CORPORATE GOVERNANCE.ppt

Mehmood Mandviwalla CORPORATE GOVERNANCE ? Mehmood Mandviwalla Barrister at Law President SAARCLAW Code of Corporate Governance - Consensus emerged that it would be unhelpful to put The Code into Companies Ordinance. ? - The need for flexibility in company governance was very strong. ? - The Code derives its strength from widespread support which it is now receiving. Purpose of the Code ?- Where public investment is being sought the obligation of the State is to protect investors against malpractices. - Composition of Board; their responsibilities; eligibility. - Periodic meetings; appointment of CFO and Company Secretary; Audit Committees and change of External Auditors. - Disclosure of interest by directors and divestment of shares ? Duties and Responsibilities of Directors - A company is an abstract entity which can only act through individuals. ? - Companies Ordinance has many specific provisions about the responsibilities of directors and reliance is made on: ? (i) Articles of the company (ii) Complex and inaccessible case law defined a directors propriety of conduct or the standard of skill and care that is required of directors. ? - As a result of this problem, directors were never clear about what their general duties were and to whom they owed such duties. Increased Role of Non-Executive Directors 1. Directors are no longer rubber stamps or hold ceremonial positions. ? 2. Directors are no longer spectators. They are now required to participate in operational detail. ? 3. Greater Accountability of Directors will result in higher responsibilities. ? 4. Directors need to give more time and attention and carry out duties in a fiduciary manner. ? 5. Directors have to now form part of the majority of the Audit Committee. ? 6. Directors should give advice, make judgments and oversee commitment of corporate resources. Increased Role of Non-Executive Directors 7. Directors are now responsible for oversight.