ISLAMABAD -  The Securities and Exchange Commission of Pakistan (SECP), in collaboration with the International Finance Corporation (IFC) and Centre for International Private Enterprise (CIPE), conducted a workshop on Saturday to raise awareness about Principles of Corporate Governance for Non Listed Companies.

The SECP has introduced a voluntary regime of principles to provide guidelines aimed at improving corporate governance in the companies, which are mainly family owned businesses. The principles are in line with the best international practices and local statutory requirements. The principles provide guidance in various areas, including role of board of directors and independent directors, remuneration, oversight and training of directors, internal control mechanism and performance evaluation. Amina Aziz, SECP director of Corporate Supervision Department, highlighted the importance of principles for SMEs and non-listed companies. She said that small business incubators had a tremendous potential for growth and could transform to large-scale entities with potential for listing on stock exchange to attract capital from public.

She said that raising capital from public through stock exchanges required more scrutiny about financial reporting, governance mechanism, legal compliances and market surveillance; hence, non-listed companies should improve corporate governance and financial reporting requirements therein, if interested in listing on stock exchange. She also deliberated on the Code of Corporate Governance for Listed Companies.

Munib Ansari from IFC highlighted the importance of SMEs in the economy and said that IFCs’ collaboration with the SECP was to improve corporate governance practices in Pakistan. He said that application of principles would transform business culture in Pakistan. Hammad Siddiqui from CIPE said that effective implementation of the SECP’s corporate governance principles could modernise the entire corporate culture of Pakistan. Mujahid Eshai, former president of the Institute of Chartered Accountants of Pakistan, emphasised the need to practice good corporate governance in SMEs and non-listed companies for sustainable business growth. He also highlighted the role of independent directors on a company’s board.

The workshop concluded that the annual reports of non-listed companies should contain balanced and understandable assessment of the company’s financial position. The board of directors of non-listed companies should be encouraged to develop an appraisal mechanism for evaluation of its own performance.

 The meetings of board of directors provided a forum to ascertain the financial and operational performance of the company; therefore, relevant agenda information should be shared with board in a timely manner.

Renowned corporate governance practitioners, representatives from the industry, accounting and professional bodies, trade bodies, academia and a good number of women entrepreneurs attended the workshop. This workshop was second in the series. The first one held in Karachi.