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Definition
The system by which business corporations are directed and controlled Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. Primarily concerned with public listed companies i.e. those listed on stock exchange
Share Holders
Directors
Managers
Shareholders
BOD
Audit Committee
Compensation Committee
-Elected by owners to represent their interest in effective running of corporation -Inside (executive): hold management positions in the company -Outside: not employed or engaged with the organization
-Members of BOD -Oversee financial reporting process, monitor internal controls, choice of accounting policies, hiring and performance of external auditors
Four Pillars
1. Accountability
2. Fairness 3. Transparency 4. Independence
Accountability
Ensure that management is accountable to the Board Ensure that the Board is accountable to shareholders
Fairness
Protect Shareholders rights
Transparency
Ensure timely, accurate disclosure on all material matters, including the financial situation, performance, ownership and corporate governance
Independence
Procedures and structures are in place so as to minimize, or avoid completely conflicts of interest Independent Directors and Advisers i.e. free from the influence of others
the board of directors of each listed company shall have at least one and preferably one third of the total members of the board as independent directors. "independent director" means a director who is not connected or does not have any other relationship, whether pecuniary or otherwise, with the listed company, its associated companies, subsidiaries, holding company or directors
The SECP is largely an independent body that regulates the corporate sector and financial markets, On the other hand the SBP is Pakistan's central bank and is responsible for regulating the country's banking and finance sector
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