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By Arslan Nawaz
Securities and Exchange Commission of PakistanCorporate Governance Code 2013
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10. Quarterly and Monthly Financial Statements and Annual Report
(2 subsection)
11. Board orientation and learning (3 subsection)
12. Formation of Board committees (3 subsection)13. Chief Financial Officer, Company Secretary and Chief Internal
Auditor - appointment and removal (3 subsection)
14. Role and qualification of Chief Financial Officer and Company
Secretary (5 subsection)
15. Requirement to attend Board Meetings (2 subsection)
16. Financial Reporting Framework
Sections of Law
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17. Directors' report to the Shareholders (4 subsection)
18. Disclosure of Interests by Directors and Officers (3 subsection)
19. Directors' Remuneration (3 subsection)
20. Responsibility for financial reporting and corporate compliance
21. Audit Committee (9 subsection)
22. Internal Audit (4 subsection)
23. External Audit (8 subsection)
24. Compliance with the rules (3 subsection)
25. Penalty for contravention of the rules
Section of Law
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Highlights of Sections
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The Board shall consists of executive and non-executive
directors, independent directors, diversified.
The Board shall have forty percent of its total members as
independent directors
Company shall disclose in the annual report Non-executive,
Executive and Independent directors.
No Independent Director shall participate in share options
or any similar schemes of the Public Sector Company
No person shall be elected or nominated as a director of
more than five Public Sector Companies and listed
companies simultaneously, except their subsidiaries.
Composition of the Board
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The office of the chairman shall be separate, and his responsibilities
distinct, from those of the chief executive.
The chairman of the Board shall, ensure that the Board is properly
working and all matters relevant to the governance of the Public
Sector Company are placed on the agenda of Board meetings;conduct the Board meeting including fixing the agenda; and ensure
that all the directors are enabled and encouraged to fully
participate in the deliberations and decisions of the Board.
The chief executive is responsible for the management of the Public
Sector Company and for its procedures in financial and othermatters include implementation of strategies and policies approved
by the Board.
Role of the chairman and chief executive and
separation of the two positions
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A director, once appointed or elected, shall hold office for aperiod of three years, unless he resigns or is removed inaccordance with the provisions of the Ordinance.
The Board shall evaluate the candidates based on the fit and
proper criteria and the guidelines specified by theCommission for appointment to the position of the chiefexecutive.
The Board shall ensure that obligations to all shareholders arefulfilled
The Board shall ensure that professional standards andcorporate values are in place
The Board shall establish a system of sound internal control
Responsibilities, powers and functions of the
Board
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The Board shall meet at least once, each quarter of a
year.
In case of noncompliance, the same shall be
reported to the Commission with reasons ofnoncompliance, within fourteen days of the end of
the quarter in which the meeting should have been
held.
Written notices of meetings, including the agenda,duly approved by the Chairman, shall be circulated
not less than seven days before the meetings.
Meetings of the Board
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The Board shallestablish appropriatearrangements to
ensure it has access toall relevantinformation, adviceand resources
necessary to enable itto carry out its roleeffectively.
Key information to be placed for decision by
the Board
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The performance evaluation of the members of theBoard including the chairman and the chief executiveshall be undertaken for which the Board shall establish aprocess, based on specified criteria, and the chairman of
the Board shall take ownership of such an evaluation.The committees shall also carry out their evaluation onan annual basis.
The Board shall monitor and assess the performance ofsenior management on a periodic basis, at least once ayear, and hold them accountable for accomplishingobjectives, goals and key performance indicators set forthis purpose.
Performance evaluation
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Every Public Sector Company shall, within one monthof the close of first, second and third quarter of itsyear of account, prepare a profit and loss account for,and balance-sheet as at the end of, that quarter,
whether audited or otherwise, for the Board'sapproval.
Annual report including annual financial statementsshall be placed on the Public Sector Company's
website. Every Public Sector Company shall also prepare
monthly accounts, for circulation amongst the Boardmembers.
Quarterly and Monthly Financial Statements
and Annual Report
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Orientation courses shall be
held by a Public Sector
Company, to enable directors
to better comprehend the
specific context in which it
operates, including its
operations and environment,
awareness of Public Sector
Company's values andstandards of probity and
accountability as well as their
duties as directors.
Board orientation and learning
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The Board shall set up the
following committees to support it
in performing its functions
efficiently, and for seeking
assistance in the decision makingprocess, namely
A. Audit committee
B. Risk management committee
C. Human resources committee
D. Procurement committee
E. Nomination committee
Formation of Board committees
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The Board shall
appoint or remove a
chief financial officer,
a company secretaryand a chief internal
auditor.
Chief Financial Officer, Company Secretary and Chief
Internal Auditor - appointment and removal.
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The chief financial officer shall be responsible for ensuringthat appropriate advice is given to the Board on all financialmatters, for keeping proper financial records and accounts,and for maintaining an effective system of internal financial
control.The company secretary shall be responsible for ensuringthat Board procedures are followed, and that all applicablelaws, rules and regulations and other relevant statementsof best practice are complied with. Where the companysecretary is not separately appointed, the role of companysecretary may be combined with chief financial officer orany other member of senior management.
Chief Financial Officer, Company Secretary and Chief
Internal Auditor - appointment and removal.
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The chief financial
officer and the
company secretary of
a Public Sector
Company shall attend
all meetings of the
Board
Requirement to attend Board Meetings
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Every Public Sector
Company shall
adopt International
Financial Reporting
Standards.
Financial Reporting Framework
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The Board shall
submit an annual
report to the
shareholders. likefinancial statements,
corporate governance
rules compliance and
key operating and
financial data of last
six years etc.
Directors' report to the Shareholders
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Every director/officer of a Public Sector
Company, if he or his relative, is in any way,
directly or indirectly, concerned or interested in
any contract or arrangement entered into, or tobe entered into, by or on behalf of the Public
Sector Company shall disclose the nature of his
concern or interest at a meeting of thedirectors/ any forum.
Disclosure of Interests by Directors and
Officers
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There shall be aformal andtransparent
procedure for fixingthe remunerationpackages of individualdirectors. No director
shall be involved indeciding his ownremuneration.
Directors' Remuneration
R ibili f fi i l i
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No Public Sector Company shall circulate its
financial statements unless the chief executive
and the chief financial officer, present the
financial statements, duly certified under theirrespective signatures, for consideration and
approval of the audit committee and the Board.
The Board shall, after consideration andapproval, authorize the signing of financial
statements for issuance and circulation.
Responsibility for financial reporting
and corporate compliance
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The Board shall establish an audit committee, whosemembers shall be financially literate and majority of them,including its chairman, shall be Independent Non ExecutiveDirectors.
The names of members of the audit committee shall be
disclosed in each annual report of the Public SectorCompany.
The chairman of the Board as well as the chief executive ofthe Public Sector Company shall not be a member of theaudit committee.
The audit committee shall be responsible for managing therelationship of Public Sector Company with the externalauditors.
Audit Committee
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There shall be an internalaudit function in every PublicSector Company. The chiefinternal auditor, who is the
head of the internal auditfunction in the Public SectorCompany, shall beaccountable to the audit
committee and haveunrestricted access to theaudit committee.
Internal Audit
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Every Public SectorCompany shallensure that its
annual accounts areaudited by externalauditors.
External Audit
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Every Public Sector Company
shall publish and circulate a
statement along with its annual
report to set out the status ofits compliance with these rules,
and shall also file with the
Commission and the registrarconcerned such statement
along with its annual report.
Compliance with the rules
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Whoever fails or refuses to complywith, or contravenes any provision
of these rules, or knowingly and
willfully authorizes or permits such
failure, refusal or contraventionshall, in addition to any other
liability under the Ordinance, be
punishable with fine and, in the
case of continuing failure, to afurther fine, as provided in sub-
section (2) of section 506 of the
Ordinance.
Penalty for contravention of the rules
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Any Question
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Thank You