Many of the market participants may be found nodding to the widely-held perception that equity tycoons, like the AKD Group and Arif Habib Group are engaged in an undeclared race for controlling the affairs of the country’s largest stock exchange.
The market sources took the development in the same context as Tuesday saw KSE’s Board of Directors deciding to convene an Extraordinary General Meeting (EOGM) to extend the present one year tenure of the board to two years.
According to KSE, the 10 member board in its emergent meeting decided to convene an EOGM on 8 December 2011 to recommend to the general body amendments in the Articles of Association with reference to the term of the board. The decision came as the board’s one-year term is going to expire next month (end-December) and the fresh elections of the directors would be conducted by the exchange for the calendar year 2012.
The market sources, however, do not hold a simplistic view of Tuesday’s decision of the board that, they claim, is currently dominated by the pro-AKD directors. “This is part of a longstanding power struggle between the two giants namely AKD and Arif Habib (groups),” claimed an analyst, requesting anonymity. He said the proposal for term-extension was backed by the AKD group with Arif Habib group who was strongly opposing it. “AKD, after succeeding in having installed the chairman and managing director of his liking on the board, wants to prolong his grip on power,” the analyst said.
Further, another source said, the pro-Arif Habib directors on the board had recently rejected the AKD backed proposal for a three year extension. “After having their move rejected by the board the AKD group now has turned to the General Body (EOGM) to get the proposal approved,” he claimed. The present KSE board comprises Muneer Kamal (chairman), Nadeem Naqvi (managing director) and directors Ashraf Bava, Abid Ali Habib, Muhammad Qasim Lakhani, Abdul Qadir Memon, Zafar Siddiq Moti, Asif Qadir and Mohammad Sohail. Of the 10 board members, five directors are elected by the KSE members while the remaining five, including the chairman and MD, are nominated by the Securities and Exchange Commission of Pakistan (SECP).
The source claimed that of the five elected directors, Asif Qadir, Mohammad Sohail and Qasim Lakhani were pro-AKD, while Abid Ali Habib and Zafar Moti were in the Arif Habib’s block. “The Arif Habib group is resisting the AKD group’s attempts to prolong its grip on power,” he said. When asked whether or not the board’s term should be extended, an investor replied in negative. “What is so special that this board does during the whole year for the benefit of the market and the investors therein,” he replied. The investor went on to say that: “If they (directors) really want to do work, then one year is more than enough.” “The extension should not be granted,” he opined. Any final outcome, however, is due on December 8 when the EOGNM would be voting for or against the controversial proposal.
