Regulator puts curbs on board meetings abroad

Move aimed at discouraging companies from wasteful expenditure.

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP), in a bid to curb the increasing trend of holding board meetings abroad, has linked the number of meetings that a listed company may hold abroad with the proportionate participation of foreign directors on the board or equity.

In a statement issued on Thursday, the SECP said it was observed in the recent past that meetings of boards of directors of listed companies were being extensively held abroad, even at places that were unrelated to the companies’ business activity or geographical location of their shareholders.

“This undesirable practice on the part of directors, who owe a fiduciary duty towards the company, was resulting in undue costs for the listed companies as well as their minority shareholders with no benefit thereof,” it said.

In order to check such detrimental trend, the SECP, in exercise of its powers, has directed that all listed companies incorporated in Pakistan and have foreign equity participation, if required, can hold board meetings abroad according to the following limitations.

Companies having more than 50% foreign shareholding can hold a maximum of four board meetings abroad in a year while those having 40% to 50% foreign shareholding can organise three meetings outside of the country. In addition to these, companies having 30% to 40% foreign shareholding can hold a maximum of two board meetings abroad and those with zero to 30% foreign shareholding can organise only one meeting abroad.

Published in The Express Tribune, November 4^th,  2011.