Implications of the Revised Code of Corporate Governance, 2012 issued by the Securities and

Exchange Commission of Pakistan

Authors:
Noman Hameed ACCA (Member, Subcommittee for the Public Sector, MNP ACCA Pakistan)
Nida Naeem ACCA (Chairperson, Subcommittee for the Public Sector, MNP ACCA Pakistan)

What is corporate governance and what is its scope?

Broadly speaking, the term corporate governance refers to the processes and the related
organizational structures by which organizations are directed, controlled and held to account. It
involves a set of relationships between a company's management, its board, its shareholders and
other stakeholders. Corporate governance also provides the structure through which the
objectives of the company are set, and the means of attaining those objectives and monitoring
performance are determined". (OECD, Principles of Corporate Governance, 2004)

Good corporate governance assists the board and management to pursue objectives that are in
the interests of the organization and its stakeholders, facilitates effective monitoring and
encourages an organization to use its resources more efficiently.

In the private sector, good governance also instills investor confidence. The investment decisions
taken by the local and international investors are impacted by the organisations governance
practices. As markets compete to attract capital from world over, companies are gauged by
investors using various factors that demonstrate sustainable track record. In order for companies
to compete globally, they have to follow enhanced corporate governance standards, which further
helps in making capital markets transparent, protecting rights of minority shareholders and
attracting and retaining foreign investment.