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Assignment No: 8

Name: FAIZA BADAR Roll no: Fa12-mba-014 Title: Analysis of Codes Submitted to: Sir.Yasir Bin Tariq Date: Dec 03, 2013

COMPARITIVE ANALYSIS OF SECP CODES (2012) and UK CODES


ISSUES First version SECP CODES First version of SECP codes introduced in 2002 in Pakistan. UK CODES First version of the UK Corporate Governance Code was introduced in 1992 by the Cadbury Committee. Responsibilities of chairman and CEO performed by the one person. No statement

CEO & CHAIRMAN

Financial year

Chairman of Audit committee Independent director

Remuneration

CEO and chairman shall not be the same person according to the SECP 2012 codes. BOD should meet at least once in every quarter of financial year. The independent director is the chairman of audit committee. One independent director is necessary but listed company give preference that the number of independent director is 1/3rd of the total members in the board. Formal and transparent procedure only for fixing the remuneration packages In Pakistan human resource introduced in 2012. Appointment and removal internal auditor was determined by board.

The independent nonexecutive directors appointed as chairman. Board appointed the one non-executive independent director for senior independent director

Human resource

Appointment and removal

Formal and transparent procedure for developing the policy and also for fixing the remuneration packages. In UK human resource was already established to meet the objectives. Audit committee done the appointment and removal of internal audits.

Leadership Criteria of assessment

Chairman is liable for leadership of board. Expanded criteria provided for individuals.

Chairman plays the role of leadership. Considerably expanded criteria are used

COMPARITIVE ANALYSIS OF SECP CODES (2002), (2007) & 2012


Issues Number of independent directors Code 2002 In 2002 SECP codes the board of directors in the listed company included that the number of independent director is at least one. Code 2012 In 2012 SECP codes stated that one independent director is necessary but listed company give preference that the number of independent director is 1/3rd of the total members in the board. In 2002 SECP codes 2007 SECP codes In 2012 SECP codes listed that a director listed that a director director cannot of listed companies of listed companies serves more than 7 cannot serve more cannot serve more companies. than 10 companies. than 10 companies. Criteria for Criteria for Expanded criteria individuals were individuals were for individuals. scanty. scanty. In 2002 the number The number of In 2012 SECP codes of executive executive directors stated that the directors should not should not be more number of be more than 75% than 75% of elected executive directors of elected directors directors including should not be more including CEO in a CEO in a listed than 1/3rd of listed company. company. selected directors including CEO. No statement No statement The 2012 SECP Code 2007 In 2007 SECP codes included that the number of independent director is at least one in the listed company.

Number of directorship

Conditions for independence Number of executive directors

Board performance

evaluation

related to board performance evaluation.

related to board performance evaluation.

Chairman and CEO

Appointment, removal and qualification criteria CFO and CS

The Head of Internal Audit (IA)

SECP codes 2002 the chairman in listed companies will be selected from the nonexecutive directors. In 2002 SECP codes the appointment, removal and other conditions of CFO & CS are resolute by the CEO and approved by board. Not introduced.

In SECP codes 2007 the chairman in listed companies will be selected from the nonexecutive directors. The appointment, removal and other conditions of CFO & CS is resolute by the CEO and approved by board. Not introduced.

codes implementation of 2years mechanism are disclosed for evaluating the performance of the Board. CEO and chairman shall not be the same person according to the SECP 2012 codes. In 2012 CFO, CS and internal audit (IA) appointment, removals, and other conditions are resolute by board.

Directors remuneration

Audit committees

The Qualification of the head of internal audit introduced in 2012 SECP codes Not stated. Not stated. According to the SECP 2012 codes the directors remuneration are shown in the annual report. In 2002 SECP codes The non-executive In 2012 SECP codes the non-executive director is the the independent director is the chairman of audit director is the chairman of audit committee and they chairman of audit committee and they decided the committee and decided the secretary of head of internal secretary of committee. audit was the committee. secretary of audit committee, H.R and remuneration

Internal audit function

In 2002 the internal audit function done by the head of the IA.

The internal audit function done by the head of the IA.

committee also commenced in 2012 In 2012 SECP codes the internal audit function done by the CFO.