During the past few years, the financial and corporate world has witnessed significant changes. Following the Asian financial crisis, recent accounting scandals have brought to light the importance of an effective institutional framework that would help corporate management increase shareholder value while protecting the interests of other stakeholders.
To achieve this goal, the Securities and Exchange Commission (SEC) of Pakistan (www.secp.gov.pk), in partnership with the United Nations Development Programme (UNDP) and the Economic Affairs Division of the Government of Pakistan, launched the SEC-UNDP Project on Corporate Governance in August 2002. Under the purview of the Project, UNDP has provided technical and financial assistance to the SEC for developing and implementing good corporate governance practices and establishing a sound regulatory framework for the corporate sector in the country. The work involves implementation of the Code of Corporate Governance, issued by the SEC in March 2002, creating stakeholder awareness, capacity-building and networking with other emerging markets.
In order to attract sustainable capital, it is imperative for economies in transition to focus on evolving a system that ensures good corporate governance. As the dust settles after the Asian financial crisis, most economic and development commentators feel that a major determinant of the relationship between long-term economic growth and poverty reduction is a well-functioning financial and corporate sector. The inflow of foreign capital brings with it a transfer of technology and managerial skills--factors crucial to the developing countries in their economic progress. At the same time, the confidence of local investors also heightens. This increased economic activity improves human welfare in the form of an efficient allocation of resources and more employment. Therefore, implementing good governance practices has a positive impact on economic growth, which creates opportunities and brings people above the poverty line.
The SEC-UNDP Project aims to make a positive contribution towards economic growth in Pakistan by developing a stronger financial and corporate sector. A Corporate Governance Cell has been established at the SEC. which acts as a resource centre and carries out research and awareness campaigns on various issues related to corporate governance.
Guidelines and newsletters are also being distributed to the corporate community for a better understanding of the issue, and research is being carried out for the harmonization of the provisions of the Code with corporate laws and an assessment of the state of corporate governance.
The Cell also aims to prepare groundwork for the establishment of an institute of corporate governance. …