The Securities and Exchange Commission of Pakistan (SECP) has announced significant amendments to the Listed Companies (Code of Corporate Governance) Regulations, 2019, and the Companies (Postal Ballot) Regulations, 2018, aimed at enhancing corporate governance practices in the country. These reforms reflect SECP’s ongoing commitment to safeguarding shareholders’ rights, improving transparency, and ensuring market integrity in Pakistan’s corporate sector.
One of the key changes introduced under these reforms is the removal of the category-wise voting scheme. This adjustment is designed to provide greater representation for minority shareholders on the board of directors, ensuring that their voices are heard in decision-making processes. By eliminating the category-based voting system, SECP aims to foster a more equitable and inclusive governance structure for listed companies, empowering shareholders regardless of their shareholding size.
Additionally, the role of the scrutinizer has been bolstered to ensure greater transparency in the process of accepting or rejecting nominations for director elections and proxies. This reform is expected to bring added integrity to the shareholder meeting process, making it more reliable and open to scrutiny.
In an effort to further enhance corporate governance, the SECP has also introduced provisions requiring mandatory attendance by directors at general meetings. This is aimed at ensuring that board members remain actively engaged in the company’s affairs and decision-making processes. Furthermore, the SECP encourages companies to seek independent evaluations of board performance from external bodies. This measure is designed to hold directors accountable for their actions and foster more effective and transparent governance practices.
The introduction of these reforms follows a comprehensive process that involved consultations with market experts and relevant stakeholders. SECP initially constituted a committee with the mandate to enhance transparency in shareholders’ meetings and improve governance practices. After conducting public consultations on the committee’s report, the SECP proposed these reforms to address the concerns raised and to align corporate governance in Pakistan with international best practices.
The amendments to the Listed Companies (Code of Corporate Governance) Regulations, 2019, and the Companies (Postal Ballot) Regulations, 2018, are now available on the SECP website for public access. These regulatory changes mark an important step forward in improving the business environment in Pakistan, ensuring that corporate governance standards meet the needs of a dynamic and growing market.
Through these reforms, SECP is not only reinforcing its regulatory framework but also contributing to the broader goals of financial transparency, corporate responsibility, and shareholder empowerment. By enhancing corporate governance structures, the SECP aims to build stronger trust among investors, improve the accountability of company boards, and create a more robust financial market in Pakistan.