The members of Karachi Stock Exchange on Thursday decided that general body meeting will be called to amend KSE Article of Association to appoint broker as a chairman of the exchange. In an emergent meeting held at KSE here on Thursday, the members decided that the 2005 decision of appointment of a non-member chairman would be reverted and KSE Article of Association would be amended to appoint a real stakeholder of capital market as the chairman of KSE.
The KSE members held this meeting to discuss the statement of Securities and Exchange Commission of Pakistan (SECP) in this regard. The meeting unanimously rejected the position taken by the SECP. The meeting expressed its determination to amend the articles of the exchange and resist any move against the proposal of the member of KSE for restructuring of the KSE Board and reversal of the discriminatory requirement of the Chairman of the board being elected from amongst the non-member directors.
The members were of the view that take-over of the KSE by a non-stakeholder, so called professionals, has ruined the capital market. Since their take-over of the KSE by SECP nominee directors sidelining the real owners and stakeholders, the market has entered a period of decline culminating in the current situation, they said.
The members said that KSE a onetime vibrant emerging market has now been relegated to frontier market status. The board having majority and chairman of non members kept the KSE closed for nearly three months in 2008 in connivance with the apex regulator. That act of so called professional was responsible totally for wiping out the public investors. Surprisingly no inquiry committee was formed by the regulator against this heinous crime of inflicting a loss of over Rs 2.00 trillion to the investing public. Moreover, the so called professional independent directors having majority in the board along with the SECP are responsible for increasing the cost of doing business of running the exchange.
The members were of the view that take-over of KSE by non-stakeholders with the support of SECP under the garb of reforms to avoid conflict of interest has miserably failed in making KSE an extension of SECP. They said that the ''reforms'' have resulted in making the KSE an extension of SECP whereas the principle was that KSE is a frontline regulator watched over by SECP as apex regulator. Hence any dictatorial move to block the legal and democratic rights of members of the exchange to reverse the failed reforms would be connected forcefully.
The members were of the view that the recent act of non-stakeholder chairman of the KSE, ignoring the resolution of the board approval for the introduction of leverage product is a glaring example of highhandedness of an individual over institutional legal decision. By his actions the chairman has shown that neither he understands the market nor does he holds its best interest in his heart.
First of all he did not allow the board to hold the meeting to discuss the mater of introducing leverage product because he was holidaying in London for one month. On his return he could not understand the board deliberation explaining the leverage product which lasted for four hours. Then he chose to record his dissent and leaked it to the media which members feel is in defiance of good governance because as chairman he is supposed to defend the resolution of the board.
Then suddenly after wasting many weeks he is now surprisingly convinced on majority of the issues explained by the management of the KSE with same arguments, which were discussed in the initial board meeting. The SECP has also remained the hostage to the chairman KSE, who after all is only a member of the board comprising 10 members, delaying consideration on KSE proposal on leverage product. In the view of above, the member have decided to amend the Article to save the market from disaster reversing the restriction on member directors to become the chairman of the exchange.