The Securities and Exchange Commission of Pakistan (SECP), in order to promote best governance practices and maintain focus on core operations, has introduced maximum terms limit for the Chief Executive Officers and Independent Directors to serve in the Capital Market Infrastructure Institutions (CMIIs) i.e. PSX, NCCPL, CDC, and PMEX.
SECP has introduced tenure limits upon the CEO of a CMII to a maximum of three terms with the third term to be allowed only in case of exceptional performance and subject to a competitive selection process. Moreover, the tenure limits for independent directors have been capped at a maximum of three terms across all CMIIs. Further, no individual shall serve as an independent director on the board of the same CMII for more than two terms.
CMIIs perform important public policy functions including the infrastructure, services, and regulations. It is expected that these reforms will encourage greater participation by professionals in the governance of the CMIIs and promote a culture of independence, accountability, and objective decision-making.
Earlier, SECP Chairman Akif Saeed during his meetings with the boards of directors of CMIIs last week, stressed the need for CMIIs to follow the highest standards of corporate governance while discussing other reforms aimed at product development, risk management, debt market development, and enhanced cybersecurity.
The SECP Commissioner Abdul Rehman Warraich stressed the need for appropriate distribution of responsibility between BOD and management, a transparent and equitable compensation structure, proper succession planning, and ensuring boards’ independence.
The limits have been imposed by approving amendments to licensing regulations of CMIIs.
