KARACHI: Elections for Pakistan Stock Exchange’s new board of directors would be held on April 19, the sitting 14-member board decided at a meeting on Monday.
Investors heaved a sigh of relief as the decision, reached in consensus, staved off a battle that could have dragged the matter to the courts – a move which would have caused further damage to the market which is already reeling under pressure for more than a year.
The tussle between the apex regulator – Securities and Exchange Commission of Pakistan (SECP) – on one side and the member and independent directors on the other, was over the mandatory date of elections. The issue took an ugly turn when the deadline given by the SECP for holding the elections passed on Feb 28.
The stock brokers and independent directors were adamant that elections were not due until Feb 2019 on the expiry of the term of the current board. Adviser to the Prime Minister on Finance, Revenue and Economic Affairs Miftah Ismail brokered talks between the two sides earlier this month, directing the PSX board to resolve the matter in consultation with the regulator.
Decision will help avoid a crisis-like situation on the equity market
The significant feature of the new board to be elected on April 19 would be representation given to minority shareholders who subscribed to 20 per cent shares issued under the Initial Public Offering; disbanding the concept of SECP-nominated directors and offering one seat to a female director as required under the Companies Act, 2017. According to sources, in the PSX board meeting held on Monday it was decided that the number of directors of the new board would be 14.
The seats would be equally divided between the shareholder directors and independent directors. The Chinese majority 40pc equity holders; the local broker directors also with 40pc stake and the public representing 20pc minority interest would contest for seven allocated seats on the board.
For the seven independent directors, PSX would pass on recommendations of 14 nominees from which SECP would chose. In effect, each of the elected directors would have to secure 14.7pc of the total votes. PSX Managing Director Richard Morin by virtue of his post would sit on the board as the 15th director.
Chairman SECP Zafar Abdullah expressed his satisfaction and appreciation for the PSX board.
Talking to Dawn, Mr Abdullah said, “The exchange has now made the right decision and upheld a high level of governance standard, while ensuring compliance with the relevant laws and the bourse’s articles of association.”