ISLAMABAD: With the Pakistan Stock Exchange (PSX) board elections scheduled to be held on April 19, lobbying has intensified between stockbrokers and some independent directors for a place on the new board.
While some independent board members have conveyed to the Securities and Exchange Commission of Pakistan (SECP) that the brokers are vying to impose their domination on the new setup, the stock brokers have asked the corporate sector regulator to ensure that fresh faces become independent directors.
Sources in the corporate sector regulator said that independent directors have expressed their concerns mostly verbally and stressed that a strong team of independent directors was needed to counter any manipulation by the brokers.
On the other hand, the PSX Stockbrokers Association has written a letter to SECP Chairman Zafar Abdullah claiming that it would be a ‘conflict of interest’ if the existing independent directors nominated themselves in the board meeting for another term.
The letter by PSX Stockbrokers Association has referred to a meeting with the SECP on January 19, 2019, where the brokers raised concerns over the continuation of existing independent board members.
The letter reminded the SECP that it had committed at the meeting that none of the existing independent directors will be reappointed in the new board.
At the same time the SECP has also recently given a warning to the Board of PSX to hold elections of directors and in case of failure serious penalty could be imposed on the responsible persons.
“We would like to draw the attention of the PSX board of directors to the following — Section 159 of Companies Act stipulates that any person who obstructs or contravenes or does not comply with any order of direction of the Commission shall be liable to pay a way of penalty,” says a letter sent from the apex regulator to the PSX.
The SECP says penalties could be up to Rs100 million in case of an individual and Rs200m in case of a company.
The SECP has referred to several previous instances by the PSX board that led to a delay in the election.
Talking to Dawn, a senior official of the SECP said, “It looks like the PSX board elections will be held on April 19, and the details have already been shared with the regulator.”
The rules demand that a minimum of 21 day notice has to be given for Extraordinary General Meeting (EOGM) as the elections are held on the meeting day, and the PSX Board can announce the EOGM and election schedule up to March 30, if the election is held on April 19.
The board consists of 14 directors, with managing director as the 15th member.
Published in Dawn, March 16th, 2018
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