Corporate governance guide for family-owned companies launched

"Today Pakistan has become the first country in Asia having formally introduced a corporate governance guidebook for family-owned companies, which has been developed through extensive private sector dialogue and input".
This was stated by Moin Fudda, Country Director, Centre For International Private Enterprise (CIPE) Pakistan while speaking at the launching ceremony of "The Corporate Governance Guide: Family-Owned Companies", held at a local hotel here on Wednesday.
The guide has been produced by a joint effort of the CIPE, the Pakistan Institute of Corporate Governance (PICG), and the Institute of Chartered Accountants Pakistan (ICAP). This handbook is a voluntary guide for progressive, medium to large sized, non-listed family-owned companies in Pakistan. Fudda said that many international organisations support corporate governance initiatives.
Stressing the value of international experience, CIPE and its partners relied on the "local knowledge approach", which enabled countries to identify their own corporate governance needs and improve international standards to reflect local realities, he explained.
He further said that CIPE, PICG and ICAP had focused on the ground realities and matched them with the best practices followed internationally while developing this guidebook. In his keynote address, Razzak Dawood, Chairman of the Pakistan Business Council and former Commerce Minister observed that corporate governance was necessary for the creation of human, intellectual and financial capital. "I am a strong believer that the good corporate governance is not a cost but value addition, an investment in the future of the company," he added.
He said he was confident that CIPE and its partners PICG and ICAP would continue their support in promoting good corporate governance in the family-owned companies." Gregg Willhauck of CIPE-Washington said on this occasion that CIPE had been a leader in promoting good corporate governance since its inception in 1983. "We help prepare the code of corporate governance in Egypt in Arabic language."
A survey conducted in Egypt suggested that 92 percent companies agreed that the corporate governance was necessary for sustainable economic development and 40 percent showed commitment to follow the transparency and succession planning as defined in the code of corporate governance.
In case of family-owned enterprises, it was important that such families be given the knowledge about how they can be benefited by following the principles of corporate governance, he added. Fuad Hashimi, President, Pakistan Institute of Corporate Governance said that the PICG had been actively conducting the training programs for Board Members. But the main focus was the listed companies, he further said.
There was an immense need to create the awareness about corporate governance among unlisted companies. PICG would continue working with CIPE to achieve this goal, he said.
Asad Ali Shah, Council Member, Institute of Chartered Accountants Pakistan said the initiative for developing this guide was a true example of "By the private sector, for the private sector".
Current focus for implementing the principles of corporate governance was tilted towards the listed companies, he maintained. These efforts would benefit only about 650 companies listed at the stock exchanges. Greater economic benefit could only be drawn by including 50,000 companies registered with the Securities and Exchange Commission of Pakistan, he said.
It is internationally recognised that good governance has a positive impact on the performance of companies and enables them to move into the next phase of the business lifecycle. As companies grow and become more conversant with good governance, their ability to attract capital from external sources also improves, allowing them to expand, diversify, and acquire other businesses in a sustainable manner.
Pakistan has been experiencing phenomenal economic growth in the past few years, leading to a sizeable increase in the number of unlisted companies, particularly family-owned organisations. The Securities & Exchange Commission of Pakistan has recently reported that the total number of unlisted companies has now surpassed the 50,000 mark, in counterpoint to the 5,000 or so companies registered in 2007.
The sharp growth in such companies is fuelling the growth of Pakistan's private sector, making good governance even more important for businesses. Currently, the Code of Corporate Governance only ensures compliance for companies listed on the stock exchanges.
Introducing the concept of good corporate governance is vital for the continuity and sustainability of the unlisted companies that support economic growth in Pakistan. Recognising the need for corporate governance guide for family-owned companies, In July last year, the Center for International Private Enterprise (CIPE) the Pakistan Institute of Corporate Governance (PICG), and the Institute of Chartered Accountants Pakistan (ICAP) forged a partnership to initiative the project for developing a guide.
After detailed deliberations by the stakeholders at five focus groups meetings and two roundtables, as well as offering the draft for comment on the three organisations' websites, the guide is finally ready. It provides a corporate governance framework, based on the OECD's internationally recognised principles, which is practical and adaptable for both listed and unlisted companies.
Moreover, this guide addresses some of the peculiarities of family-owned businesses in Pakistan. It is hoped that in addition to family-owned companies, other unlisted companies will benefit from this guide as well.