PSX proposes legal change to indemnify staffs

KARACHI: Pakistan Stock Exchange (PSX) wants to indemnify its directors and officials against any loss and liability through a legal change, it was learnt on Tuesday, much like a similar demand by the central bank.

“PSX explored international practices and found that various stock exchanges in other countries have indemnification clause available in their respective regulatory frameworks,” the PSX said. “Accordingly, PSX is proposing to insert an indemnity clause in PSX regulations.”

PSX, as the frontline regulator, plays a vital role to ensure protection of investors in particular and all other stakeholders in general. To fulfill its responsibilities, PSX has to interact with different regulatory authorities and agencies, listed companies and brokers and take enforcement actions against non-compliant regulated persons.

Keeping in view the functions and nature of work, PSX considers it important that PSX Regulation should have an indemnification clause for the protection of its directors and officials.

“The exchange, its directors including members of the committees constituted by the board, officers, employees and members of the arbitration panel shall not be liable to, and shall be indemnified and saved harmless at all times by regulated persons and/or the exchange, as the case may be, from and against any loss, claim, liability, damages, costs, charges, expenses,” said the PSX

Moreover, PSX has proposed to have the power to relax consequential actions including suspension in trading of shares and placing the company in defaulter segment, on a listed company in case of non-compliance of any regulations.

According to the proposal, the relaxation can be granted for a maximum 60 days at once, which may further be extended if the relaxation is considered to be in the best interest of the shareholders/investing public; and where the company has demonstrated improvement from last reported progress towards the rectification of causes of its non-compliance.

The State Bank of Pakistan also proposed indemnification of its employees against inquiry or investigation by the National Accountability Bureau or Federal Investigation Agency under proposed amendments into the central bank law.

The governor, deputy governors, directors, members of any board committee and monetary policy committee, officers and employees of the bank will not be liable in their personal capacity for any act of commission or omission done in their official capacity in good faith and in case of any such proceedings they will be indemnified by the bank, which shall bear all the expenses thereof, till final decision of the case. No action, inquiry, investigation or proceedings shall be taken by NAB, FIA or provincial investigation agency, bureau, authority or institution by whatever name called without prior consent of the board of directors of State Bank.