abt, CORPORATE GOVERNANCE Listed Companies (Code of Corporate Governance) Regulations, 2019 = MANNAR AHMED SIDDIQUI LICENSED CORPORATE LAWYER CA, ACCA, LLB, Double MastersOther Relevant Laws Code of Corporate Governance Note: All the regulations and provisions as mentioned inside the highlighted/shaded area are mandatory and shall be strictly complied with. The other regulations and provisions are either to be complied with or ‘an appropriate explanation on not implementing such regulations would provide a sufficient justification, The Board of Directors 1. Composition of BOD Female Directors (in any category) Atleast 1 Executive Directors (including CEO) ‘Not more than 1/5" of BOD Independent Directors ‘At least, higher of; 2 directors OR 1/34 of BOD 2. A person cannot be a director (esd amauted alteaate <<.) oF 7 Jisted companies simultaneously. 3. Minority shareholders « as a class shall be facilitated to contest election; ‘Statement by contestant (from amongst the minority shareholders) is to be annexed with, notice of elections including his profile Information regarding members and shareholding structure shall be provided to him ~ Right of proxy solicitation shall also be available to such candidate 4. Chairman and CEO shall not be the same person, 5. Responsibilities of BOD: ~ Establishing Risk Management Policies = Atleast annually, an overall review of business risk shall be undertaken - Chaiman to set to set out role, responsibilities and remuneration of each director = All directors shall attend =>) the general meetings, rnless prechided - Other general responsibilities (esas patie. oak cond) Qs in Regulation 10 6. Remuneration of Directors for attending meetings, which is not to be decide by a director for hhimsetf, shall be according to a formal policy considering his expertise and responsibilities 7. Directors’ Training Program (DTP): ~ Every director shall avail this prescribed certification within 1 year of his appointment ~ Compeny shall get all existing directors certified latest by June 30, 2022 = Dizectors having 14 years of education along with 15 years of experience in BOD of a listed company shall be exempted from this requirement 8. Meeting of Directors shall be held, in which CEO shall place significant issues for decisions of the board, which include (but are not limited to) such issues as mentioned in Regulation 14. 9. Any related party transactions shall be placed before audit committee for recommendation, before being placed before the BOD for approval. Provided that, if majority of directors are interested, then the matter shall be placed before general meeting for approval. Mannar Ahmed Siddiqui CA (Marit Folde:), ACCA, LLB, Double Masters, PGC (UK) Licensed Corporate Lawyer « Partner, Ashfaq Hussain & CoOther Relevant Laws Code of Corporate Governance ‘CEO, Company Secretary and Head of Internal Audit ‘© Cluef Financial Officer (CFO) should have the following years of experience: = CAorACMA At least 3 years = Postgraduate in finance or equivalent At least § years = Other suitable degree At least 7 years ‘+ Internal Auditor shall have the following years of experience: = CAor ACMA At least 3 years = CIA of CFE of CICA or Masters (Business/Finance) At least § years = Other suitable degree At least 7 years ‘+ Company Secretary shall have such qualifications as mentioned in Section 22 of “Companies (General Provisions and Forms) Regulations, 2018" ‘© One person shall not hold two of the above offices together. ‘* CFO and Company Secretary shall attend all the board meetings (tnless item relates to them or BOD is an otherwise opinion) © CFO and Company Secretary are appointed by the BOD, which decides their rammerations. terms ang conditions; Subsequently approval of BOD shall be required for their removal. ‘* Head of Internal Ault may be removed by BOD on recommendation of the Andit Committee * Company secretary shall be the Secretary of BOD. Internal Audit Head of HR shall report to audit committee; may also report administratively to CEO ‘No director can be Head of HR, to ensure independence Internal audit reports to be provided for review to extemal auditors A qualified person shall be appointed as Head of HR, other than CFO The internal audit fimction can be outsourced, wholly or partly, to a professional service provider, but not to the existing external auditors of the company Mannar Ahmed Siddiqui CA (Marit Folde:), ACCA, LLB, Double Masters, PGC (UK) Licensed Corporate Lawyer « Partner, Ashfaq Hussain & CoOther Relevant Laws Code of Corporate Governance Committees of BOD + Audit Committee = Composition: Atleast 3 members from non-executive ditectors = Atleast 1 of above shall be an independent director = Chairman shall be an independent director = ctasmssefB0D) Secretary of the committee can be Company Secretary or CLA. = Atleast I shall be a ‘financially literate’: © A professional accountant or post graduate in finance © Atleast 10 years of experience as audit committee member OR 20 years of senior management experience in finance & andit = Meeting of Audit Committee: = Atleast once in each quarter of financial year = Shall also be held if requested by extemal auditors or head of intemal audit © Head of internal audit and extemal auditors shall also attend = CEO and CFO must not be members, but must attend as Chaitman invites = Atleast once a year with extemal auditors, and without CFO and CIA. = Atleast once a year With Internal Audit function without CFO & extemal = The terns of reference (scope and limitations) shall include, as provided under Regulation 27, + HR Committee = Atleast 3 members comprising majority from non-executive directors - Atleast 1 of above shall be an independent director - Chairman shall be an independent director = CEO can also be a part of such committee = Head of HR or Company Secretary can be the Secretary of HR Committee = CEO (torments 4) Head of HR 845%) or any other person may join only by invitation - Any member shall not participate when the agenda item relates to him = Shall meet at least once in a financial year ~The tenns of reference (scope and limitations) may include, as provided under Regulation 28 + Nomination Committee = BOD shall constitute this, with such numbers and such directors as may deem fit ~The tenns of reference (scope and limitations) shall be determined by BOD = Shall be respousible for making recommendations to BOD regatdiag BOD committees and their chairmanship along with keeping structure, size and compostion of BOD under review. + Risk Management Committee = BOD shall constitute this as may deem fit to camry outa review of sisk management Mannar Ahmed Siddiqui CA (Marit Fold), ACCA, LLB, Double Masters, PGC Licensed Corporate Lawyer « Partner, Ashfaq Hussain & CoOther Relevant Laws Code of Corporate Governance External Audit ‘+A firm to get appointed as external auditors: + Shall have a satisfactory QCR rating by ICAP Shall be registered with Audit Oversight Board of Pakistan = Shall be compliant with the IFAC Guidelines on Code of Ethics ‘+ BOD shall recommend appointment, as suggested by audit committee ‘* Such recommendations shall be included in directors’ report, along with reasons ifretiring auditors arenot re-appointed) ‘+ Not otler services (+H 8s wii rsiston shall be provided by anditors ‘+ Auditors shall not involve in management flmctions or make such decisions '* No close relative of CEO, CFO, Head of HR. Company Secretary. ot any of directors can be anditor ‘+ Aniditors to provide a management letter to BOD within 45 days of date of audit report ‘+ Alllisted companies, in financial sector, shall change their extemal auditor every 5 years ‘+ Allinter-telated companies engaged in financial services business shall appoint same firm of anditors ‘* Alllisted companies, other than financial sector, shall at least change engagement partner in 5 years ‘+ CEO and CFO, along-with their endorsements, shall get anmal and interim financial statements initialed by external auditors before presenting it to the aucit committee and BOD for approval Mannar Ahmed Siddiqui CA (Marit Fold), ACCA, LLB, Double Masters, PGC Licensed Corporate Lawyer « Partner, Ashfaq Hussain & CoOther Relevant Laws Code of Corporate Governance Reporting & Disclosure ‘© The quarterly waudited financial statements shall be published with the directors’ report on the affairs of the company. The BOD shall state in directors’ report: = Total Number of Directors - Number of Male Directors - Number of Female Directors - Number of Independent Directors - Number of Other Non-Executive Directors = Number of Executive Directors - Names of Members of BOD Committees - Remuneration Policy for Non-Executive Directors ‘© The company may post on its website: = Communication and disclosure poticy = Code of conduct for BOD, management and employees = Risk management policy = Internal control policy ~ Conporate social responsibility poticy - Key elements of other significant policies = Summary of scope and limitations of BOD committees, ~ Key elements of directors" remuneration policy ‘+ Allcompanies shall publish and circulate a compliance statement, with the annual reports: = to set out the status of their compliance with the requirements of these Regulations ~ stich statement shall be specific and be supported by the necessary evidence = company stall ensure that such statement is reviewed and certified by statutory auditors = auditors shall ensure that any ron-compliance is highlighted in their review report Mannar Ahmed Siddiqui CA (Merit der), ACCA, LLB, Double Masters, PGC (UK) Licensed Corporate Lawyer « Partner, Ashfaq Hussain & Co