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PSX, SECP resolve discord over board reconstitution

March 03, 2018

KARACHI: Pakistan Stock Exchange (PSX) on Friday agreed to reconstitute its board paving the way for election of minority stakeholders, a demand put forward by Securities Exchange Commission of Pakistan (SECP), but they couldn’t decide the election schedule yet, officials said on Friday.

“The board is likely to meet on March 14 and would decide the elections date then,” a PSX director said, requesting anonymity. “The situation blew out of proportion due to an issue of election of independent directors.”

A SECP’s spokesman Sajid Gondal said the demutualisation law necessitates reconstitution of PSX board once the demutualisation process is complete. “Since the process has been completed in June 2017 when 20 percent shares of PSX were issued to public it is imperative that representation of this 20 percent minority shareholders should now be on the PSX board,” Gondal added. “The minority shareholders are presently deprived of their due legitimate right.”

Currently, the 15-member board comprises four representatives of Chinese investors who own the capital market’s strategic stake, three selected by brokers, two SECP-nominated members, while the remaining five are independent directors who were nominated by the government to complete demutualisation. PSX chief executive officer sits on the board as the 15 member.

In December 2016, PSX sold 40 percent strategic shares to a Chinese-led investors group for around $85 million.

In December last year, SECP asked PSX to replace independent directors with elected ones in line with the law and directed it to hold elections till February 29. But, the elections could not be held on time on the pretext the three-year term of the board would complete in February 2019.

“There was a discord on independent directors but the differences have been ironed out,” the director said, referring to a meeting between SECP and PSX brokered by Adviser to Prime Minister on Finance Miftah Ismail in Islamabad. Ismail directed PSX management to resolve the matters relating to election of its directors in consultation with SECP as per the regulatory requirements.

“The government is endeavouring to make Pakistan’s financial and capital market, among the most competitive in the world,” a statement quoted the adviser as saying. Terming the demutualisation, integration and prioritisation of stock exchanges as a landmark achievement, “Adviser said the reforms carried out during the last four years had paid huge dividends.”

SECP chairman Zafar Abdullah briefed the adviser on the regulators efforts to facilitate the development of strong capital market. Abdullah said the commission maintains close contacts with all stakeholders to resolve various issues confronted by them. “Due to the implementation of major reforms, a strong enforcement and compliance regime was in place to guard against market manipulation and other unfair practices,” he said.

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