Investor Relations Seminar
Securities & Exchange
Commission of Pakistan
Khalida Habib, Director SECP
July 29th, 2011
Investor’s Rights under the Law
SECP’s Regulations- Disclosure Based
Corporate Disclosure Requirements
Code of Corporate Governance
Disclosure Regional Scenario
SECP’s Measures for Investor Protection
To protect investors, maintain
fair, transparent, and efficient
markets, and facilitate capital
Mandate of SECP
To maintain the confidence of
investors in the securities
markets by ensuring adequate
protection to investors.
Basic shareholder rights are in place.
Ownership registration is secure and in the
process of being dematerialized through CDC.
Shareholders can demand a variety of
information directly from the company and
have a clear right to participate in, and to be
sufficiently informed on, decisions concerning
fundamental corporate changes
Investors have the right to participate and
vote in AGM.
The Law provides protection to investors
from any misuse of power by the Board of
Directors through provisions for conflicts of
interest and Related Party Transactions.
Investors have the opportunity to obtain
effective redress for violation of their rights
by lodging complaint with SECP
Disclosure based (DBR)
The onus of assessing and determining the investment merits of
any securities offering rests with the investors while the SECP
regulates the disclosure of material information.
SECP’s regulations focus on three segments These are:
– Due Diligence
– Corporate Governance
•Disclosure of information benefits investors by
facilitating them to make investment decisions
both in primary and secondary market.
•Directors of public companies are responsible to
ensure that all material information required to
make investment decisions is provided accurately,
in full and on a timely basis.
Due diligence is imperative to ensure that information to be disclosed is
true, sufficient and timely.
• Directors of public companies must ensure that the information to
be released is accurate and timely.
•Due care must also be given to ensure that there is no omission of
•Information that can affect the trading activities and prices of the
company's securities must be released immediately.
The onus then lies with the investor to consider and weigh the
information provided before making decisions.
The timely, accurate and transparent disclosure of material
information is an integral component of ensuring good corporate
Boards of directors of companies need to be open and transparent
in handling corporate activities and transactions.
Apart from compliance with laws and regulations that constitutes
one aspect of ensuring that directors perform their fiduciary duties
properly, compliance with code of Corporate Governance is also
The Companies Ordinance 1984 and the Code of Corporate
Governance 2002 sets the disclosure requirements ensuring
the Quality and Timeliness of Financial Disclosure
Requirements are in place for disclosure of financial and
operating results, beneficial ownership and related party
International Accounting Standards and International Financial
Reporting Standards are applicable.
Independent audit is undertaken annually to ensure that
financial statements fairly reflect the company affairs.
Channel for disseminating information provide for equal,
timely and efficient access to information.
Code of Corporate
For protection of Investors and to maintain confidence in the market
the SECP issued Code of Corporate Governance in 2002. For more
transparent markets the Code entails various disclosure requirements
which need to be complied with by Public listed companies.
Salient features of the Code of CG:
- Restructures composition of BoD
- Emphasizes openness and transparency in corporate affairs
- Requires strengthening of corporate working, internal control system and external
The Code 2002 is currently in the process of being amended as per
stakeholder concern and international best practices.
Corporate Disclosure- South Asian Scenario
Protecting Investors Data (2004) Indicator
Bangladesh India Nepal Pakistan Sri Lanka
Is family ownership disclosed? No No Yes No No
Is indirect ownership disclosed? No No Yes Yes Yes
Is beneficial ownership disclosed? Yes Yes No No No
Is information on voting agreements between shareholders Yes No No Yes No
Are internal audits required before releasing financial No Yes No No Yes
Is an external auditor required? Yes Yes Yes Yes Yes
Is ownership and financial information publicly available to No Yes No Yes Yes
Disclosure Index 3 4 3 4 4
The Disclosure Index is calculated using the above data (one point for each "Yes"). The index varies between 0 and 7, with higher
values indicating more disclosure.
SECP - Investor
SECP considers that educated and careful investors are so
critical to the functioning of efficient markets. To help support
investor education, the SEC offers the public a wealth of
educational information on this Internet website .
Besides, following measures are taken to inform and protect
– Public disclosure of enforcement actions taken by the SECP
– Web-placement of Rules, Regulations and important documents
pertaining to the SECP’s regulatory ambit
– Web-placement of series of Guides to educate investors on
various aspects of investment
– Handling of investor’s complaints in an efficient manner.
– All other information deemed to be in the interest of investors
through media releases and web placements.
Developing an online complaint handling system with status updates
for ease of handling and investor protection
A dedicated website focused towards investor education and
24 hour Automated helpline for investors in both English and Urdu
Publication of Investor Guides in Urdu
Comprehensive Investor Education Plan focusing on different market
segments through seminars in various cities of Pakistan
Media strategy based on informing investors over the activities of the
Mandatory compliance of listed companies with the revised Code of
Corporate Social Responsibility policy of the SECP.