AMENDMENTS TO THE CODE OF CORPORATE GOVERNANCE,

2002 RECOMMENDED BY PICG’S TASKFORCE

BOARD OF DIRECTORS

(a).BALANCE OF EXECUTIVE AND NON-EXECUTIVE

DIRECTORS

The board of directors shall have a balance of executive and non-executive

directors (and in Particular independent directors and those representing
minority interests) such that no
Individual or group of individuals can dominate the board’s decision making
and so that the Board as a group includes core competencies and diversity
considered relevant in the context of The Company’s operations.
(b).Shall Have Not Less Than 1/3rd or 3, whichever is Higher,
Independent Directors.

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OR

I.DIRECTOR

Whichever is higher
The Board of Directors of each listed company shall have not less than 1/3rd
or 3, whichever is higher, of the total members of the board as independent
directors. The Board should identify in the annual report each non-executive
director it considers to be independent. The board should determine whether
the director is independent in character and judgment and whether there are
relationships or circumstances which are likely to affect, or could appear to
affect, the director’s judgment.
Explanation of independent director

PROVIDED THAT WITHOUT PREJUDICE TO THE GENERALITY OF THIS

EXPLANATION NO DIRECTOR SHALL BE CONSIDERED INDEPENDENT IF
ONE OR MORE OF THE FOLLOWING CIRCUMSTANCES EXIST:

1 He has been an employee of the company or group within the last three
years
2 He has, or has had within the last three years, a material business
relationship with the
company either directly, or as a partner, shareholder, director or senior
executive of a body
that has such a relationship with the company
3 He has received in the year preceding his appointment as a director or
receives additional
remuneration excluding retirement benefits from the company apart
from a director’s fee or
participates in the company’s share option or a performance-related pay
scheme
4 He is a close relative of the company’s directors or senior executives;

5 He holds cross-directorships or has significant links with other directors

through
involvement in other companies or bodies
6 He is a shareholder holding 5% or more of the total voting shares of the
company
7 He is an employee of an institutional investor including a banking
company, development
finance institution, non-banking finance companies, pension fund or
insurance company or a
person nominated by such institutional investor who is subject to
restraint in any manner in
the exercise of his independent judgment as director of the company
8 He has served on the board for more than three consecutive terms from
the date of his first
 election provided that such person shall be deemed “independent
director” if re-elected after
a lapse of one term

3.QUALIFICATION AND ELIGIBILITY TO ACT AS A DIRECTOR

iii.
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No listed company shall have as a director, a person who is serving as a
director of ten other listed companies.
DIRECTOR

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NEW

No person shall be appointed as a director of more

than five listed companies.

DIRECTOR

COMPANY COMPANY COMPANY COMPANY COMPANY

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4.TENURE OF OFFICE OF DIRECTORS
IV.
The tenure of office of Directors shall be three years. Any casual vacancy
in the Board of Directors of a listed company shall be filled up by the
directors within 30 days thereof.

Any casual vacancy in the Board of Directors of a listed company shall

be filled up by the directors at their earliest but not later than 60 days
thereof.

5.RESPONSIBILITIES, POWERS AND FUNCTIONS OF BOARD OF

DIRECTORS

VII
Addition Of clause (A)

A board of directors of a listed company shall not later than two years
from the coming into force of this provision, put in place a mechanism
for undertaking annually an evaluation of its own performance and of
its committees to enhance board performance.

VIII (a)
Addition (aa)

Adequate systems and controls are in place for the identification and
redressal of grievances arising from unethical practices.

(d) (ix)
Addition
The Chairman and the Chief Executive Officer, by whatever name
called, shall not be the same person. The Chairman shall be elected from
among the non-executive directors of the listed company. The Chairman
is responsible for leadership of the board and ensuring its effectiveness
on all aspects of its role.

Provided that all listed companies having the Chief Executive also
acting as Chairman shall separate the two offices upon reconstitution of the
Board.
Provided further that where by any special enactment applicable to a
company the Chairman and Chief Executive Officer are to be the same, the
Board of Directors shall appoint an Independent Director as a Lead Director
whose role shall be as under:
• Advise the Chairman as to an appropriate schedule of Board meetings,
seeking to ensure that the independent directors perform their duties
responsibly while not interfering with the day-to-day management functions;
• Advise the Chairman the information, agenda and meeting schedules for
the Board and the Board Committee meetings, with the assistance of the
Company Secretary;
• Advise the Chairman on the quality, quantity and timeliness of the
information submitted by the company’s management which is necessary
and appropriate for the independent directors to effectively and responsibly
perform their duties;
• Recommend to the Chairman the retention of the advisers and consultants
who report directly to the Board of Directors;
• Assist the Board of Directors in better ensuring compliance with the
implementation of the Board’s Guidelines on significant corporate
governance issues;
• Serve as principal liaison between the independent directors and the
Chairman on sensitive issues;
• Recommend to the Chairman the membership of the various Board
Committees, as well as the selection of Committee chairmen;
• Serve as Chairman of the Board when the Chairman is not present;
• Serve as liaison for consultation and communication with shareholders;
• Lead the process of evaluation of the Board and its members as provided in
paragraph
(vii) (a); and
• Perform such other duties as the Board may from time to time delegate.
Provided that the provisions of the clauses listed below shall be applicable
and become effective when the Board of directors is next reconstituted on the
expiry of its current statutory term:
(i) (b) dealing with the mandatory minimum number of independent directors
(i) (c)regarding the executive directors not to exceed the prescribed
minimum
(iii) Dealing with restricting the number of a person’s directorship to five
excluding directorship of certain subsidiaries
(ix) dealing with mandatory separation of office of the
Chairman and CEO and in special circumstances to have a “Lead Director”.
6.MEETINGS OF THE BOARD
(xii)
The minutes of meetings shall be circulated to directors and officers entitled
to attend Board meetings not later than 30 days thereof, unless a shorter
period is provided in the listed company’s Articles of Association.
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7. SIGNIFICANT ISSUES TO BE PLACED FOR DECISION BY THE

BOARD OF DIRECTORS
In order to strengthen and formalize corporate decision-making process,
significant issues shall be placed for the information, consideration and decision of the
Boards of Directors of listed companies.
Significant issues for this purpose may include:
annual business plans, cash flow projections, forecasts and long term plans;

long term plan

Strategic plans;
 succession planning for the CEO and key management positions
who report directly to the CEO;
report on risk management issues
related party transactions

8. ORIENTATION COURSES FOR DIRECTORS

The orientation course shall at a minimum follow the outline given in

Annexure A to this code. Nothing provided herein shall apply to those
directors who have already taken the orientation course prior to the coming
into force of this revised code.
It will be mandatory for all the directors of the listed companies to have
certification under “The Board Development Series” program offered by the
Pakistan Institute of Corporate Governance or such other body or institution
as may be accredited in this behalf.
Provided that at least one director shall be required to have such certification
up to June 30, 2011 and thereafter, every following year minimum one
director on the Board shall acquire the said certification under this program .

9. CHIEF FINANCIAL OFFICER (CFO) AND COMPANY

SECRETARY APPOINTMENT AND APPROVAL
(xv)

The CFO, the Company Secretary and the head of internal audit of
listed companies shall not be removed except by the CEO with the approval
of the Board of Directors.

10. CORPORATE AND FINANCIAL REPORTING FRAMEWORK

THE DIRECTORS’ REPORT TO SHAREHOLDERS
(i)
 • Foreign (non-resident) shareholders (name wise details) stating
separately their holdings in any other capital subscribed to the company
(e.g. GDR’s) and the type of voting / non-voting rights that such
subscription carries.

11.DIVESTITURE OF SHARES BY SPONSORS/CONTROLLING

INTEREST
(xxix) Provision deleted

Consequent to the promulgation of Listed companies (substantial

acquisition of voting shares and take overs) Regulations, 2008.

12.EXTERNAL AUDITORS
(xliii) Every listed company shall require external auditors to furnish a
Management Letter to its Board of Directors not later than 30 days from
the date of audit report.
45 Days

Provided that any matter deemed significant by the external auditors

shall be communicated in writing to the Board prior to the approval of the
audited accounts by the Board.

(xliv)

Provided that to avoid conflict of interest, such partner after being given
an opportunity to be heard, may if so required, absent himself from the
meeting when the appointment or removal of external auditors is discussed.
COMPLIANCE WITH THE CODE OF CORPORATE
GOVERNANCE

(xlv)

The statement shall be specific and deemed to be supported by the

necessary evidence held by the company making the said statement.
The said statement shall also include an affirmation to the following
effect that:
• the ‘closed period’, prior to the announcement of interim/final results,
and business decisions, which may materially affect the market price of
company’s share, was determined and intimated to directors, employees,
stock exchange(s) and SECP.
• Material / price sensitive information has been disseminated among all
market participants at once through stock exchange(s).