The Securities and Exchange Commission of Pakistan (SECP) has introduced significant regulatory reforms aimed at enhancing corporate governance and ensuring greater transparency in corporate decision-making. These changes come through amendments to the Listed Companies (Code of Corporate Governance) Regulations, 2019, and the Companies (Postal Ballot) Regulations, 2018.
The regulatory amendments align with SECP’s commitment to safeguarding shareholder rights, strengthening corporate governance frameworks, and maintaining market integrity. By refining the governance structure, the SECP seeks to create a more equitable and transparent corporate environment, ensuring that shareholders, particularly minority investors, are better represented and protected.
One of the most notable changes in the new regulations is the removal of the category-wise voting scheme, which was previously used in board elections. This move aims to increase minority shareholder participation by ensuring a fairer and more transparent election process for directors. Additionally, the role of the scrutinizer has been expanded to bring greater oversight to the acceptance or rejection of nominations for board elections and proxy voting. These measures are expected to increase confidence among investors and market participants by mitigating the risk of governance-related malpractices.
Furthermore, the reforms introduce new provisions to strengthen corporate governance in listed companies. Among these changes is the mandatory attendance requirement for directors at general meetings, ensuring greater accountability and engagement from corporate leadership. The amendments also encourage companies to conduct independent evaluations of board performance through external bodies. By implementing these measures, SECP aims to enhance decision-making processes and ensure that boards operate in the best interest of shareholders and other stakeholders.
To develop these reforms, SECP initially formed a dedicated committee comprising industry experts and key stakeholders. The committee was tasked with evaluating current corporate governance practices and proposing improvements to enhance transparency, particularly in the conduct of shareholder meetings. The SECP then conducted extensive public consultations on the committee’s findings and gathered feedback from market participants before finalizing the proposed reforms. This collaborative approach underscores SECP’s commitment to fostering an inclusive and well-regulated corporate ecosystem.
The amendments to the Listed Companies (Code of Corporate Governance) Regulations, 2019, and the Companies (Postal Ballot) Regulations, 2018, have been officially published on the SECP website. Companies and stakeholders are encouraged to review the updated regulations to ensure compliance with the new governance standards.
These reforms mark a significant step forward in strengthening Pakistan’s corporate regulatory landscape, promoting greater transparency, and reinforcing investor confidence. With enhanced governance measures in place, SECP aims to create a more accountable and robust financial market that aligns with international best practices.
