Karachi, September 17, 2013 (PPI-OT): Corporate Governance offers a practical solution to the challenge of a good relationship between owners and other stakeholders which becomes more complex when a business expands.
The corporate governance system puts in place the policies and procedures to manage effective organizational setup that defines roles and responsibilities.
This was stated by Fuad A. Hashimi, President and CEO PICG at the conference on “Corporate Governance Implications for Companies with Concentrated Ownership” held hereon Wednesday organized by Pakistan Institute of Corporate Governance (PICG) in collaboration with the Association of Chartered Certified Accountants (ACCA) Pakistan and Center for International Private Enterprise (CIPE) Pakistan.
The Conference was sponsored by Pakistan Petroleum Limited and co-sponsored by Tri-Pack Films Limited, Allied Bank Limited and Engro Corporation.
It may be mentioned here that concentrated ownership of listed companies is a reality in most Asian economies. This ownership structure presents both opportunities as well as risks. The objective of this conference was to discuss whether the ownership structure of companies should influence the board of directors in carrying out its duties and responsibilities, and its impact on the management and long-term performance of these companies.
Hashmi said the effective governance in the corporate sector leads to transparency and investors confidence paving the way towards increase in profitability, revenues growth and business expansion with a greater role in the economy.
The corporate governance process seeks that the business and management of corporate entities is carried on with the highest standards of ethics and efficacy to promote the interests of all corporate stakeholders, he said.
Historically, only 30 per cent of family businesses make a successful transition from the first generation to the next. In order to ensure that succession does not disturb company’s growth and survival, there is a need for written and clear policies for the selection of the right family members for future leadership roles. We all understand that successful businesses are the result of years of hard work. Therefore, it becomes more important to pass on this success to future generations smoothly.
To bring greater transparency in the affairs of individual companies, the SECP has tried to introduce new requirements, amended certain existing clauses and have done away with certain other provisions.
The code is an evolving set of guidelines targeted to ensure greater diversity on the board of directors, improved board evaluation, separation of the roles of the Chief Executive and the Chairman, inclusion of the minority shareholders in the company’s decision making process, enhanced role for the audit function, Hashmi said.
Mr. Andrew C. Wilson, Regional Director CIPE for Eastern Europe and Eurasia spoken to the participants at the conference. This was followed by a Panel Discussion titled ‘The Board of Directors has the Right to Appoint the Chief Executive Officer’ moderated by Mr. Arif Masud Mirza, Head of ACCA Pakistan. Panelists included Mr. M.J. Jaffar, Off Counsel Orr Dignam and Co.; Mr. Adnan Afridi, Advisor Silkbank Limited and former MD Karachi Stock Exchange; Mr. Kamran Y. Mirza, CEO Pakistan Business Council and Mr. Zaffar A. Khan who serves on diverse boards including MNCs Shell Pakistan and Unilever Pakistan.
It may be mentioned here that the discussion was highly interactive as the participants actively contributed to the discussion. Mr. M. J. Jaffar remarked that the law clearly states that it is the duty of the board to appoint the CEO, while adding that the directors substantially invested their trust and power in the CEO to manage and direct the company.
For more information contact:
Pakistan Institute of Corporate Governance
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Category: General Business News