ISLAMABAD, Oct 31: The upgraded draft of Code of Corporate Governance has been finalised by the Securities and Exchange Commission of Pakistan (SECP) that calls for higher degree of transparency and disclosures by the listed companies.

The code disallows the same person to be the CEO and the chairman of the board of the same company, while any individual cannot be at the board of more than seven companies, as against the current regulations which allow any person to be at the board of 10 companies.

The revisions were finalised at a meeting on Monday between SECP officials and the task force of Pakistan Institute of Corporate Governance, and the revised code would be implemented after being notified by the SECP in November 2011.

The meeting was held to finalise the code in consultation with the task force members and in the light of recommendations received from different stakeholders.

The revised code will be implemented by the stock exchanges which are the front line regulators of listed companies and the SECP the corporate sector regulator in country.

“The upgraded code is needed to safeguard the rights of shareholders by improving the disclosures and define responsibilities of directors, CEO and the chairperson of the board,” an official of the SECP said.

The official said that main responsibilities of the CEO are related with the operational matters of the company while the chairman deals with policy issues and overseeing the operations.

Under the current code, only audit committees have been strengthened while the revised code has emphasised for a strong and able Human Resource Recommendation (HRR) Committee.

The revised code has also incorporated more strict conditions for being a member of the board of a company.

Any person who has been an employee of a company cannot become its board member for at least three years after the separa- tion from the company. Similarly the board member cannot have any business links or material relations with the company.

The revised code has also barred any relative of the major share-holder to become a board member of that company.

However, the most significant part of the revised code is to encourage policy of protecting the 'Whistle Blower'.

The revised code states that each company has to have a policy or system to encourage employees to inform about flaws and issues in the company, instead of covering or hiding such issues.

“This may seem to be a distant dream in Pakistan but if we have a look at the corporate governance in the past 10 years, the situation has changed many-fold,” an SECP official said, adding, “the internal structures of companies will further improve in future to be close to international standards.”

The meeting was attended by the SECP team, led by its chairman, Mohammad Ali and the task force members, including the chairman of the task force, Ebrahim Sidat, Zafar Ali Khan, Moin Fudda, Fuad Hashmi, Sadia Khan, Lubna Farooq, Pervez Ghias and Masoud Naqvi.