ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has introduced a voluntary regime to provide guideline principles for improving corporate governance, mainly in family-owned companies.

Addressing a seminar on Saturday, Amina Aziz, director of SECP’s corporate supervision department, has suggested that non-listed companies should improve corporate governance and financial reporting requirements to get themselves listed on the stock exchange.

“Raising capital from public through stock exchanges required more scrutiny about financial reporting, governance mechanism, legal compliances and market surveillance,” Ms Aziz said.

The seminar was organised in collaboration with the International Finance Corporation (IFC) and Centre for International Private Enterprise (CIPE) to promote corporate culture among businesses and encourage corporatisation and listing of small companies.

SECP’s principles are in line with the best international practices and local statutory requirements, which provide guidance in different areas, including role of board of directors and independent directors, remuneration, oversight, training of directors, internal control mechanism, and performance evaluation.

While highlighting the importance of principles for small and medium-sized enterprises (SMEs) and non-listed companies, she said small business incubators have tremendous potential for growth and could transform to large-scale entities with potential for listing on stock exchange to attract capital from the public.

The speaker highlighted the importance of SMEs in the economy and called for improving corporate governance practices in Pakistan.

Mujahid Eshai, former president of the Institute of Chartered Accountants of Pakistan, also emphasised the need to practise good corporate governance in SMEs and non-listed companies for sustainable business growth. He also highlighted the role of independent directors on a company’s board.

Hammad Siddiqui of CIPE said effective implementation of SECP’s corporate governance principles can modernise the entire corporate culture of Pakistan.

The speakers said annual reports of non-listed companies should contain a balanced and understandable assessment of the company’s financial position.

Moreover, their board of directors should be encouraged to develop an appraisal mechanism to evaluate the company’s performance. The meetings of board of directors provide a forum to ascertain the financial and operational performance of a company and the relevant agenda information should be shared with board in a timely manner, the speaker added.

Published in Dawn, March 19th, 2017