An overwhelming majority of the members of Karachi Stock Exchange (KSE) rejected the idea of what sources said was partly implementing the provisions of Companies Ordinance 1984. Voting was made as years after the formulation of the exchange’s Articles of Association (AoA) the front and apex regulators at the helm of KSE and Securities and Exchange Commission of Pakistan (SECP) came to know that relevant provisions in the two pieces of legislation were “inconsistent”, especially on the tenure of KSE’s Board of Directors.
It is interesting to note that whereas the said ordinance sets three-year tenure for the companies’ boards the KSE’s articles provide that the KSE Board would be elected for one year. Officials at SECP and KSE board, however, have now sensed discrepancy and are now out to amend the exchange’s relevant rules. Thursday saw only 59 of the total 200 KSE members attending the Extraordinary General Meeting (EOGM) to vote for or against SECP-backed move to extend the board’s one-year term at least for two years.
According to an attendee, an overwhelming majority of the 59 participating members vetoed the proposal saying the one-year election mode be retained or, what a senior broker said, relevant company laws be implemented in total. The attendee said only four of the members raised their hands in favour of the proposal with the remaining 55 rejecting it. To make an amendment in AoA KSE board requires three-fourth of the total participating members to vote for a resolution.
In total 44 votes were required for the passage of today’s resolution, said a senior broker who also opposed the move. “You can not implement the company law selectively means adopting those which suit interests of the regulator,” the broker said. According to the broker, SECP should execute the company laws in full and not partially. “The company laws say no nominee directors and chairman at the KSE and that the chairman be elected by the KSE Board,” he said. “You can not do cherry picking,” commented another broker.
Many of KSE members are still opposed to the appointment of four nominee directors and a chairman at KSE board by SECP in the name of “public interest” that, the broker said, was to be determined by judicial courts and not the government institutions. A former elected member of KSE board said how those having zero stakes at stock market could be expected to prioritise interest of brokers.
SECP argues that one year was not enough for board members to fully comprehend the market affairs. But the members don’t buy the argument saying whereas the elected directors needed no extra time to get acquainted with the market issues, the nominee directors could be appointed by the SECP for another year term. “I think the one-year tenure is enough as the proposed three years would allow the directors, specially the nominee ones, to stretch well and do less,” the ex-KSE member said.
