BRIEF ON CORPORATE GOVERNANCE Glossary

Glossary

The liability of a board of directors to shareholders and stakeholders for

accountability
corporate performance and actions.
Acquiring control of a corporation by stock purchase or exchange, either
acquisition
hostile or friendly.
A company gathering, usually held at the end of each financial year, at
which shareholders and management discuss the previous year and the
AGM
outlook for the future, directors are elected and other shareholder
concerns are addressed.
An audited document issued annually by all publicly listed companies to
annual report their shareholders. Contains information on financial results and overall
performance of the previous fiscal year and comments on future outlook
Statement of the accounting firm's assessment of the validity and
audit report accuracy of a company's financial information and conformity with
accepted accounting practices.
board of The collective group of individuals elected by the shareholders of a
directors corporation to oversee the management of the corporation on their behalf.
The chief executive officer or CEO is the highest ranking officer of the
CEO
company
The corporate executive responsible for the financial planning and record-
CFO
keeping of a company
Chairman of the
Highest-ranking director in a corporation's board of directors.
Board
code of best Guiding principles for ensuring good corporate governance to which all
practice publicly listed companies should aim to follow.
When someone is in a position of trust which requires them to exercise
conflict of judgment on behalf of others and also has interests of the sort that might
interest interfere with the exercise of their judgment, and which the person is
ethically required to either eschew or openly attest.
The term corporate governance refers to the rules and incentives by
which the management of a company is directed and controlled so as to
maximize the profitability and long-term value of the firm for its
corporate shareholders while into account the interests of other legitimate
governance stakeholders (Stone et al, 1998). The main players involved in corporate
governance are directors, stakeholders and management. Corporate
governance promotes transparency and accountability within corporate
entity.
A method of stock voting that permits shareholders to cast all votes for
one candidate for the board. Minority shareholders may be able to elect
cumulative
one or more directors by giving all of their votes to one or several
voting
candidates. It is different from regular or statutory voting, in which
shareholders must vote for a different candidate for each available seat.
A person elected by shareholders to serve on the company’s board of
director
directors
disclosure The public dissemination of material, market-influencing information.
executive A member of a company's board of directors who is also an employee of
director the company.
The release of all material, market-influencing information to the public at
fair disclosure
the same time.
One who owes to another the duties of good faith, trust, confidence,
fiduciary
candor (Blacks Law Dictionary)
 A written report that quantitatively summarizes the financial status of an
financial organization for a stated period of time. Includes an income statement
statement and balance sheet describing the flow of resources, profit or loss, and the
distribution or retention of profits.
A set of uniform accounting rules for recording and reporting financial
GAAP
information as established by the Financial Accounting Standards Board.
Financial reporting standards created by the International Accounting
IAS Standards Committee in an effort to harmonize various practices all
across the world
A director who is not connected with the listed company or it promoters or
independent directors on the basis of family relationship and who does not have any
director other relationship whether pecuniary or otherwise with the listed company,
its associated companies, directors, executives or related parties.
individual An individual who purchases generally small amounts of securities for his
investor or her own account.
initial public
The initial sale of stock by a company to members of the public
offering
A member of a company's board of directors who is also an employee of
inside director
the company.
Buying or selling corporate stock by an insider, or an insider's disclosure
insider trading
of insider information
Institutional investors include financial institutions (both banks and non-
institutional
bank financial companies) and non-financial companies. These include
investor
both the public-owned as well as privately owned institutions.
institutional Institutional ownership is defined as share ownership by institutional
ownership investors
interlocking Two or more corporate boards of directors that share at least two
directorates directors in common.
internal audit An evaluation of a company's financial health by its own employees.
investor Process by which a company communicates with its shareholders and the
relations investment community.
The combination of two or more entities through a purchase acquisition or
merger
a pooling of interests.
non-executive A person elected by shareholders to a corporation's board of directors
director who is not affiliated with the company in any other capacity.
The granting of authority by shareholders to others to vote their shares at
proxy AGM. It is a ballot by which shareholders can submit their votes without
physically attending the annual meeting.
A document sent by publicly listed companies to their shareholders
proxy statement
providing material information on issues to be vote on at the annual
general meeting.
A report filed quarterly in accordance with Securities and Exchange
quarterly report Commission of Pakistan regulations containing unaudited financial
statements.
The right of holders of common stock to vote on matters of corporate
right to vote
policy at company’s annual meeting.
A person or entity that owns shares of stock in a corporation or mutual
shareholder
fund.
The monitoring of performance and corporate governance of portfolio
shareholder
companies by shareholders whether they are institutions, groups or
activism
individuals.
A group, individual or an institution that takes action in an effort to
shareholder
influence management and effect change in the behavior of companies to
activist
increase shareholder value and promote corporate governance.
 Socially responsible investment (SRI) combines investor’s financial
socially
objectives with their commitment to social and environmental concerns. It
responsible
permits investors to choose companies or funds that meet certain ethical
investment
and moral standards.
stakeholder Any group, individual or institution that has an interest in a company
A market in which there is open communication between stakeholders,
transparent
investors and company managers and all material information is readily
market
available to the public.

A Publication of the SEC-UNDP Project on Corporate Governance

For comments and queries contact:
cgc@secp.gov.pk