The Securities and Exchange Commission of Pakistan (SECP) has directed directors, senior management, and other employees of publicly listed and public sector companies to avoid “Insider Trading” of unpublished price-sensitive information.
According to the guidelines issued by the SECP on Friday, directors, senior management, and other employees of publicly listed and public sector companies should not indulge in insider trading on the basis of unpublished price-sensitive information, subject to exceptions given in section 128 of the Securities Act, 2015, and ensure compliance with all relevant laws and company’s policies, if any, on the prohibition of insider trading.
The said officials must protect confidential, proprietary, and any such information received by virtue of their position in the company and not disclose such information to anyone unless the disclosure is required under any law or authorized by the board of the company.
They should also not use confidential and proprietary information for gaining unfair advantage and personal benefits unless it becomes public.
In pursuance of Rule 5 of the Public Sector Companies (Corporate Governance) Rules, 2013, and Regulation 10 of the Listed Companies (Code of Corporate Governance) Regulations, 2019, publicly listed and public sector companies are required to have a code of conduct for directors, senior management and other employees under respective laws.
In the absence of uniform guidelines, there is a risk that the aforementioned companies may formulate a code of conduct covering different points in their code, while some may rely on heavily regulated regimes while others may not, SECP maintained.
These guidelines are being issued to facilitate and provide general guidance to the aforementioned companies in formulating their code of conduct for directors, senior managers, and other employees, by covering some broad areas, emphasizing individual responsibility and the importance of business-led solutions.
The code and its accountability measures would be implemented by the aforementioned companies.
The Public Sector Companies (Corporate Governance) Rules, 2013 (the “PSC Rules”) and the Listed Companies (Code of Corporate Governance) Regulations, 2019 (the “CCG Regulations”) require that the board of such companies develop a formal code of conduct for its directors, senior management and other employees to articulate expected behavior, promote an ethical culture in the company and prevent conflict of interest in their capacity as a member of the Board and senior management, SECP added.
