ISLAMABAD, Dec 28: Managements of private companies must realise that implementing good corporate governance is a win-win game as it promotes accountability within a corporate entity and benefits both the micro and macro-economic levels, Mr Oner Yucer, UNDP Resident Representative told senior executives of listed companies here on Saturday.

He was addressing the first workshop for directors and management of listed companies organized jointly by UNDP and Securities and Exchange Commission of Pakistan.

Observing that private sector is the dominant engine of growth, he said that the UNDP was one of four UN agencies supporting the implementation of Global Compact through a partnership amongst governments, the private sector and the international community.

Already initiated in some Asian countries including China, India, the Philippines, Thailand and Malaysia, UN Global Compact was in fact the UN Secretary General’s call to businesses to take greater responsibility in the three areas of human rights, labour rights and environment, based on the nine broad principles drawn from UN declarations.

The executives of listed companies, in their remarks in the workshop, expressed the view that poor governance in Pakistan was the root cause of economic backwardness.

Haroon Sharif, Executive Officer to SECP Chairman, said similar workshops were planned to be conducted in Karachi and Lahore. The objective was to create awareness among the directors about their statutory and fiduciary responsibilities.

Some participants stressed the need of training the chief executives, etc., in the selection of directors for performance of their multifarious roles in the management and operations of companies.

Mr. Sharif said the SEC planned to set up an Institute of Directors.

Nevertheless, a number of participants said the limited deadlines given by the SECP for preparation of financial statements and periodical accounts was straining the resources of small and medium companies.

The Workshop was also addressed by Khaliq-uz-Zaman Khan, Barrister-at-Law, Adil J. Cawasji, Company Secretary, Packages Limited and Mr Kaiser H. Naseem, former President, SME Bank.

Over the past few years, particularly after the Asian financial crisis, they said, Pakistan had suffered a continuous outflow of capital due to declining investor confidence. This, in turn, stemmed from policy inconsistencies, political volatility, fragile law and order situation and weak institutional framework. One of the major elements of structural weaknesses was the lack of transparency and accountability in the corporate sector. In Pakistan, most companies are closely held and managed in a manner detrimental to minority shareholders.

Pakistan’s economy, they observed, was currently in a transitional phase and needs sizable investments in fixed capital which, however, has been amongst the lowest in Asia.

Mindful of the critical need of a sound corporate governance framework, Mr Sharif said, the SECP had taken a series of measures to improve the governance structure of the three stock exchanges and infuse discipline in the capital market. It now aimed at introducing long-term reforms in the corporate sector, with prime focus on good corporate governance.

Last August, a Memorandum of Understanding was signed with UNDP for provision of technical and financial assistance to SECP in developing and implementing good corporate governance practices and establishing a sound regulatory framework for the corporate sector in Pakistan.

Mr. Sharif further remarked that in Pakistan, the SECP was left to undertake regulation as a major player because the capital market was still under-developed. As elsewhere in the world, he was confident, the market associations would increasingly function as self-regulators in an atmosphere of evolution of a well-developed market.