PRESENTATION ON CODE OF CORPORATE GOVERNANCE

GROUP MEMBER MUZAMMIL ABDUL AZIZ MUHAMMAD IMRAN

What is Corporate Governance?GovernTo rule by right of authority To direct, guide, control, influence……..

GovernanceThe exercise of direction, authority and

control

What is ManagementManage To conduct (the day-to-day) business To bring about or succeed in accomplishing a task To administer and supervise (the functions of

management)Management1. The organizing and controlling of the affairs of abusiness or a particular sector of a business2. The act of conducting business; bringing about orsucceeding in accomplishing a task.

What CG does ?Corporate governance provides the structure

for shareholders to define, implement and monitor a company's goals and objectives,

while the management is responsible for delivering on those goals and objectives.

To put it in very simple terms, the board of directors makes policy, and management carries it out.

Role of Board and Management?Board responsibilities, according to OECD include:•Develop the company's purpose, vision, values•Guide strategy•Oversee management•Nominate key executives•Align remuneration of board and key executives

with long terminterests of the company•Ensure that properly supervised controls are in

place•Oversee disclosure and communications

Role of Board and Management?The senior management team, by contrast,

holds specific executive powers of managing the day-to-day business of the company and is accountable to the board for the proper fulfillment of its designated functions, tasks and strategic and operational objectives.

The highest levels of senior management (typically, the chief executive officer) may also sit on the board of directors, in which case, they are referred to as executive directors."

Key Benefits of good CGShareholders enhanced confidenceTransparencyGreater and cheaper source of Capital BorrowingsGreater financial sector stabilityFaster corporate sector growth and job creationBetter protection for all investors, including pension

beneficiariesActive Capital Markets beneficial to minority

shareholdersGood corporate governance practices lead to bettercompanies and, in turn, better societies

Key Parameters of CGGood Board Practices.Shareholder Rights.Control Environment.Disclosure & Transparency.Commitment

Core Values of good CGResponsibilityAccountabilityIntegrityFairnessTransparencyHonestyTrustLaw abidingCommunication

What SECP says about CodeWhat SECP says about Code The Code sets

minimum benchmark in terms of governance standards, brings consistency in corporate practices and promotes transparency through enhanced disclosure requirements.

The Code will result in availability enhanced information to markets participants and hence will provide better protection of the rights of all investors, particularly minority shareholders.

Key Components of CCGComposition and relationship amongBoardCommittees of BoardChairmen of Board and CommitteesCEOManagementInternal AuditCFOCorporate Secretary

Composition of BoardThe board of directors is encouraged to have a

balance of executive and non executive directorsIncluding independent directors and those

representing minorityinterests with the requisite skills, competence,

knowledge and experience so that the board as a group includes core competencies and diversity, including gender, considered relevant in the context of the company’s operations.

At least one independent director and not more than one third of executive directors including CEO

Responsibilities, powers and functionsThe board of directors of a listed company shall

ensurethat:professional standards and corporate values

are put in place that promote integrity for the board

adequate systems and controls are in place for identification and redress of grievances arising from unethical practices.

the board of directors shall define the level of materiality

The significant policies may include:governance, risk management and compliance issues;human resource management including preparation of a

succession plan;procurement of goods and services;investors’ relations including but not limited to generalinvestor awareness, complaints and communication, etc.;marketing;determination of terms of credit and discount to

customers;write-off of bad/doubtful debts, advances and receivables;

The significant policies may include:capital expenditure, planning and controlinvestments and disinvestment of fundsborrowing of moneys;determination and delegation of financial powers;transactions or contracts with associated companies

and related partiesthe corporate social responsibility (CSR) initiatives

and other philanthropic activities including donations, charities contributions and other payments of a similar nature; health, safety and environment; and

the whistleblower policy

The Chairman and CEOThe Chairman and the Chief Executive

Officer (CEO), by whatever name called, shall not be the same person except where provided for under any other law.

The Chairman shall be elected from among the nonexecutive directors of the listed company

The Board of Directors shall clearly define the respective roles and responsibilities of the Chairman and CEO.

FORMATION OF BOARD COMMITTEEThe board shall setup the following committees

Audit CommitteeRisk management CommitteeHuman Resources CommitteeProcurement CommitteeNomination committee

Board CommitteesHuman Resource & RemunerationMin 3 members,Majority NED, 1 preferably independentCEO can’t be chairman of the committeeAuditMin 3 NED,Chairman Independent,Board Chairman Can’t be Audit Committee

ChairmanAt least one member to have financial skills/

expertise

Meetings of the BoardThe chairman of the listed company shallPreside over meetings of the board of

DirectorsMeet at least once in the every quarter on the

financial yearEnsure that minutes of the meeting of the

board of directors are appropriately recorded

Responsibility of HR & R Committeerecommending human resource management policies

to the board;recommending to the board the selection, evaluation,

compensation (including retirement benefits) and succession planning of the CEO;

recommending to the board the selection, evaluation, compensation (including retirement benefits) of COO, CFO, Company Secretary and Head of Internal Audit; and

iv) consideration and approval on recommendations of CEO on such matters for key management positions who report directly to CEO or COO.

Audit Committee Terms of ReferenceThe Board shall provide adequate resources and

authority to enable the Audit Committee carry out its responsibilities effectively.

The Audit Committee shall, inter alia, recommend to the Board of Directors the appointment of external auditors, their removal

review of quarterly, half-yearly and annual financial statements of the listed company and focusing on, major judgmental areas, the going concern assumption, any changes in accounting policies and practices

Audit Committee MeetingsThe Audit Committee of a listed company shall

meetat least once every quarter of the financial year

These meetings shall be held prior to the approval of interim results of the listed company by its Board of Directors and before and after completion of external audit.

A meeting of the Audit Committee shall also be held, if requested by the external auditors or the Head of Internal Audit

INTERNAL AUDITORThere shall be an internal audit function in

everyPublic Sector Company. The chief internal auditor, who is the head of the internal audit function in the Public Sector Company, shall be accountable to the audit committee and have unrestricted access to the audit committee.

EXTERNAL AUDITOREvery Public Sector Company shall ensure

that its annual accounts are audited by external auditors, as envisaged under section 252 of the Ordinance. When carrying out audit of a Public Sector Company, the external auditors shall take into account the specific requirements of any other relevant regulations, ordinances or ministerial directives which affect the audit mandate and

Appointment and removal of CFO, CS & HIAThe appointment, remuneration and terms and

conditions of employment of the Chief Financial Officer (CFO), the Company Secretary and the Head of Internal Audit of listed companies shall be determined by the board of directors

The removal of the CFO and Company Secretary of listed companies shall be made with the approval of the board of directors

The removal of Head of Internal Audit shall be made with the approval of the board only upon recommendation of the Chairman of the Audit Committee

Qualifications of CFO

a member of a recognized body of professional accountants

has a postgraduate degree in finance from a recognized university or equivalent

CFO and CS to attend Board MeetingsThe CFO and Company Secretary of a listed

company or in their absence, the nominee, appointed by the board, shall attend all meetings of the Board of Directors. Provided that the CFO and Company Secretary shall not attend such part of a meeting of the Board of Directors, which involves consideration of an agenda item relating to the CFO and Company Secretary respectively

THANKING YOU