali Naqvi said that the primary responsibilities of directors are fair presentation of financial statements, maintenance of proper records to enable extraction of such financial statements, establishment of adequate internal controls, application of accounting policies and safeguard the assets of the company.