KARACHI (June 13 2003) : Securities and Exchange Commission of Pakistan (SECP) Chairman Abdul Rehman Qureshi has said that it was a heartening development that more and more companies are now realising the value of corporate governance and some companies had voluntarily offered themselves for corporate governance rating.
He was addressing the participants of the workshop on “Significant issues in corporate governance” in Islamabad on Thursday.
The SECP arranged the workshop under the SECP-UNDP project on corporate governance for senior management of listed companies.
Over 40 participants from across the country attended the workshop.
The project on corporate governance was formed through a memorandum of understanding signed between the SECP, the United Nations Development Programme (UNDP) and the Economic Affairs Division (EAD) in August 2002 to encourage compliance with the principles of good corporate governance.
The primary objective of the project is to introduce and encourage compliance with good corporate governance practices in Pakistan in order to revive investors confidence that is critical for sustainable economic growth, which in the long run, will lead to poverty alleviation.
This reflected the commitment of management in setting up standards for itself.
“I have been informed that the manufacturing companies are also approaching the rating agencies for their ratings. This corporate governance rating is like ISO certification, which reflects on the procedures, methods and the discipline followed by a company,” he added.
Abdul Rehman said, “It is a fact that the code of corporate governance enforced by the SECP through listing regulations is the code of good corporate practices, which was aimed at enhancing the efficiency of the corporate sector through effective management and internal control practices to improve corporate performance.
Unfortunately a wrong impression has been created that this code is a kind of over regulation and is a discouraging factor for new listings.
“To the contrary, I strongly feel that to be a listed company is a symbol of prestige and it entails greater corporate responsibility.
Therefore, as a policy, the SECP now encourages listing of such companies which have a proven track record and are in a position to pay return to the shareholders through dividend or capital appreciation.”
He also said, “Some companies have also been agitating about the cost and labour involved in the printing and circulation of quarterly accounts among the shareholders.
In order to redress their concern, the SECP had already directed all the listed companies to have their Web sites and is considering to do away with the requirements of printing and dispatch of such reports by the listed companies.
This will reduce the cost and also ensure timely dissemination of information to the shareholders and regulatory authorities.”
“While we have endeavoured to inculcate good corporate practices by introducing code of corporate governance, we have also taken concrete steps to improve the quality of audit to make financial statements more reliable and transparent.
“It is my sincere desire that the auditing professionals take further measures in this direction. I feel duty bound to give a clear message to all those who are directly or indirectly involved in the corporate governance to follow and implement the code in letter and spirit and remove all impediments lying in their way,” Abdul Rehman Qureshi said.
The workshop is in continuity of the SECP's efforts to encourage participation of various stakeholders in effective implementation of the code of corporate governance, which was issued by the SECP in March 2002.
The workshop aims to broaden the understanding of stakeholders and advance the current thinking on corporate governance and best practices.
Distinguished speakers at the workshop from the corporate sector touched upon and explored several issues in corporate governance.
The event started with an introduction to corporate governance by Khaliq-uz-Zaman Khan, partner, Azzaman Advocates and Legal Consultants.
Hasan Bilgrami, head, Assets Management, National Investment Trust, spoke on the appropriateness of accounting policies.
Tajamal Shah, company secretary, Pakistan Tobacco Company, highlighted upon the role a company secretary plays as a guardian of good corporate governance practices, and the type of background needed to succeed in this position.
The workshop participants also learnt about the significance of audit committees from Shamim Ahmed Khan, director, International General Insurance, and former chairman of the SECP.
Javed Iqbal, director in several organisations, including the Karachi Stock Exchange, highlighted on ensuring transparency in corporations, especially in the board of directors.
Farid Dossani, senior country representative, International Finance Corporation (IFC), chaired the workshop.