The Upper House of the Parliament on Friday passed unanimously the State-Owned Enterprises (Governance and Operations) (Amendment) Bill, 2024, aimed at strengthening the provisions for the removal of directors under the Act.
Minister for Law and Justice Azam Nazeer Tarar on behalf of the Minister for Finance and Revenue moved the bill in the House to amend the State-Owned Enterprises (Governance and Operations) Act, 2023 [The State-Owned Enterprises (Governance and Operations) (Amendment) Bill, 2024].
The minister said that the amendment was brough to enhance the efficiency of Board of Directors of all State-Owned Enterprises besides ensuring good governance.
In the proposed changes, future board directors, including government and independent members, would undergo performance evaluations by the board’s nomination committee. Recommendations for removal would be sent to the federal government for approval.
The act would empower the government to nominate independent directors through an institutionalised mechanism and provide for the majority of independent directors, security of tenure, removal criteria, enhanced board independence, and appointment of chief executive officers on the recommendations of the boards.
The statement of objects and reasons of the bill says that the SOEs (Governance and Operations) Act was promulgated in February 2023. The Act, inter alia, provides for the matters relating to the constitution of Boards of Directors of SOEs.
Presently, there is a need to reconstitute the Boards of SOEs to better align them with the reform initiatives aimed at restructuring and transformation as well as privatisation of certain entities. In order to achieve the above objective, there is a need to strengthen the provisions for the removal of directors under the SOEs Act.
