Cg & Role of SECP Securities and Exchange Commission of Pakistan


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The Securities and Exchange Commission of Pakistan (SECP) was set up in pursuance of the Securities and Exchange Commission of Pakistan Act, 1997. This Act institutionalized certain policy decisions relating to the constitution and structure, powers, and functions of the SECP, thereby giving it administrative authority and financial independence in carrying out its regulatory and statutory responsibilities.

The SECP became operational in January 1999 and has come a long way since then. It was initially concerned with the regulation of corporate sector and capital market. Over time, its mandate has expanded to include supervision and regulation of insurance companies, non-banking finance companies and private pensions. The SECP has also been entrusted with oversight of various external service providers to the corporate and financial sectors, including chartered accountants, credit rating agencies, corporate secretaries, brokers, surveyors etc. The challenge for the SECP has amplified manifold with its increased mandate.

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Cg & Role of SECP Securities and Exchange Commission of Pakistan

  1. 1. SECP
  2. 2.    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)
  3. 3.    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)
  4. 4.       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
  5. 5.  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)
  6. 6.    Circumstances in which no director shall be considered independent Maximum number of directorships to be held by a director Filling up a casual vacancy
  7. 7. 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      
  8. 8.            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
  9. 9.      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
  10. 10.      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
  11. 11.            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
  12. 12.     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
  13. 13.       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
  14. 14.        Frequency of meetings Attendance at meetings Terms of reference Reporting procedures Internal Audit External Audit Compliance with the code of CG
  15. 15.            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
  16. 16.        Background Criteria for institutions Program outline Legal view Role and responsibilities of board of directors Financial overview International trends practices
  17. 17.             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
  18. 18.