Handbook of Corporate Governance - Title

INDEX

Chapter

Page

Preface

iii

Abbreviations

v

Index

vii

1

Introduction

1.1

What is Corporate Governance?

3

1.1.1

Defining Corporate Governance

4

1.2

Why Corporate Governance?

6

1.2.1

Reasons; Why This Subject Has Gained so Much Importance

7

1.3

Incentives Available for The Players of This Game

9

1.4

Why This Book?

10

1.5

Highlights of Basic Tools for Sound Corporate Governance

11

2

International Developments

2.1

Forums & Committee Working on Corporate Governance

15

2.2

Board of Directors

16

2.3

Management

20

2.4

Audit & Audit Committee

20

2.5

Financial Reporting

20

2.6

Code of Conduct, Business Ethics

23

2.7

Shareholders

23

2.8

Stakeholders

23

2.9

Corporate Governance Rating

24

3 

Board of Directors

3.1

Qualification & Eligibility to act as Director

29

3.2

Election of New Director

33

3.3

Appointment of Directors by SBP

35

3.4

Consent to act as Director

35

3.5

Tenure of Director

36

3.6

Responsibilities & Powers of the BOD

37

3.7

Powers of Directors

42

3.8

Executive Directors

43

3.9

Nominee Directors

44

3.10

Independent Directors

46

3.11

Independence of BOD

47

3.12

Min number of Directors

47

3.13

Prohibition of Common Director

47

3.14

Orientation Course

48

3.15

Meetings of BOD

49

3.16

Minutes of meetings

49

3.17

Loans to Directors

52

3.18

Remuneration of Directors

55

3.19

Dealing with Directors

56

3.20

Power of SBP to Supersede BOD

56

3.21

Vacation of Office

57

3.22

Retirement of Directors

58

3.23

Removal of Director

58

3.24

Prosecution of Director

61

4

Management

4.1

Chief Executive Officer

65

4.2

CFO & Company Secretary Appointment

65

4.3

Qualification                                                                      

65

4.4

Requirement to attend BOD Meetings

66

4.5

Fit & Proper Test for Key Executive

66

5

Financial Disclosure

5.1

Accounts & Balance Sheet

71

5.2

Improved Disclosure

71

5.3

Directors’ Report to Shareholders

72

5.4

Frequency of Reporting

75

5.5

Responsibility for Financial Reports & Corporate Compliance

77

5.6

Disclosure of Interest by Directors Holding Company Shares

77

5.7

Corporate Ownership Structure

78

5.8

Divestiture of Shares by Sponsors/Controlling Interest

78

6

Auditor

6.1

Auditor

83

6.2

Guidelines for The Auditor

86

6.3

Qualification & Disqualification of Auditor

89

6.4

Tenure of Auditor

90

6.5

Reading & inspection of Auditor’s Report

90

6.6

Signature on Audit Report

90

6.7

Auditors Not to Hold Shares

91

7

Audit Committee

7.1

Composition

95

7.2

Meetings 

95

7.3

Terms of Reference

95

7.4

Reporting Procedure

97

7.5

Internal Audit

97

References

a

Annexure

c

Anx – I

Proforma (Fit & Proper Test for Directors)            (Reference: page 20)

e

Anx – II

SECP's Code of Corporate Governance        (Reference: page 28)

g

Anx – III

Proforma (Fit & Proper Test for Key Executives)     (Reference: page 51)

y