KARACHI, April 10: The Federal Finance Minister, Dr Abdul Hafeez Shaikh, said on Tuesday that no new taxes would be imposed on the already taxed sector, nor would there be increase in tax rate in the federal budget 2012-13.
He said that the tax net would be widened to bring new non-tax paying affluent people into the net. The minister observed that the government would address the issues faced by the corporate sector as they were brought to its notice.
Good corporate governance would be strengthened with good government governance, Dr Abdul Hafeez Shaikh said addressing a ceremony organised by the Securities and Exchange Commission of Pakistan (SECP) here on Tuesday to launch the ‘Code of Corporate Governance 2012’.
The ceremony was held in collaboration with the Centre for International Private Enterprise (CIPE), which the SECP acknowledged “had been supportive of SECP’s initiative throughout the process of revising the code.”
Answering a question about the implementation of the reformed Capital Gains Tax (CGT) regime, the finance minister told the media that the SECP was working on the ordinance and it would be done soon.
He said that job creation and poverty were major issues to be addressed and visualised GDP growth at 4 per cent for the current year.
The code sets a minimum benchmark in terms of governance standards, brings consistency in the corporate practices and promotes transparency through enhanced disclosure requirements, the SECP hopes.
“The code will result in availability of enhanced information to market participants and hence will provide better protection of the rights of all investors, particularly minority shareholders,” statement released by the SECP said.
Some of the major reforms in the new code as compared to the previous code include: The Code 2012 requires at least one independent director while preference is for 1/3rd of the total members of the board to be independent directors; the criteria for assessment of independence have been substantially expanded.
Maximum number of Executive Directors has been decreased from 75 per cent to one-third of elected directors including CEO and number of directorships has been decreased from 10 to 7 that a director can hold at the same time.
Requirement of board evaluation has been introduced and office of the chairman and CEO has been separated. The chairman shall now be elected from amongst the non-executive directors of a listed company.
It will now be mandatory for directors of listed companies to attain certification under any director training programme offered by any institution (local or foreign), which meets the criteria specified by the SECP.
The appointment, remuneration and terms and conditions of employment of the Chief Financial Officers (CFO), Company Secretary (CS) and the Head of Internal Audit (IA) of listed companies shall be determined by the board rather than CEO.
“The code has been revised taking into account the lessons learnt from the practical issues and considerations relevant to the listed companies and to ensure that it reflects changing governance concerns, practices and economic circumstances and international best practices,” the SECP said.It observed that the governance standards are dynamic and changing with the development of constantly evolving corporate sector and financial markets. This calls for a constant review of governance framework to keep pace with globally set benchmarks.
In an endeavor to align our governance regime with enhanced requirements of present times and global best practices, the SECP mandated the Institute of Corporate Governance to initiate work on review of the code.
The SECP, while finalising the code, conducted a thorough consultative process and due consideration was given to all the suggestions received, keeping in the view the global developments in corporate governance and the overall objective of raising the standards of corporate governance in the country.