ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has recently made amendments to the Listed Companies (Code of Corporate Governance) Regulations, 2019, and the Companies (Postal Ballot) Regulations, 2018.
This move comes as an effort to address practical challenges faced by listed companies during the election of directors and to promote diversity within their boards.
The revised regulations aim to assist listed companies in meeting their regulatory obligations regarding the appointment of independent and female directors. Additionally, they seek to enhance the corporate governance framework by introducing the concept of voting in categories on a proportionate basis.
Under the new guidelines, a three-tier voting structure is being introduced for listed companies. Separate votes will be cast for three categories of directors: female, independent, and others. The maximum number of votes allotted to each member in a category will be proportionate to the number of directorial seats within that specific category.
Moreover, the votes for each category will be counted separately. For the female director category, there will be a fixed seat of one, while for the independent director category, it will be two or one-third, whichever is higher. However, there will be no restriction on the total number of female and independent directors that can be elected across all categories combined.
It is important to note that independent directors are widely recognized globally for their ability to bring specialized expertise to boards and contribute to conflict resolution. The implementation of these reforms will not only promote greater inclusion of women but also align with SECP’s comprehensive approach to strengthening corporate governance in listed companies.
These regulatory changes are expected to further enhance the corporate governance framework and play a crucial role in safeguarding minority interests by ensuring the election of independent directors in a transparent and efficient manner.
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