KARACHI, July 16: The Code of Corporate Governance attempts to help directors in discharging their responsibilities in the larger interest of all stakeholders in transparent, well-informed and diligent manner with the association and help of professional managers, said Mr. Etrat Hussain Rizvi, Commissioner, SECP.
A press release issued by NIT on Friday, said that Mr Etrat was addressing nominee directors of National Investment Trust (NIT) at a workshop on Corporate Governance issues organized by the NIT. Nominee directors of NIT sit on about 250 boards of directors of companies.
The commissioner SECP stated that the non-executive or independent directors being representatives of shareholders on the boards had significant role to play in monitoring of a company's managers and as such should ensure that they (managers) adhere to the rules.
He cited a number of studies in the US and the UK where the percentage of non-executive directors on boards had grown by over 20 per cent in the last decade. "The SECP did consider this point in the development of Code of Corporate Governance 2002, in which over 17 clauses were indirectly related to the independent non-executive directors," he said.
Mr Etrat claimed that the code had proved very useful in improving the transparency levels in the corporate sector. He further commented that the code proved beneficial also in establishing best practices internationally acknowledged over the last two years.
The commissioner, SECP, agreed that there was still a room for improvement as it would remain in state of evolution for sometime. He invited a proper and continuous feedback from all stakeholders to further enhance and improve its canvas in accordance with best international practices.
Emphasising his point regarding improvement in the code, he cited clause 14 of he code, which required companies to arrange orientation courses for their non-executive directors. He welcomed the lead taken by NIT by holding first-ever educational workshop for its nominee directors.
The commissioner, SECP, stated that the corporate regulators had developed the code of corporate governance by putting together the provisions of Company Laws, Articles of Association, Prudential Regulations, Banking Law and NBFC Rules.
"The Code primarily aims at establishing a system whereby company is directed and controlled by its directors in accordance with the best practices so as to safeguard the interest of diversified stakeholders," he said and added that the code emphasizes openness and transparency in corporate affairs, including the decision making process.
The commissioner was also stated to have expressed satisfaction over the performance of NIT under the management of chairman Tariq Iqbal Khan. Earlier, Tariq Iqbal Khan said that orientation workshop was not only in compliance with the law but was part of efforts that the trust had been making to improve governance at different levels, after creation of an independent Corporate Governance Department in 1997.
He said that to promote corporate governance in line with internationally acceptable standards, NIT had adopted three- pronged strategy to work with regulators in close liaison, creation of enabling environment and strengthening boards by giving greater role to independent non-executive directors.
Mr Tariq Iqbal Khan said that NIT had completely changed criteria for selection of directors on its boards and put emphasis on ability, skill and reputation. Not coming up to the criteria, 70 per cent directors of its directorship had been changed.