THE CODE OF CORPORATE GOVERNANCE 2012

SECP

SCHEME OF PRESENTATION

Importance of CG & Role of SECP The code of CG 2012 regarding,

composition of the board, responsibility, powers & functions of the director, decisions of board, CFO, CS, Corporate & financial reporting, Audit Committees, Criteria for DTP

Comparison of 2002 & 2012 codes (Annexure C)

Sample Secretarial compliance certificate

(Appendix A) Sample Statement of compliance

with the code of corporate governance

(Appendix B) Comparison of 2002 & 2012 codes (Annexure C)

Securities and Exchange Commission of Pakistan

Good governance & corporate governance standards

Ensuring the interest of various stakeholders, Making capital markets transparent, protecting rights of minority shareholders and attracting and retaining foreign investment

Importance of corporate governance Role of SECP- March 2002 Revisions in the code 2012-PICG The corporate compliance, transparency,

disclosure and accountability standards will improve significantly in the capital markets

Code of Corporate Governance 2012

Composition of the Board: The board of directors is encouraged to have a balance of executive and non-executive directors, including independent directors and those representing minority interests 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.  The minority shareholders as a class are facilitated to

contest election of directors by proxy solicitation The board of directors of each listed company shall have at

least one and preferably one third of the total members of the board as independent directors. The board shall state in the annual report the names of the non-executive, executive and independent director(s)

Code of Corporate Governance 2012

Circumstances in which no director shall be considered independent

Maximum number of directorships to be held by a director

Filling up a casual vacancy

Responsibilities, powers and functions of board of directors

Professional standards and corporate values

Adequate system and control Vision and mission statement System of sound internal control Annual evaluation of board performance Material transactions or significant

matters are documented The Chairman & CEO Meetings of the board

Significant issues to be placed for decision of Board of Directors

  Full details of the company’s failure to meet obligations shall be

provided in the company’s quarterly and annual financial statements

Annual business plan, cash flow projections, forecasts and strategic plan

 Budgets including capital, manpower and overhead budgets, along with variance analyses

Quarterly operating results of the listed company Internal audit reports, including cases of fraud, bribery, corruption,

or irregularities of a material nature Management letter issued by the external auditors Status and implications of any law suit Failure to recover material amounts of loans, advances, and

deposits made by the listed company Report on governance, risk management and compliance issues Disputes with labor and their proposed solutions Whistleblower protection mechanism

Related party transactions

Name of related party Nature of relationship with related

party; Nature of transaction; Amount of transaction; and Terms and conditions of transaction,

including the amount of consideration received or given

Directors’ Training Program Chief Financial Officer (CFO),

Company Secretary and Head of Internal Audit Appointment and removal

Qualifications of CFO and Head of Internal Audit

Requirement to attend the board meeting

Director’s remuneration

Corporate and financial reporting framework

The financial statements Proper books of accounts Appropriate accounting policies International financial reporting standards System of internal control Significant deviations in operating results Operating & financial data Dividend issue Plans and decisions Number of board & committees meetings Details of training programs

Frequency of financial reporting Responsibility for financial reporting

and corporate compliance Disclosure of interest by a director

holding company’s interest Composition of the committees of

the board

Committees of the board

The committee shall be responsible for: Recommending 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

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

The names of members of the committees of the board shall be disclosed in each Annual Report of the listed company

Audit Committee

Frequency of meetings Attendance at meetings Terms of reference Reporting procedures Internal Audit External Audit Compliance with the code of CG

Terms of reference

Determination of appropriate measures to safeguard the listed company’s assets

Review of quarterly, half-yearly and annual financial statements

Review of preliminary announcements of results prior to publication

Facilitating the external audit and discussion with external auditors

Review of management letter issued by external auditors Ensuring coordination between the internal and external

auditors of the listed company; Review of the scope and extent of internal audit Consideration of major findings of internal investigations of

activities Internal control systems including financial and operational

controls, Monitoring compliance with the best practices of corporate

governance Consideration of any other issue or matter as may be

assigned by the Board of Directors

Criteria for Institutions desirous of offering Directors’ Training Program

Background Criteria for institutions Program outline Legal view Role and responsibilities of board of

directors Financial overview International trends practices

Comparison of 2002 & 2012 Codes

Independent Director Criteria for assessment of independence Executive Directors Number of directorships Board evaluation Office of Chairman and CEO Training of the Board of Directors  Appointment and removal and qualification criteria for

Chief Financial Officer (CFO) and Company Secretary (CS)

The head of internal audit Remunerations of directors Board Committees Internal audit

CORPORATE GOVERNANCE VIDEOS

http://www.picg.org.pk/index.php

http://www.picg.org.pk/multimedia.php?vxdidp=1

http://www.picg.org.pk/multimedia.php?vxdidp=2

http://www.youtube.com/watch?v=EV_8PjrTtbw