Good corporate governance is vital in the long term as it is necessary for creating a believable and efficiently driven commerce organization that has the capability to convert active circumstances for the huge preponderance of the inhabitants. The world becoming a global village, WTO and globalization is bringing more and more set of opportunities for Pakistan; And for it to transpire thriving from this new rendezvous with fortune, there are no effortless choices accessible and the Pakistani commercial segment must inevitably change direction to fine governance in its pursue of aggressive excellence in a demanding global business environment.
Pakistan has aspirations of moving to one of the planet’s trade and industry focal point. It comprehends the requirement for a robust corporate sector, which encourages development. There is a continuing requirement for steady appraisal and action plan that could keep the country in the correct line of corporate excellence. This job wants to be addressed by a sensible combination of thought, analysis, legislation, directives and follow ups.
A set of measures may be adapted in order to put into practice good governance in the non-listed companies that holds a broader interest of the economic sphere, like:
§ A competent and independent board of directors is a prerequisite to ensure created wealth is applied for the benefit of all shareholders.
§ While the introduction of independent directors is expected to assist largely in achieving the objectives, other similar measures such as appointment and separation from the post of chief executive officer, chief operating officer and chief finance officer will encourage transparency.
§ It is advisable for all companies (listed and non-listed) that the disclosure of the companies’ operational and general financial status should be made with a reasonable span of time of closure of financial books.
§ One of the major issues is the disclosure of executive compensation and non-executive board remuneration as this is the area which is most scandalized in the corporate scenario. A reasonable justification may also be provided while disclosing this information.
§ While voting for the directorship, a major concern is holding cross-corporate directorships. There should be a proper mechanism for limiting the number of directorships of directors and managers.
§ A comprehensive disclosure of major transactions and related transactions should be made so as to create transparency and autonomy in the system. The definition of major and related transactions may be clearly defined.
§ There is a very common trend of mergers and acquisitions in listed and non-listed sector companies. A clear disclosure of such policies and regulations may be defined so as to protect the rights of shareholders during mergers, acquisitions and divisions.
§ It is a common practice of denying the right of minority shareholders while holding the major policies framework and transactions. A proper mechanism should be made to obtain their consent as well, as shareholders, even minor, have the right to attaining vital information about the company.
§ It is advisable that a monopoly controlling authority to come over with law on pricing and competition that establish free entrepreneurship and access to markets, to ensure a healthy and fair competition among economic players is maintained while restricting dominant position abuses, oligopolies and non-transparent atmosphere.
§ SME plays major role in flourishing free market economies as they comprise a major chunk of the pie. A major initiative should be taken like accessibility to financing, promotion of trade laws, so as to organize them and bring them under the umbrella of regulated sectors and making them to follow the standards set by authorities.
Thus we can say that for the non-listed companies in
Pakistan, corporate governance can have a variety of implications. On a broader level, the implementation of corporate governance measures allows bringing foreign investments, extending the sources of financing, and translates the opportunities of true sense of globalization into economic and social benefits. Fine corporate governance represents a customary test for economic and political reforms this entails, and also the improvement of management practices.
Published Date: September 17, 2007