The Security Exchange Commission Pakistan is likely to modify its directive issued on November 29 on a proposal received from Islamabad Stock Exchange, it is reliably learnt. It is expected that change in Lahore and Karachi is now likely also as the ISE proposal has been accepted by the SECP.
According to details, Islamabad Stock Exchange has been allowed by the Securities and Exchange Commission of Pakistan (SECP) to amend its bylaws to ensure that the ISE Board would have the right to elect any of the four non-member directors as chairman of the Exchange.
Sources told Business Recorder on Sunday that this change in the Articles of Association (AoA) of the ISE has been approved as a consequence and related amendment suggested by the ISE following the directives to all three bourses by the SECP requiring the exchanges to amend their regulations so that in future only a non-member director could be elected as chairman of the exchange.
The ISE Board in its meeting on December 1, 2005, while unanimously approving the SECP-directed amendment in its AoA, had also forwarded a list of some further related and consequent amendments necessitated due to the said directive for the approval of the regulator. This was done with the purpose to ensure that all related amendments may be placed before the Extraordinary General Meeting of the Exchange scheduled for December 9, 2005.
In these recommended amendments of the ISE, one amendment particularly relates to preserve the right of ISE Board members to elect any one director out of the four non-member directors as Chairman of the Board having the confidence of the majority of the Board members.
This specific step has been made possible through an amendment proposed by the ISE and approved by SECP in its letter issued on December 2, 2005. According to this approval of SECP, Article 67 of the AoA of the Exchange would now contain a provision stating:
''However, for the election of the Chairman, nominations duly proposed and seconded by two directors may be filed in the Board meeting where the election of the chairman is to be held''. In this way, the Board members of the ISE would now have a choice to propose and second any particular non-member director for election as chairman of the exchange.
In this case, both the elected and the non-elected directors would be able to propose and second any number of candidates, and only that non-member director will be elected who enjoys confidence of majority of the ISE Board.
It may be mentioned that the electoral college for the election of the chairman of each of the exchanges comprises five member directors, four independent/professional directors appointed by the SECP, whereas the tenth director on the Board of the Exchanges is the Managing Director who is barred from voting in the election of Chairman through an earlier change made in the rules/regulations of the exchanges.