Company law
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Transcript of Company law
Some Words About Teacher
You are the best. Wherever I go,
Whatever I do, I will always
remember you.
THE STAKEHOLDERS
A "stakeholder" is a person (including an entity or group) that has an interest or concern in a business or enterprise though not necessarily as an owner.
General Shareholders Directors Employees Creditors
General
Control large number of diversified minds by board of director appointed by shareholders.
The annual report is a vital link and, in most instances, the only link between the company and its stakeholders.
Shareholders
An owner of shares in a company. It is essential for a corporate governance framework
to protect the rights of all shareholders. A shareholder is not responsible for managing
corporate activities as responsibility for corporate strategy and operations is entrusted with the Board and the management team. Shareholder rights must, therefore, focus on issues such as the election of the Board, amendments to the company's organic documents, approval of extraordinary transactions in addition to basic issues specified in the Companies Ordinance and internal company documents.
Directors
The primary responsibility for the administration and performance of a company lies with the directors. The directors administer the company on behalf of shareholders and their powers and duties are covered in the statute.
Employees
All employees have some responsibility for implementation of effective internal control procedures as part of their accountability for achieving objectives. They collectively should have the necessary knowledge, skills, information and authority to operate the company. This will require an understanding of the company, its objectives, the industries and markets in which it operates, and the risks it faces.
Creditors
Contractual stakeholders like customers, contractors and sub-contractors are fundamental for any corporation. A relationship based on trust develops between the corporation and such stakeholders and it is normal, especially where transactions are frequent, for credit to be extended.
Code of Corporate Governance 2012
First time issued in March 2002 Revised by SECP and issued in April
2012
Definition
The Code will result in availability enhanced information to markets participants and hence will provide better protection of the rights of all investors, particularly minority shareholders.
Composition of the Board
The board of directors plays a central rolein the corporate governance mechanism.
The board is responsible for ensuring thatthe corporation has well-defined andprotected shareholder rights, a solidcontrol environment, high levels oftransparency and disclosure, and keepsthe interests of the company and thoseof all shareholders aligned.
Maximum number of directorships to be held by a director
No person shall be elected or nominated as a director of more than seven listed companies simultaneously.
Filling up a casual vacancy
Any casual vacancy on the board of directors of a listed company shall be filled up by the directors at the earliest but not later than 90 days thereof.
Responsibilities, powers and functions of board of directors
The board of directors of a listed company shall exercise its powers and carry out its fiduciary duties with a sense of objective judgment and independence in the best interests of the listed company.
Duties And Power of directors• human resource management• procurement of goods and services• investors relations including but not limited to general investor awareness,• complaints and communication, etc.
• marketing• determination of terms of credit and discount to customers• write-off of bad/doubtful debts, advances and receivables• capital expenditure, planning and control• investments and disinvestment of funds• borrowing of moneys• determination and delegation of financial powers• transactions or contracts with associated companies and related parties• health, safety and environment; and• the whistleblower policy.(exposes misconduct)
Meetings of the board
All written notices, including the agenda, of meetings shall be circulated at least seven days prior to the meetings, except in the case of emergency meetings, where the notice period may be reduced or waived.
The Chairman shall ensure that the minutes of meetings of the board of directors are appropriately recorded. The Company Secretary shall be secretary to the board
Significant issues to be placed for decision of 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 board of directors of listed companies and/or its committees,
Directors’ Training Program
All listed companies shall make appropriate arrangements to carry out orientation courses
for their directors to acquaint them with this code, applicable laws, their duties and responsibilities to enable them to effectively manage the affairs of the listed companies for and on behalf of shareholders.
Appointment and removal
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 board of directors.
The removal of the CFO and Company Secretary of listed companies shall be made with the approval of the board of directors.
The removal of Head of Internal Audit shall be made with the approval of the board only upon recommendation of the Chairman of the Audit Committee:
Qualifications of CFO and Head of Internal Audit
No person shall be appointed as the CFO of a listed company unless he/she has at least five years of experience of handling financial or corporate affairs of a listed company or a bank or a financial institution and is:
A member of a recognized body of professional accountants; or
Has a postgraduate degree in finance from a recognized university or equivalent.
Auditor :No person shall be appointed as the Head of Internal Audit of a listed company unless he/she has 5 years of relevant audit experience and is:
A member of a recognized body of professional accountants
A Certified Internal Auditor; or A Certified Fraud Examiner; or A Certified Internal Control Auditor
Requirement to attend board meetings
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
Directors’ remuneration
There shall be a formal and transparent procedure for fixing the remuneration packages of individual directors. No director shall be involved in deciding his/her own remuneration.
Frequency of financial reporting
All listed companies shall ensure that second quarterly financial statements are subjected to a limited scope review by the statutory auditors in such manner and according to such terms and conditions as may be determined by the Institute of Chartered Accountants of Pakistan (ICAP) and approved by the SECP.