After the tussle between Securities and Exchange Commission of Pakistan and Pakistan Stock Exchange ended, another controversy has popped up.
It was previously announced that the new board of directors elections will be held on April 19.
Lobbying has intensified between stockbrokers and some independent directors for a place on the new board.
Some independent board members have conveyed to the regulator that the brokers are competing to impose their domination on the new setup, the stockbrokers have asked the SECP to ensure that fresh faces should emerge as independent directors.
According to an English Daily, SECP said that independent directors have expressed their concerns verbally and stressed that a strong team of independent directors was needed to counter any manipulation by the brokers.
The brokers had raised concerns over the continuation of existing independent board members back in January.
On the other hand, the PSX Stockbrokers Association has written a letter to SECP Chairman Zafar Abdullah claiming that it would be a ‘conflict of interest’ if the existing independent directors nominated themselves in the board meeting for another term.
The letter reminded the SECP that it had committed at the meeting that none of the existing independent directors will be on the new board.
At the same time, the SECP has also recently given a warning to the PSX board to hold the elections immediately and in case of failure, a serious penalty could be imposed on the responsible people.
“We would like to draw the attention of the PSX board of directors to the following — Section 159 of Companies Act stipulates that any person who obstructs or contravenes or does not comply with any order of direction of the Commission shall be liable to pay a way of penalty,” says a letter sent from the apex regulator to the PSX.
SECP says penalties could be up to Rs 100 million, in case of an individual, and Rs 200 million, in case of a company.
Giving an interview to an English Daily, a senior official of the SECP said, “It looks like the PSX board elections will be held on April 19, and the details have already been shared with the regulator.”
The board consists of 14 directors. PSX Managing Director Richard Morin, by virtue of his post, will sit on the board as the 15th director.
We want Pakistan’s financial and capital market to be among the most competitive in the world but politics like these will not favor the market at all. Things should clear up as this can create a bad image in front of the global market.