Huraira Ehsan

F17-0848
Bs Accounting and Finance
7th Semester
Corporate Governance
Sir Shiraz Ahmed
23/1/21
REFRENCES:
INTRODUCTION

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE IN WORLD

CORPORATE GOVERNANCE IN PAKISTAN

NUMBER OF COMPANIES

NATURE OF COMPANIES BUSINESS

TOTAL CAPITAL OF COMPANIES

CEO DUALITY

BOARD SIZE

NON EXECUTIVE DIRECTORE IN BOARD

FAMILY CONCENTRATED OWNERSHIPS

INDEPENDENR AUDIT COMMITTEE

CROSS DITECTOR-SHIP

YEAR OF DATA

DATA TAKEN SOURCE

CONCLUSION
Introduction of Project

In this project, we will analyze the level of corporate governance in different corporations in
same sectors on base of different studies in these corporations like, CEO duality, board size,
Non-Executive directors in board, Family concentrated ownership, independent audit committee,
Cross directorship.

CORPORATE GOVERNANCE

Corporate governance is the combination of rules, processes or laws by which businesses are
operated, regulated or controlled. The term encompasses the internal and external factors that
affect the interests of a company’s stakeholders, including shareholders, customers, suppliers,
government regulators and management. The board of directors is responsible for creating the
framework for corporate governance that best aligns business conduct with objectives.

Specific processes that can be outlined in corporate governance include action plans,

performance measurement, disclosure practices, executive compensation decisions, dividend
policies, procedures for reconciling conflicts of interest and explicit or implicit contracts between
the company and stakeholders.

An example of good corporate governance is a well-defined and enforced structure that works
for the benefit of everyone concerned by ensuring that the enterprise adheres to accepted ethical
standards, best practices and formal laws. Alternatively, bad corporate governance is seen as
poorly-structured, ambiguous and noncompliant, which could damage the image or financial
health of a business.

Principles of corporate governance

While corporate governance structure may vary, most organizations incorporate

the following key elements:
 All shareholders should be treated equally and fairly. Part of this is making
sure shareholders are aware of their rights and how to exercise them.

 Legal, contractual and social obligations to non-shareholder stakeholders

must be upheld. This includes always communicating pertinent information to
employees, investors, vendors and members of the community.

 The board of directors must maintain a commitment to ensure

accountability, fairness, diversity and transparency within corporate
governance. Board members must also possess the adequate skills
necessary to review management practices.

 Organizations should define a code of conduct for board members and

executives, only appointing new individuals if they meet that standard.

 All corporate governance policies and procedures should be transparent or

disclosed to relevant stakeholders.

https://searchcompliance.techtarget.com/definition/corporate-governance

CORPORATE GOVERNANCE IN WORLD

In the us, shareholders elect a board of directors, who in turn hire and fire the managers who
actually run the company. In Germany, the board is not legally charged with
representing the interests of shareholders, but is rather charged with representing the
interests of stakeholders, including workers and creditors as well as the shareholders. It also
usually has a member of the labour union on the board.
In the UK, the majority of public companies voluntarily abide by the Code of Best
Practice on corporate governance. It recommends there should be at least three outside
directors and the board chairman and the CEO should be different individuals.
Japan’s corporate boards are dominated with insiders – loyal managers who cap off
their careers with a stint inside the boardroom – and they are primarily concerned with the
welfare of keiretsu (parent company) to which the company belongs.
China has colossal corporate structures where businesses have parent, grandparent and
even great-grandparent companies. Each level has a board and Communist Party officials usually
have a seat. In India, the founding family members usually hold sway over the board.
Korean manufacturers’ strategy is to grow as rapidly as possible and do this by
borrowing money from banks. As a result, the government holds sway over their corporate
governance structure through the banks. This relationship gives the Government influence over
the company, while the company has a say in government issues and Korean corporate
governance.
Finally, the French corporate governance structure often attracts criticism for involving
a complex network of public sector organisations, large businesses and banks. However, this
ensures the French excel at collaborative projects between business and Government. For
example, France leads the world in the production of nuclear reactors and high-speed trains.
https://www.linkedin.com/pulse/how-does-corporate-governance-vary-around-world-lubna-
qassim#:~:text=Corporate%20governance%20is%20the%20system,financiers%2C
%20government%20and%20the%20community.
Corporate governance in Pakistan
According to the 2017 annual report of the Securities and Exchange Commission of
Pakistan (‘SECP’), 8,286 new companies were registered in Pakistan. Compared to the preceding
financial year, this signaled a growth of 34%, raising the total corporate portfolio to 80,700.  The
continuous increase in the number of companies not only depicts economic growth and
circulation of money, but also provides opportunity for the SECP to formulate new methods of
handling and controlling companies. Albeit the fact that this annual report illustrates a reduced
number of registered public limited companies, the focus of the SECP, nevertheless, remains on
their regulation. The checks on public limited companies are higher because of the imbalance
between the companies’ capital and control; this imbalance forms the most frequently discussed
agency problem in Pakistan.
An agency problem arises whenever the welfare of one party (the principal) depends on the
actions taken by another (the agent).  The difficulty lies in motivating the agent to act in
accordance with the principal’s interest, rather than his own, as generally the agent has better
information than the principal regarding the situation. It is therefore possible that, on the basis of
those facts, he can act in a manner detrimental to the principal and beneficial to himself. The
principal cannot always ensure that the agent acts in accordance with what was promised to him.
Therefore, an agent has a fiduciary relationship with the principal, which means that the former
must perform his duties with due skill, authority, in obedience, and in the interest of the
principal, while avoiding the temptation of self-gain from the privileged position bestowed upon
him.  A lack of trust between the principal and the agent is ultimately detrimental to both the
parties. In a conflict, the shareholders/principals will desire to maximize their value (increased
share price and stable dividends) and the controllers/agents will attempt to make the most of their
utility (survival and power). The difference in this process of maximizing utility between the two
parties is considered an agency cost.
There are generally three recognized types of agency problems that arise in business firms. 
The first is the conflict between the owners of the firms and their hired managers, the former
being the principals and the latter the agents. The second agency problem involves a conflict
between the majority shareholders/controlling owners and the minority shareholders/non-
controlling owners; here, the controlling owners are the principals and the non-controlling ones
are the managers. A conflict between the firm and the other parties with whom it contracts or
interacts with is the third recognized type of agency problem. This conflict involves the creditors,
employees, and the customers of the firm. The difficulty lies in assuring that the firm, as in the
case of the agent, does not behave opportunistically towards its various other principals.
This article examines the system of corporate governance in Pakistan through the lens of the
agency problems it faces. It discusses the aforementioned agency problems with the aid of
reported case law. The article asserts that out of the three agency problems, the conflict between
the shareholders and the directors of a company is the most widespread one in Pakistan with the
SECP and the High Courts being inclined towards protecting the interests of the shareholders as
they have provided investment to the firms. The second agency problem deals with the conflict
between the majority and minority stakeholder, and is the least reported upon due to the
concentrated ownership structure of firms in Pakistan. With regards to the third agency problem,
banks have been supported by the SECP and the High Courts, specifically in terms of the non-
payment of loans by the firms with case law demonstrating that the judiciary has generally tried
to protect the interests of the investors. It is worth noting that the SECP has also played a
significant role in regulating the agency problems in Pakistan.

https://sahsol.lums.edu.pk/law-journal/theory-and-practice-corporate-
governance-analysis-agency-problems-pakistan

NUMBER OF COMPANIES:

1. MARTIN DOW
2. ABBOTT
3. GSK GLASO SMITH KLINE
4. HILTON PHARMA
5. PFIZER

NATURE OF COMPANIES BUSINESS:

 MARTIN DOW:
Martin Dow is a Pakistani multinational pharmaceutical company which is
based in Karachi, Pakistan. It was founded in 1995[2] and is one of the leading
pharmaceutical companies in Pakistan. It has more than 60 brands and over 1000
employees. Its products are manufactured in Karachi at its cGMP compliant
manufacturing plant.[3]

As of 2016, Martin Dow had six manufacturing facilities in total in 2 countries

In 2010, Martin Dow acquired the manufacturing facility and brands of Roche Pakistan.[5]
In 2015, Martin Dow was recognized as a Global Growth Company by the World Economic Forum.
[6]
 In the same year, Martin Dow entered into an alliance with Biocodex S.A., a France-based
pharmaceutical company.[7]
In 2016, German Merck KGaA executed a binding contract to divest its shareholding in Pakistan to
Martin Dow Ltd.[8][9][10]
In 2016, in a €1.5 million deal, Martin Dow acquired the Bristol-Myers Squibb's pharmaceutical
manufacturing facility in Meymac, France.[11][12] The French President inaugurated Martin Dow
Pharma's Meymac Plant in France.[13][14] The plant of V2Pharm in Gien was also taken over by Martin
Dow.[15]
In 2020, Martin Dow Limited was awarded for excellent performance in fire safety and protection by
the Sindh Local Government minister. [16]
 ABBOTT

Abbott Laboratories is an American multinational medical devices

and health care company with headquarters in Abbott Park, Illinois, United States. The
company was founded by Chicago physician Wallace Calvin Abbott in 1888 to formulate
known drugs; today, it sells medical devices, diagnostics, branded generic medicines
and nutritional products. It split off its research-based pharmaceuticals business
into AbbVie in 2013.

Among its well-known products across the medical devices, diagnostics, and nutrition
product divisions are Pedialyte, Similac, Ensure, Glucerna, ZonePerfect, FreeStyle
Libre, i-STAT and MitraClip.

 GSK GLAXO SMITH KLINE:

GlaxoSmithKline (GSK) is a world leading research-based

pharmaceutical company with a powerful combination of skills and resources
that provides a platform for delivering strong growth in today's rapidly
changing healthcare environment. GSK's mission is to improve the quality of
 human life by enabling people to do more, feel better and live longer. Over
15,000 people working in GSK's global R&D organisation are responsible for
discovering, developing, registering, commercialising and supporting
appropriate marketing of prescription medicines and vaccines for the treatment
and prevention of human disease. In 2002 GSK invested £2.6 billion in
research and development at more than 20 sites in eight countries worldwide.
GSK aspires to become the most productive R&D organisation in the
pharmaceutical industry. To achieve this, GSK is harnessing the latest
knowledge and applying new technology. The company has a leading position
in genetics research and new drug discovery technologies.

 HILTON PHARMA:

Hilton Pharma Company is one of leading company in pharmaceutical industry.

Basically, Hilton Pharma is the member of Progressive group of companies. Hilton
Pharma is renowned as largest national pharmaceutical company in Pakistan.
Hilton Pharma is valued for its entrepreneurship and strong ethical standards.
Since the beginning of Hilton Pharma, they are recognized as highly focused on
the research for their products. They always launched products under licensed
from the verification of world famous pharmaceutical research centres. Hilton
Pharma constantly comes up with innovative market strategies to sustain for long
time period in the market and positioned their products in related therapeutic
areas.

 PFIZER:

Pfizer Inc. (/ˈfaɪzər/)[3] is an American multinational pharmaceutical corporation.

Pfizer is one of the world's largest pharmaceutical companies, and was ranked 64th on
the 2020 Fortune 500 list of the largest U.S. corporations by total revenue, at $51.75
billion.[4][5]
Headquartered in Manhattan, Pfizer develops and produces medicines and vaccines for
a wide range of medical disciplines, including immunology, oncology, cardiology,
endocrinology, and neurology. Its products include the blockbuster drug Lipitor
(atorvastatin), used to lower LDL blood cholesterol; Lyrica (pregabalin) for neuropathic
pain and fibromyalgia; Diflucan (fluconazole), an oral antifungal medication; Zithromax
(azithromycin), an antibiotic; Viagra (sildenafil) for erectile dysfunction; Celebrex (also
Celebra, celecoxib), an anti-inflammatory drug; and Prevnar 13, a pneumococcal
conjugate vaccine.