The Securities and Exchange Commission of Pakistan has issued the draft of amendments to the Public Sector Companies (Corporate Governance) Rules, 2013, to obtain feedback from the stakeholders and the public. Based on the implementation experience as well as feedback received from the line ministries of public sector companies and other stakeholders, it was deemed necessary to introduce certain amendments to the rules to facilitate compliance and ensure to good corporate governance principles.
The public sector companies are significant economic players delivering critical services in important economic sectors. With the approval of the federal government, the SECP issued these rules in 2013. The rules were aimed at improving the governance of PSCs through a range of measures, including empowering the board of directors, facilitating the government to exercise its ownership function, strengthening the internal control mechanism, etc.
The provisions which have been proposed to be amended or added to the rules includes introduction of criteria for sound and prudent management of public sector companies, change in the proportion of independent directors on the boards from a majority to a minimum of one-third, specifying additional grounds for removal of non-performing directors, revision of criteria for appointment of chairman and chief executive, requirement for the government to enter into performance contracts with directors at the time of their appointment, optimization of fit and proper criteria for the directors, etc.
It is hoped that the proposed amendments will improve standards of good corporate governance in public sector companies by facilitating them in improving their performance, minimizing political interference in the management, ensuring proper and effective use of public assets and resources, and maintaining a balance between public service delivery and profitability. The proposed amendments are available for reference at www.secp.gov.pk.-PR