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Company law

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Sunny Shah

The document discusses corporate governance and the stakeholders in a company. It defines a stakeholder as anyone with an interest in the company, whether as an owner or not. The main stakeholders discussed are general shareholders, directors, employees, and creditors. It then goes on to summarize the key points of Pakistan's Code of Corporate Governance from 2012, including the responsibilities of the board of directors, requirements for board meetings, and qualifications for senior financial roles.

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Group No 3  Submitted to: Mis. Saima Batool  Submitted by: Sana Ali Roll No: 06
Some Words About Teacher You are the best. Wherever I go, Whatever I do, I will always remember you.
COMPANY LAW (CORPORATE GOVERNANCE)
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 role in the corporate governance mechanism.  The board is responsible for ensuring that the corporation has well-defined and protected shareholder rights, a solid control environment, high levels of transparency and disclosure, and keeps the interests of the company and those of 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.
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Company law

  • 1. Group No 3  Submitted to: Mis. Saima Batool  Submitted by: Sana Ali Roll No: 06
  • 2. Some Words About Teacher You are the best. Wherever I go, Whatever I do, I will always remember you.
  • 4. 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
  • 5. 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.
  • 6. 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.
  • 7. 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.
  • 8. 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.
  • 9. 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.
  • 10. Code of Corporate Governance 2012  First time issued in March 2002  Revised by SECP and issued in April 2012
  • 11. 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.
  • 12. Composition of the Board  The board of directors plays a central role in the corporate governance mechanism.  The board is responsible for ensuring that the corporation has well-defined and protected shareholder rights, a solid control environment, high levels of transparency and disclosure, and keeps the interests of the company and those of all shareholders aligned.
  • 13. 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.
  • 14. 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.
  • 15. 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.
  • 16. • 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)
  • 17. 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
  • 18. 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,
  • 19. 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.
  • 20. 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:
  • 21. 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
  • 22. 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
  • 23. 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.
  • 24. 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.