ISLAMABAD: The Senate Standing Committee on Finance has approved amendment in the State-Owned Enterprises (SOEs) law to strengthen the provisions for the removal of directors under the Act.
The meeting presided over by Senator Saleem Mandviwala held a discussion on the amendments in the SOEs (Governance and Operations) Bill, 2024, before giving approval.
Finance Minister Muhammad Aurangzeb in the statement of objects and reasons stated that the SOEs (Governance and Operations) Act was promulgated in February 2023. The Act, inter alia, provides for the matters relating to the constitution of Boards of Directors of SOEs.
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Presently, there is a need to reconstitute the Boards of SOEs to better align them with the reform initiatives aimed at restructuring and transformation as well as privatisation of certain entities.
In order to achieve the above objective, there is a need to strengthen the provisions for the removal of directors under the SOEs Act. The bill is designed to achieve the above-stated objectives.
The Finance Ministry informed the committee that presently, there is a need to re-constitute the Board of SOEs to better align them with the reform initiatives aimed at restructuring and transformation as well as privatisation of certain entities and other administrative affairs of government-owned institutions.
The act will provide nomination of independent directors institutionalised, majority of independent directors, security of tenure removal criteria, enhanced board independence and appointment of CEOs.
The meeting was also informed that through the amendments performance of board members of government-owned enterprises will be reviewed. It was briefed that a board nomination committee has been constituted which will be responsible for recommending ex-officio position to be held by the relevant Division or public sector organisations of the federal government or where necessary a provincial government.
Similarly, the committee will be responsible for evaluating the performance of ex-officio and independent directors and recommending the removal of directors to the federal government on the basis of evaluating the performance of such directors.
The amendments in the act also improvises the procedure adopted by the board nominations for performing its functions will comply with the principles of merit confidentiality, transparency, diversity and fairness.
The act also provides amendments to the term of office of directors that the federal government can remove a director on the recommendation of the board nominations committee.
Copyright Business Recorder, 2024