The Securities and Exchange Commission of Pakistan (SECP) has proposed amendments to the Listed Companies (Code of Corporate Governance) Regulations, 2019 and the Companies (Postal Ballot) Regulations, 2018 with the aim to facilitate companies listed on Pakistan Stock Exchange (PSX) in meeting regulatory requirements relating to election of independent and female directors to their boards.
Draft amendments to the regulations along with a concept paper have been made public soliciting stakeholders’ consultation. Under the proposed model, a three-tier voting structure for listed companies is being proposed whereby votes shall be casted separately for the three categories of directors i.e. female, independent and others.
It shall be the discretion of the shareholders to cast their votes to any candidate in each of the three categories and number of votes for each category shall be counted separately. The model will not restrict the right of a person to be a director in multiple categories e.g a female director can also be an independent director.
It is pertinent to mention that the role of independent directors is globally recognized in bringing specialized expertise to the board and contributing to conflict resolution. The initiative to mandate the presence of at least one female director on the board is part of SECP’s integrated approach to strengthening corporate governance in public interest companies.
These reforms will not only improve the corporate governance framework but will also play an important role in protecting minority interest by ensuring election of independent directors in an efficient and transparent manner.
