LSE board against coopting new member: Resignations
By Our Staff Reporter
LAHORE, Nov 28: The Lahore Stock Exchange (LSE) directors on Wednesday decided against coopting any persons on the board to fill the vacancies created by the resignations of their chairman, vice-chairman and four other colleagues triggered by their failed attempt to get a reforms package approved by the bourse members.
At a board meeting called to consider the situation created by the resignations, the directors decided that there was no need to coopt new members on the board because the “bourse could continue to operate without any obstacle for the remaining one month or so of the tenure ending on December 31 of the current board.”
The directors also decided to meet again on Friday to announce schedule for election of chairman, vice-chairman and directors of the exchange for the year 2002.
LSE chairman Dr Yasir Mehmood, vice-chairman Shaikh Habibullah and four elected directors resigned from the board on Monday when the bourse members rejected a reforms package put before them for their approval at an extraordinary general meeting last weekend.
The amendments to the articles of association were unanimously approved by the directors three weeks ago before placing them for the approval of the members at the EGM.
The reforms package was rejected in toto by about 27 out of 40 LSE members who attended the EGM. While 12 members supported the package, one abstained.
The reforms package proposed to increase the representation of outside directors to nine from the current seven and reducing the number of elected directors to nine from the present 10 to ensure transparency and restore the investors’ confidence in the capital markets.
It also recommended to extend the one-year term of the elected directors to three years with one-third of them retiring from the board every year in order to ensure continuity of policies.
Furthermore, the proposals called for indirect election of the chairman and vice-chairman by the elected directors every year. The package also sought to restrict the role of elected directors only to decision and policy making and stop them from interfering in the operational matters of the bourse, allowing the managing director to enjoy more powers.
The names of the directors who tendered their resignations are Khawaja Sami Rasheed, Muhammad Younus, Muhammad Muntasim and Asif Baig. Dr Mehmood claimed at a news conference that Salman Taseer, another elected director, had also tendered resignation. However, LSE managing director Samir Ahmed did not confirm the report.
Dr Mehmood told the press conference that the objective of the reforms was to strengthen the bourse management and board instead of chairman and his deputy. He said the reforms aimed at adopting “best international practices to restore public confidence in the capital markets.”
He also sought to dispel the impression that “he and directors had resigned en bloc under some compulsion”. Everyone resigned in his individual capacity. He also denied that they were under some “pressure from the Securities & Exchange Commission to amend the LSE articles of association.”
He said the idea of “equal representation” was not a new. In fact, he said, several bourses around the world, including the New York and Bombay exchanges, had long “embraced these practices in the best interest of investors”. Even the much younger bourses in Bangladesh had adopted them.
He said the opponents of the proposed package feared that they would lose control over the bourse if the amendments were allowed to be approved. He said he was at a loss to understand as to what do the brokers want.
Dr Mehmood admitted that he had failed to convince the brokers about the advantage of having a more open and transparent bourse. “This is precisely why I and others have resigned from the board. I accept the responsibility. But I will continue my effort to get the reforms introduced in the larger interest of the exchange, its members and investors,” he asserted. He said it was only a matter of time when the members would have to adopt these changes. “It’s sooner or later to become a public demand. If we want to lure the foreign investors, we will have to accept the changes to let them know that the LSE stand out as the most progressive, transparent, and efficient exchange,” he said.
