SECP Introduces Regulatory Reforms to Enhance Corporate Governance

The Securities and Exchange Commission of Pakistan (SECP) has made amendments to the Listed Companies (Code of Corporate Governance) Regulations, 2019 and the Companies (Postal Ballot) Regulations, 2018. The amendments have been made pursuant to SECP’s commitment to safeguarding shareholders’ rights, enhancing corporate governance practices, and upholding market integrity. Under these reforms, the category-wise voting scheme has been omitted to support minority shareholders’ representation on the board. Further, the scrutinizer’s role has been enhanced for bringing transparency in the process of accepting or rejecting nominations for the election of directors and proxies. Reforms were also incorporated to enhance corporate governance by including provisions for mandatory attendance of directors in the general meetings and encouraging independent evaluation of board performance by an external body. Earlier, the SECP constituted a committee comprising market experts and relevant stakeholders to enhance transparency and improve the manner of holding the shareholders’ meetings. SECP carried out extensive public consultation on the committee’s report, following which the reforms were proposed in light of the committee’s recommendations. Public consultation was also carried out on the proposed reforms. The amendments in the Listed Companies (Code of Corporate Governance) Regulations, 2019, and the Companies (Postal Ballot) Regulations, 2018, are posted on the SECP website.