Published On: Tue, Jan 14th, 2014
Published in Category: Islamabad

SECP amends Code of Corporate Governance

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ISLAMABAD: The governance standards are dynamic and changing with the development of constantly evolving corporate sector and financial markets.

This call for a constant review of the governance framework to keep pace with global benchmarks. In an endeavour to align our governance regime with enhanced requirements of the present times and global best practices, the Securities and Exchange Commission of Pakistan (SECP) has approved amendments to certain provisions of the Code of Corporate Governance for listed companies.

The amendments have been made taking into account the lessons learnt from the practical issues and considerations relevant to the listed companies and to ensure that it reflects changing governance concerns, practices and economic circumstances and best international practices.

The amended provisions relax eligibility requirements for the chief financial officer (CFO) and the head of internal audit (HOIA) for listed companies.

The experience requirements of the CFO have been reduced from five years of handling financial or corporate affairs of a listed company or a bank/financial institution to three years of experience in a public practice (audit/accounting) firm or in managing financial/corporate affairs of a company.

The experience requirements for HOIA have also been reduced from the earlier restrictive five years of relevant audit experience to three years in audit, finance or compliance function. As per an earlier clarification issued by the SECP, experience in a public practice (audit/accounting) firm would also be considered relevant audit experience.

These amendments have been approved following a review focused primarily on further refining practicality of the code for listed companies.

The said amendments are expected to improve compliance with the code and encourage new entrants to the fields of finance, audit and related functions, thereby expanding the existing talent pool of professionals in the country.

Moreover, the mandatory condition of appointing an independent director as chairman of the audit committee has been made voluntarily to facilitate companies in appointing suitably qualified non-executive directors as chairmen to the said committee.
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