Regulations for selection of Independent directors in SECP

These regulations has been implemented on 26th April 2018 through
S.R.O. 359 (I) 2018.-

Companies (Manner and Selection of Independent Directors) Regulations, 2018, proposed to be made by the Securities and Exchange Commission of Pakistan.

Databank has been defined in this SRO as maintained by such institute, body or association as may be notified by the Commission for the purpose of section 166 of the Act. Databank of independent directors. –

Subject to requirements of section 166 of the Act, any institute, body or association as may be notified by the Commission, shall create and maintain the databank.

Eligibility criteria for persons for enrolling as an Independent Director in databank:

Any person desirous of including his/her name on the databank referred to in regulation 3, shall fulfill the following educational and other
requirements, namely:-

a) a person who:
i) either holds at least a graduate degree from a university recognized and
approved by the Higher Education Commission of Pakistan

or is a member of a professional body; and
Explanation: the expression, “professional body” means:
established in Pakistan, governed under a special enactment of the Federal Government as a self-regulatory organization managed by a representative National Council, and has a prescribed minimum criterion of examination and entitlement of membership of such body;
or
established outside Pakistan and established under a special enactment in the country of its origin and which is a member of the International body relevant for such field.

(ii) has at least five years of relevant experience in one or more of the fields of
finance, law, management, sales, marketing, administration, research,
corporate governance, technical operations or other disciplines related to
the company’s business; or
(b) has at least fifteen years of relevant work experience in one or more of the fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the company’s business;

(c) the person is willing to act as an independent director and can confirm that on appointment, would devote reasonable time to the affairs of the company in order to enable him/her to discharge his/her stewardship responsibilities as given under the applicable law, corporate governance directives and where applicable, licensing requirements.

Note: if person fulfil any criteria defined in option a, b and c. He/she is eligible to register his/her name in databank.

Every independent director, after being appointed/ elected on board, shall
complete Directors’ Training Program (DTP) or avail exemption from the Commission as per the requirements of Regulation 20 of the Listed Companies (Code of Corporate Governance) Regulations, 2017.

Procedure and manner for including names of persons on databank.-

(1) Subject to the requirements of section 166 and regulation 4, any eligible person desirous of including his/ her name on the databank shall make an application to the institute along with all the relevant information.
(2) Every directors’ training organization, duly approved by Commission, shall provide the name and CNIC/passport number to the Institute within 15 days of the individual completing the directors training program.
(3) The Institute, if satisfied that all the requirements of the Act and these regulations are fulfilled, shall enter or provide manner of inclusion of, relevant details of individuals in databank, names of persons who have successfully completed the Directors’ Training Program (DTP) or obtained exemption under the Listed Companies (Code of Corporate
Governance) Regulations, 2017, subject to the condition that each applicant complies with the eligibility criteria as prescribed in sub-regulation (4) above.
(4) The databank of independent directors shall not include names of person who has:
i) been ineligible, under any applicable law or debarred by the Commission,
from acting as a director of a company;
ii) been convicted by a court of any offence involving moral turpitude or fraud;
iii) been convicted in the mismanagement of investments in any capacity;
iv) been involved in the management of a company whose registration or
license has been revoked or cancelled or which has gone into liquidation or
other similar proceedings due to mismanagement of affairs, financial
misconduct or malpractices; and
v) entered into a plea bargain arrangement with the National Accountability Bureau (NAB).

Procedure and manner for including names of persons on databank.-

(1) Subject to the requirements of section 166
and regulation 4, any eligible person desirous of including his/ her name on
the databank shall make an application to the institute along with all the
relevant information.
(2) Every directors’ training organization, duly approved by Commission, shall
provide the name and CNIC/passport number to the Institute within 15 days of
the individual completing the directors training program.
(3) The Institute, if satisfied that all the requirements of the Act and these
regulations are fulfilled, shall enter or provide manner of inclusion of,
relevant details of individuals in databank, names of persons who have
successfully completed the Directors’ Training Program (DTP) or obtained exemption under the Listed Companies (Code of
Corporate
Governance) Regulations, 2017,
subject to the condition that each applicant complies with the eligibility criteria as prescribed in
sub-regulation (4) above.
(4) The databank of independent directors shall not include names of person who
has:
i) been ineligible, under any applicable law or debarred by the Commission,
from acting as a director of a company;
ii) been convicted by a court of any offence involving moral turpitude or
fraud;
iii) been convicted in the mismanagement of investments in any capacity;
iv) been involved in the management of a company whose registration or
license has been revoked or cancelled or which has gone into liquidation or
other similar proceedings due to mismanagement of affairs, financial
misconduct or malpractices; and
v) entered into a plea bargain arrangement with the National Accountability
Bureau (NAB).