Tuesday, 28 May 2013

ROLE OF SECP(Securities And Exchange Commission Of Pakistan) IN CORPORATE GOVERNANCE


Role of SECP  in Corporate Governance


Introduction
Corporate Governance
“Formal system of accountability and control for a legal, ethical and socially responsible decisions and use of resources in business organization”
Top to Down Process
Corporate Governance Functions Þ Millstein et al.
Consistent Improvement of existing laws

Issue of Code of Corporate Governance

In March 2002
United Nation Development Programs & Economic Affair Division
Under the Section of 34(4), SECP issued  directions to KSE, ISE & LSE
Code Vs Corporate Law
Corporate Laws Review Commission (CLRC)
Significance of Corporate Governance arises with the increasing number of Corporate Scandals


Contents
Historical Prospective
Tool of corporate management
Strengthens social, cultural and religious values of a country
Corporate environment
Corporate governance issues
Corporate law in Pakistan

Historical Prospective
Contents

History Of Corporate Governance In Pakistan
sole proprietorship
conflict of interest
Corporate entities regulated by SEC
Corporate Law Authority
Corporate Governance framework
Islamic Ethics
Initiatives taken by SECP
Issuance of Code
Further explanations & interpretations
Formation of PICG
Notification on CSR
Corporate Governance in Banks

History Of Corporate Governance In Pakistan
Contents
Creation of SECP
set up in pursuance of the SECP Act, 1997
SECP became operational in January 1999
initially concerned with the regulation of corporate sector and capital market
Vision
Mission
Strategy

Creation of Securities and Exchange Commission of Pakistan

Contents
Major Institutions
SECP
SBP
PICG
ICAP
KSE, LSE, ISE
IFC’s Corporate Governance Project in Pakistan
LUMS
IBA, Karachi
ACCA, Pakistan

Institutions Contributing for implementing Corporate Governance in Pakistan

Contents
Constitution of Corporate Law Authority
Notified by: Federal Government
Number of Members: Not more than 3
Federal Government appoints Chairman
Powers and functions of the Authority
Specify limitations & conditions
Purpose of Proceeding/enquiry
Produce, specify & examine books, accounts etc.
CLA vs. SECP


Role, Function and Legal Framework of Corporate Law Authority Of Pakistan

Contents
SECP regulates the corporate sector
Under SEC Act, 1997
Companies Ordinance, 1984
Objectives of the CLRC
To access the companies ordinance objectives
To develop and maintain the efficient, deregulated and cost effective corporate sector
To prepare and revise the conceptual framework
Redraft the companies ordinance law
Review the structure and contents
To balance the international practices and indigenous conditions
Execution of the work
A conceptual paper
A draft bill
A statement of the objects and reasons of amendments
A report

Companies Ordinance 1984 and Its Implementation

Contents
SECP issued Code of Corporate Governance
Best performance & ensure company’s conformance in the long run
Benefits of SECP that relates to corporate governance in Pakistan
- Competitive market                        - Corporate sector growth
- Corporate sector growth               - Attract capital & investors
            -  Enhance the productivity & expansion of the business
Company Law division, specialized company division including Modaraba creation
Basis of Islamic economic principles
  
Role, Function and Legal Framework of SECP

Contents
SECP Divisional Structure



SECP functional profile
Advisory wing
To provide legal advice to the operational divisions and other departments of SECP
Litigation
To Manage the operational divisions and other departments of SECP
Legislation
Amendment and vetting from the Federal Government and for the SECP
Role, Function and Legal Framework of SECP (cont.)

Conclusion
SECP successfully implemented the effective code of corporate governance

It ensured the conformance to the applicable laws, rules and practices

Better outcome and streamline operations within the corporate enterprise
Recommendations

Effective and better implementation of the identified methods and principles of corporate governance

Consistent examination of the companies ordinance

Redrafting the law

Only professional accountants should be the Chief Finance Officer

The auditors must be appointed by the SECP