ASSIGNMENT NO: 03

NAME: SAMANA ZAIDI

ID #: 7827
CLASS: BBA 8
SUBMITTED TO:
SIR KAMRAN KHAN

CODES OF CORPORATE GOVERNANCE 2012

BOARD OF DIRECTOR
1) Section 174 to 197A of company ordinance 1984 related to directors of the companies.
The board of directors is encouraged to have a balance of executive and non-executive
directors, including independent directors and those representing minority interests with
the requisite skills, competence, knowledge and experience so that the board as a group
includes core competencies and diversity, including gender, considered relevant in the
context of the companys operations.
For this cause listed companies must take the following steps:
(a) The minority shareholders as a class are easier to contest election of directors by substituted
apply for which purpose the listed companies shall:

Provide information regarding members and shareholding structure to the candidate

representing minority shareholders.
Extension with the notice issued under Section 178 (4) of the Ordinance, a statement
by a candidate from among the minority shareholders who seeks to contest election to
the board of directors, such statement shall include a profile of the candidate

(b) The board of directors of each listed company must have at least one and rather one third of
the total members of the board as independent directors. The board shall condition in the annual
report the names of the non-executive, executive and independent director
Reason: For the purpose of this clause, the expression "independent director" means a director
who is not have any connection or connected, whether pecuniary or otherwise, with the listed
company, its associated companies, subsidiaries, holding company or directors. The test of
independence principally emanates from the fact whether such person can be reasonably
perceived as being able to exercise independent business judgment without being subservient to
any form of conflict of interest. Director shall be considered independent if one or more of the
following circumstances exist

He/she is or has been the CEO of subsidiaries, associated company, associated

undertaking or holding company in the last three years;
He/she is a close relative of the companys promoters, directors or major shareholders
He/she has served on the board for more than three consecutive terms
From the date of his first appointment provided that such person shall be deemed
independent director after a lapse of one term

Any person nominated as a director under Sections 182 and 183 of the Ordinance, shall not be
taken to be an "independent director" for the abovementioned purposes.

(c) Executive directors, i.e., paid executives of the company from among senior management,
shall not be more than one third of the elected directors, including the Chief Executive
MAXIMUM NUMBER OF DIRECTORSHIPS AND ELIGIBILITY TO ACT AS A
DIRECTOR
2) No person will be nominated as a director of more than seven listed companies at the
same time: Provided that this limit shall not include the directorships in the listed a
company controlled by a holding company.
FILLING UP A CASUAL VACANCY
3) Any casual vacancy is filled by the directors of well reputed organization which are listed
with in the period of less than 90 days.
RESPONSIBILITIES, POWERS AND FUNCTIONS OF BOARD OF DIRECTORS
4) The directors of listed companies shall use their powers and duties with a sense of
objective judgment and freedom to the greatest advantage for their shareholders and
banks.
5) EVERY LISTED COMPANY MUST:
Statement of Ethics and Business Practices is must prepared and circulated annually
by its BOD.
The Board of Directors legally take a vision/ mission statement and overall corporate
strategy for the listed company.
The Board of Directors establish a system of internal control ( check and balance)
Appointment, remuneration and terms and conditions of employment of the Chief
Executive Officer (CEO) and other executive directors of the listed company are
determined and approved by the Board of Directors
Health, safety and environment.
Investments and disinvestment of funds
Borrowing of moneys
The corporate social responsibility (CSR) initiatives and other philanthropic activities
including donations, charities, contributions and other payments of a similar nature
Human resource management including preparation of a succession plan
Producing (Procurement ) of goods and services
Whistleblower policy: is a person who exposes any kind of information or activity
that is deemed illegal, unethical, or not correct within an organization that is either
private or public
Governance, risk management and compliance issues. A complete record of
particulars of the significant policies along with the dates

on which they were approved or amended by the board of directors shall be

maintained
Tenure of Office of Directors .The tenure of Directorship is provided in section 180
of the ordinance, code requires fulfillment of vacancy within 30 days

6) The Chairman and the Chief Executive Officer (CEO) should not be a similar person as
per law. The Chairman is selected from non-executive directors. The Chairman is
responsible for the board that they are full filling their duties. The board of directors
define the proper roles and responsibilities of the Chairman and CEO.
MEETINGS OF THE BOARD
7) Inform the meeting 7 days before and tell the agenda of discussion, in any case of
emergency meetings the time will be reduced or postponed.
8) The Chairman of a listed company, shall direct over meetings of the Board of Directors.
Meet at least once in every quarter of the financial year. Ensure that minutes of meetings
of the Board of Directors are appropriately recorded by the companys secretary.
SIGNIFICANT ISSUES TO BE PLACED FOR DECISION OF BOARD OF DIRECTORS
9) The important issues must be brought in consideration of the board of directors or
committees of listed companies by the CEO so that proper decisions are made
accordingly which includes the issues such as:
The probability that the loans or obligations of the company could not be met
Cash flow projections, forecasts plan, annual business plan and strategic plan
Capital, manpower and overhead budgets with their variance analyses
Matters which committees of the board recommend or report
Quarterly report of the operations of the company
Internal audit report including all illegal or unethical cases if any
Management letter which the external auditors issue
Joint venture details, agreements with agents, distributors etc.
Any changes in a law, rule or regulation or enforcement of any new rule or
accounting standard which may impact the company
Any law suit or proceedings filed by or against the company
Any demand, prosecution or show case notice received from regulatory ore
revenue authorities
In case the company fails to recover any loans, advances or deposits such as trade
debts
Any big accidents related to pollution and environmental issues involving the
company
Public or product liability claims made by or against the company which may
negatively impact the company;

Report on risk management, governance and compliance issues such as

reputational risk which shall address risk analysis, risk management and risk
communication;
Conflicts with labors and other related issues to labor
Whistleblower protection mechanism;
CSR activity reports
Payment for goodwill, brand equity or intellectual property.

RELATED PARTY TRANSACTIONS

10) The Audit Committee must be informed about all the transactions and the board must be
informed about it for review and approval if the audit committee recommends.
If the audit committee recommends, the transactions which are not done at arms length
price must be put forward to the board at each board meeting separately for approval.

The pricing methods for transactions equal to the terms prevailing in arms length
transaction must be approved by the board of directors, only if those terms could be
proved.

The record of transactions must be maintained by the company party wise in each
financial year along with relevant documents and explanation. The record of transactions
related to the party must include the name, nature of relationship, nature of transaction,
amount and terms and conditions related to the party.

DIRECTORS TRAINING PROGRAM

11) All listed companies make proper arrangements to carry out orientation courses for
their directors to present them with this code, applicable laws, their duties and
responsibilities to enable them to effectively handle the affairs of the listed companies for
and on behalf of shareholders
CHIEF FINANCIAL OFFICER (CFO)
12) The appointment, remuneration and terms and conditions of employment of the Chief
Financial Officer (CFO), the Company Secretary and the head of internal audit of listed
companies shall be determined by the CEO with the approval of the Board of Directors.
QUALIFICATION
13) No person shall be appointed as the CFO of a listed company unless he is:
A member of a recognized body of professional accountants.
Post Graduate from a recognized university or equivalent.
Having at least five years experience in handling financial or corporate affairs of a
listed public company or a bank or a financial institution.

14) No one can be appointed as a Head of Internal Audit of a listed company until and
unless he/she has relevant 5 years of audit experience.
a member of a recognized body of professional accountants; or
a Certified Internal Auditor; or
a Certified Fraud Examiner; or
a Certified Internal Control Auditor
REQUIREMENTS TO ATTEND BOARD MEETINGS
15) The CFO and Company Secretary of a listed company or in their absence, the
nominee appointed by the board, shall attend all meetings of the Board of Directors.
Provided that the CFO and Company Secretary shall not attend such part of a meeting of
the Board of Directors, which involves consideration of an agenda item relating to the
CFO and Company Secretary respectively
CORPORATE AND FINANCIAL REPORTING FRAMEWORK
16) The directors of listed companies shall annex statements to the following effect with the
Directors Report, prepared under Section 236 of the Ordinance:

The financial statements, prepared by the management of the listed company, present
its state of affairs fairly, the result of its operations, cash flows and changes in equity
Proper books of account of the listed company have been maintained
Appropriate accounting policies have been consistently applied in preparation of
financial statements and accounting estimates are based on reasonable and prudent
judgment
International Financial Reporting Standards, as applicable in Pakistan, have been
followed in preparation of financial statements and any departures therefrom has been
adequately disclosed and explained
The system of internal control is sound in design and has been effectively
implemented and monitored

DIRECTORS REMUNERATION
17) Through the proper channel, the remuneration of the director is decided. Directors has not the
rights to decide for their remuneration.

Directors remuneration packages represents the companys worth. Through the

shareholder/board and according to the Articles of Association remuneration is
decided to attract the directors. The packages according for directors need through
which they successfully govern the company.
Executive and non-executive directors salary/fee, benefits and performance-linked
incentives etc all the details of their remuneration are specifically mentioned in the
companys annual report.

FREQUENCY OF FINANCIAL REPORTING

18) The quarterly unaudited financial statements of listed companies shall be published
and distributed with in the directors review to discuss the issues of the listed company.
19) All listed companies shall ensure that second quarterly financial statements are
subjected to a limited scope review by the rank auditors in such style and according to
such terms and according to the terms and conditions made by Institute of Chartered
Accountants of Pakistan (ICAP) and authorized by the SECP.
20) Every listed company shall immediately broadcast to the SECP and the stock
exchange on which its portions are listed all material information relating to the job and
other affairs of the listed company that will pretend the market price of its shares. The
way of dissemination of information shall be dictated by the stock exchange on which
parts of the company are listed.
RESPONSIBILITY
COMPLIANCE

FOR

FINANCIAL

REPORTING

AND

CORPORATE

21) Authority is not given to any listed company to distribute the financial statement until
and unless the CEO and CFO present the financial statement, under the consideration and
approved by the Board of Directors.
22) The duty of the Company Secretary is to compile all the certification and ordinance
as per companys requirement.
DISCLOSURE OF INTEREST BY A DIRECTOR HOLDING COMPANYS SHARES
23) The overriding objective of the Securities and Futures Ordinance is to enable those
investing in listed corporations to obtain relevant information on a timely basis so they
can make informed investment decisions. The persons who control, or are in a position to
control, interests in shares in listed corporations, and those who may benefit from
transactions involving associated corporations of listed corporations.
Their (the major shareholders) spouse can buy and sell share but the information
regarding to this would immediately give to the company secretary. Substantial
shareholders - individuals and corporations who are interested in 5% or more of any class
of voting shares in a listed corporation, must disclose their interests, and short positions,
in voting shares of the listed corporation; and Directors and chief executives of a listed
corporation must disclose their interests, and short positions, in any shares in a listed
corporation (or any of its associated corporations) and their interests in any debentures of
the listed corporation (or any of its associated corporations).
COMMITTEES OF THE BOARD
24) Audit committee shall be established by the board of directors, which include at least three
members of non-executive directors. In which the Chairman of the committee will be considered

as an independent directors which are not the Chairman of the board. One member of the audit
committee has relevant financial skills/expertise and experience for their satisfaction level.
25) Human Resource and Remuneration (HR&R) Committee includes at least of three members
involves a majority of non executive directors and an independent director. The CEO will be
considered as a member of committee. If the CEO is member of HR&R Committee is not
properly participate in the committees issues then it will directly effect on his performance and
their compensation.
26) Every member of the committees of the board should be clearly mentioned in each annual
report of the listed company.
AUDIT COMMITTEE
FREQUENCY OF MEETINGS, ATTENDANCE, TERMS OF REFERENCE AND
REPORTING PROCEDURES
27) Meet quarterly the audit committee of listed company within a year. These meetings held by
the board of directors first check the internally then after the external audit. Meeting shall be held
by the permission of external auditors or head of internal audit.
ATTENDANCE AT MEETINGS
28) The audit committee shall meet the external auditors when the CFO or and the head of
internal audit is available. Within a year the audit committee shall meet the head of internal
auditor
REPORTING PROCEDURE
29) To appoint a secretary of the committee.CFO is not a companys secretary. The duties of the
secretary is to distribute the minutes of meeting to all members, directors, head of internal audit
and the CFO.
INTERNAL AUDIT
30) The audit shall be done in every listed company. Head of internal audit should report to
committee and the CEO. The external auditors cannot be appointed as an internal auditor.
31) The external auditor review the internal auditors report and then discuss with the audit
committee.
EXTERNAL AUDITORS
COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

39) Annual reports of the company will be distributed to represents the progress of the company
and the necessary should be attach with it.
40) Statement of compliance is revised and certified by statutory auditors.
41) The SECP is satisfied by the corporate governance practices in particular case, if any
problem can be faced in future on this subject then it will be sort out like this method.