Corporate governance is the practices, processes and rules by which a corporate entity is organized and operated and refers to the way in which corporate entities are administered and to meet the objectives of shareholder rights, ownership control and corporate transparency. Corporate governance also classifies who has the authoritative power and accountability, and who can make decisions.

Corporate Governance is said to be a goal for a corporate entity in achieving a healthy relationship with its internal operating community, by doing this, both the community as well as the corporate entity gain advancement. Three prime factors are to be considered for achieving good corporate governance, beginning with shareholder rights, followed by ownership control and corporate transparency.

Corporate governance is an increasingly important area of focus for stakeholders in all organizations and particularly those listed on publicly traded exchanges. Directors and other officeholders face ever greater challenges in addressing risk management, ethics, policies, procedures and internal controls. ZA-LLP offers specialized services to help our clients in improving corporate governance and internal control systems in line with international standards, and to comply with applicable laws and regulations. Our highly experienced professionals bring detailed knowledge to client projects, performing compliance assessments, recommending systems and process improvements and full support for any regulatory compliance reviews.


Due to the ever changing societal norms, increasingly complex business environment and the recent corporate collapse of companies around the globe, Corporate Governance has emerged as an imperative issue at the forefront of organisational concerns. This has lead to a mounting emphasis on Board accountability, performance scrutiny and, compliance and conformance.

The ownership control is the power to steer a company in a certain direction either by ownership of stock, voting rights, by entering into a contract or by other means. Since this factor is under noticeable development phase in Pakistan, the current ongoing status relating to ownership control is moderate.

Corporate transparency, on the other side, is essentially the sharing of vibrant information amongst the stakeholders on account of building a trust relationship and boosting the productivity. It is imperative to note that companies in Pakistan focuses on transparency on account of corporate dealings, usually at the end of each calendar period. Keeping minimal level of information secretive will build a healthy relationship between workers and the corporate sector, thus help them both.

According to the Doing Business Report 2019 published on October 2018, out of 190 countries Pakistan ranks 26, which signifies an impressive start. If we take a look at the Listed Companies Regulation, 2019, we can see that effectiveness from December 5, 2018, disclosure of remuneration of individual directors in annual report is encouraged in terms of the amendment made in the Listed Companies (Code of Corporate Governance) 2017.


Corporate governance regulates on the principle of running and controlling the companies on grounds of fairness, accountability, responsibility and transparency. It mainly focusses on the good governance which governs through:

  • Relationship among the management;
  • Board of directors;
  • Controlling chareholders;
  • Minority shareholders; and
  • Stakeholders

Main motive behind corporate governance is to improve companies’ performance and to enhance access to outside capital. Corporate governance in Pakistan mainly works under Code of Corporate Governance, 2002 most importantly for public–private partnership, Securities & Exchange Commission of Pakistan (SECP) plays a pivotal role in conjoining State Bank of Pakistan (SBP) and 17 other institutions that are all concerned with corporate governance. Respectively, corporate governance requires appropriate arrangements to be taken by the company for the directors in order to conduct orientation and training courses. Mainly, the need for corporate governance in Pakistan was presented in 1999 in Karachi, however, before it the idea was presented in fifth all Pakistan Chartered Accountantss Conference held on December 1998. First code was applied in 2002 and was then amended in 2012. To represent it as a significant principle in public sector companies, SECP publicized public sector companies’ governance rules in 2013. Pakistan as a developing nation have corporate sector which carries crowd of companies that have controlling interest which are both fully and partially.

Section 27 of Code of Corporate Governance Regulations, 2019 consist that audit committee shall be constituted by the Board, make corporate entities more transparent.

Section 34 of Code of Corporate Governance Regulations, 2019 says that the directors report carrying the quarterly financial statement of companies shall be published and circulated amongst the directors for their necessary review on the running affairs of the company.



  • Securities & Exhange Commisssion Ordinance, 1969
  • Companies Ordinance, 1984
  • Pakistan Act, 1997
  • Securities & Exchange Commission Act, 1997


  • Insurance Ordinance, 2000
  • Securities & Exchange Commission of Pakistan (SECP), 2002
  • Pakistan Institute of Corporate Governance (PICG), 2004


  • Corporate Governance Code, 2012
  • Public Sector Comapnies (Corporate Governance Rules), 2013
  • Securities Act 2015 replacing Securities & Exchange Ordinance (SEO), 1969
  • Reporting and disclosure of shareholding by (directors, executive officers and substantial shareholders in listed companies) Regulations, 2015
  • Listed Companies (Code of Corporate Governance) Regulations in 2017 (update Corporate Governance Code, 2012)
  • The Companies Act, 2017 replacing the Comapnies Ordinance, 1984


There are three prime factors essential for the development and reforms in corporate governance:

  • Shareholder Rights [ Rights focusing on financial aspects of owning shares ]
  • Ownership Control [ Refers to balance of powers within corporation ]
  • Corporate Transparency [ Points to important disclosure to citizen which helps to promote social justice and protects the interest of the company ]


These are regulated by the Companies Act, 2017 which shed light upon the rights of the person who owns shares, it can either be a person or a company or an institution that have shares in a company’s stock and is the one who re-counts to the communication between the company and shareholders. Rights consist of:

  • Right to the offer of shares by the company at the time of further issuance of shares or to sell those shares;
  • Right to receive demands and company reports;
  • Right to participate, attend and vote in general meetings and on key issues plus on corporate actions; and
  • Right to elect and remove directors.

Shareholder are responsible to make sure that company is regulated and managed in effective manner and it happens when shareholder’s monitor the performance and progress of the company. It provides financial security for the company thus control over how the directors manage the company and how they receive a percentage of any profits generated by the company. Rights of shareholders were protected and improved through the Companies Act, 2017.


Ownership control is the power to direct or cause the direction of the management and policies of a person or an organization whether by ownership of stock by voting rights by contract or by means. It can be seen as legal possession or control over property. Ownership control is considered to be one of most significant factor because it strikes a balance of powers within a company. Moreover, it directly impacts upon governance practices and company behavior. It effects upon incentives of managers and efficiency of the firm. It works by distribution of equity with regard to votes and capital and identity of equity owners. Publicly held business companies in which the shareholders (residual claimant) possess little or no direct control over management decisions.


Corporate transparency refers to the disclosure of processes and transactions to outsiders. It allows it to be observable to other people and informs everyone affected about its decision and also act in accordance with the legal requirements. Transparency endorses efficiency and effectiveness in government which also leads towards strengthening democracy. The main objectives are accountability and providing information to people about what steps are taken from which they maybe be affected. One of the objectives of corporate transparency is that it promotes social justice, protects the interest of the company / stakeholders.

It benefits in to nurture trust through open communication and helps in to build up relationships between employees and employers which ultimately results in fostering environment of collaboration. In order to bring it into effect the communication must be effective, information must be shared a rationale should be set by embedding the culture.

Corporate Governance


We have a global capability and expert level experience in assessing and reviewing Corporate Governance structures, assisting with developing appropriate frameworks and devising solutions that meet regulatory requirements and fit corporate and cultural paradigms. With network of offices across the country, we assist clients on the ground in any jurisdiction(s) required. Our professionals are highly adept at analyzing the most sophisticated breakdowns of corporate governance frameworks, both at entity level as well as at transactional level.

If we look at the statistics of Doing Business Reports, annually published by the World-bank, we can see that Pakistan would best qualify for the corporate governance index in coming times through achieving the shareholder rights, ownership control and the corporate transparency by enforcing better reforms on account of corporate governance. Since the right to claim damages can be exercised by “shareholders” directly as well as the limited liability company itself, any minority shareholder can bring a direct claim without having to go through the hassle of restrictions on shareholder claims imposed under the statutory derivative action rules which operate in common law countries. Therefore, an aggrieved minority shareholder will have direct legal redress against directors / management – if not the majority shareholders.

One of the issues being faced is the conflict between majority and minority shareholders where the majority shareholders derive benefits from them by getting them to pay compensation to them and / or abusing their powers. In UK, minority shareholders can bring an “unfair prejudice” claim seeking relief against the acts of the controlling directors of the company. Alternatively, the shareholders may, on grounds of oppression, seek the winding-up of the company on a just and equitable basis. In Pakistan, the same rights can be exercised by minority shareholders similar to majority shareholders which is an example of equality not being equal to equity. Pakistan would certainly go for new law reforms so that minority shareholders would enjoy more power and they would not be at the mercy of the majority shareholders as in the UK.


Corporate Governance is a set of principles, systems, processes and policies set in place to protect and manage organisational resources. Boards accept, adopt and support governance policies and processes to ensure that organisational goals are met. The policies and processes act as a performance meter to measure the Boards performance and identify areas where the Board is responsible and accountable for their actions / decisions. Corporate Governance also incorporates ‘best practise’ principles which are compliant and conformant with current industry standards.

The Code of Corporate Governance playing an essential role in promoting and upgrading the Corporate Governance culture in Pakistan. We will take a look at some of the important provisions that would have a major impact on Corporate Governance.

According to Sec. 27, it is now compulsory that the audit committee shall be constituted by the Board, keeping in view some requirements, this will help make corporate entities more transparent.

As per Sec. 34 the Directors’ Report, the quarterly financial statements of companies shall be published and circulated amongst the directors for their necessary review on the running affairs of the Company.

The Directors’ Report shall include the number of directors, inclusive of male and female alongside the composition including independent directors, non-executive directors, executive directors and a female director, the names of members of Board’s Committees. The directors in their report to members shall state the remuneration policy of non-executive directors including independent directors, as approved by the Board, which shall also include disclosing the significant features and elements thereof.

The Company’s Annual Report shall contain details of aggregate amount of remuneration separately for executive and non-executive directors, including salary/fee, perquisites, benefits and performance-linked incentives etc.

Companies are encouraged to provide aforesaid details of remuneration of individual directors in annual report. Disclosure of significant policies on website is also necessary. The company may post the following on its website: key elements of its significant policies inclusive of but is not limited to the following, communication and disclosure policy, code of conduct for members of board of directors, senior management and other employees, risk management policy, internal control policy, whistle blowing policy, corporate social responsibility, sustainability, environment, lastly social and cultural policy.

The role of the Board of Directors (the Board) is to define, delegate and monitor expectations placed on the organisation and the Chief Executive Officer (CEO) in relation to Strategic Planning; Policy Development; and Compliance, Risk Management and Audit. In addition, the Board’s key function is to purposefully allocate organisational resources in the best interests of all stakeholders and in line with organisations goals.

Consultants at ZA-LLP have several years of experience and expertise in governance and management. These attributes have been gained through working on CEO / Executive level performance evaluation, Strategic Business planning and Board / Executive mediation and dispute resolution, to name a few.

The importance of Corporate Governance advice to clients has increased dramatically in recent years. We provide sophisticated and timely advice regarding many issues that arise as a result of recent changes in securities and accounting rules and other regulations.

With experienced lawyers from our Transactional, Securities, Enforcement and Litigation Practices, combined with our Government Enforcement, Compliance and White Collar Defense attorneys, we offer a fully integrated approach to serving our clients’ corporate governance needs. We counsel, advise, and represent corporate directors and officers of public companies on all corporate governance issues. We are committed to educating our clients with continual updates on developments from SECP regulations and other standards governing public company conduct.

Our Transactional & Securities Practice attorneys frequently advise corporations, boards of directors, board committees, corporate officers, shareholders, and other parties regarding:


We work with clients to develop and implement best practices for boards of directors as well as nominating and governance, audit, compensation, and other board committees. Our attorneys keep our clients advised of evolving best practices and monitor corporate governance proposals from the Board of Investment, the SECP, stock exchanges, and independent policy groups.


Attorneys at ZA-LLP provide advice relating to a board’s oversight function, including design and implementation of self-evaluation systems tailored to each client’s existing organizational structure and cultural needs.


We advise clients regarding the development of nominating and governance, audit, compensation, and other board committee charters. In addition, ZA-LLP has extensive experience in reviewing, developing, and implementing national and worldwide ethics and compliance programmes to prevent and detect violations of law and to help ensure our clients’ employees conduct business ethically and in compliance with applicable legal and regulatory requirements. As part of this service, attorneys at ZA-LLP work closely with clients to develop or refine codes of conduct and aid in code and policy distribution and employee training.


Attorneys at ZA-LLP advise board members regarding directors’ duties and responsibilities in change of control transactions, executive succession, financial reporting irregularities, internal investigations, and auditor independence. Co-operation among attorneys in our Transactional, Securities, Government Enforcement, Compliance and White Collar Defense Practices provides clients with comprehensive legal advice on director and officer fiduciary duties and shareholder rights in any situation.


ZA-LLP assembles interdisciplinary teams of attorneys with experience in tax law, corporate law, accounting, SECP regulatory requirements, and relevant domestic law to efficiently deliver comprehensive advice regarding executive compensation and succession issues.


Our attorneys prepare and review internal corporate policies governing disclosure controls and procedures, internal and external corporate communications, securities trading, and document retention. We have counseled clients regarding the conduct of sensitive accounting, ethics, governance, and other internal investigations, including representation of audit committees in connection with investigations of accounting irregularities, alleged fraud, and other regulatory issues.


We advise clients on the preparation of proxy statements for annual meetings and special meetings, including those held to consider business combinations. In this regard, our attorneys provide guidance to boards of directors on their obligations under SECP regulations and stock exchange rules.

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