On the policy note issued by the Competition Commission of Pakistan (CCP), the Securities and Exchange Commission of Pakistan (SECP) has incorporated the amendment in the revised draft of the Code of Corporate Governance. Under the amendment made in the Code of Corporate Governance, there is a mandatory training requirement for directors of listed companies, broadly prescribing the detailed requirements of the program that may be offered by the Pakistan Institute of Corporate Governance.
In this regard, the SECP has issued a letter to the CCP about the implementation of the CCP's proposal. According to an announcement of the CCP here on Thursday, the CCP has appreciated the decision of the SECP to incorporate changes suggested by CCP in the Code of Corporate Governance.
The CCP issued a policy note to SECP on July 12, 2010 recommending revocation of amendments made to Karachi Stock Exchange (KSE) Listing Regulations on June 22, 2010. The amendments included a clause requiring directors of all listed companies to get a certification of 'The Board Development Programme," offered by the Pakistan Institute of Corporate Governance (PICG) at a cost of Rs 200,000 per director. The amendments would virtually have created a monopoly position of PICG by recognising only its certification.
The CCP was of the view that although qualification requirements for certain posts is a globally recognised phenomenon, specifying a certain institution only in this case amounts to creating entry barriers for other educational institutions, and hence prevents competition. Such a measure could retard incentives for quality improvement by the exclusive player, and limits consumer choice both in terms of cost and location.
SECP Chairman Salman Ali Shaikh, in his letter of August 24, 2010 addressed to CCP Chairperson Ms Rahat Kaunain Hassan stated that SECP has given due considerations to the competition concerns raised in the CCP Policy Note and that SECP understands the need to discourage any entry barriers that may lead to the creation of a monopoly and prevent competition in the market. "The amendment recommended by CCP has already been incorporated in the revised draft of the Code of Corporate Governance that specifies the mandatory training requirements for directors of listed companies broadly prescribing the detailed requirements of the program that may be offered by the PICG as well as other institutions recognised for the purpose by SECP," the SECP letter added.
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