The Securities and Exchange Commission of Pakistan (SECP) has asked all listed companies not to incur excessive expenses on publication of their annual financial reports, which at times even include full page photographs of company products, directors and management teams.
Though the primary purpose of annual financial report as laid down in the applicable financial reporting framework is to help shareholder/ stakeholders to evaluate financial performance of a company, yet it has been noticed that the annual reports instead of giving details of financial performance of the company, give irrelevant pictures, editorials. Huge sums are also being spent on designing of annual reports.
The SECP would advise that the principles of probity and propriety ought to be adhered to by the directors of all companies and due economy should be exercised in the conduct of business. This means that companies should ensure compliance with the reporting requirements in the most prudent and cost-effective manner.
Over the past few years the SECP with the objective of reducing company costs and increasing shareholder facilitation has introduced electronic options for dissemination of information to the shareholders. Such measures include requirement for the maintenance of functional websites, and the option for shareholders to receive financial reports in soft form on their email addresses registered with the companies, instead of the same in printed form. Companies are also required to keep their websites updated with material information about the companies, including their profiles, governance structures and BOD profiles etc.
In view of aforesaid, the companies must educate their shareholders regarding the said options at their general meetings. They are further advised to undertake cost-benefit analysis while considering additional disclosure of non-financial information in the financial reports and additional disclosures may be made on their websites.-PR