Rumble in the bourse

SECP attempts to address differences among KSE directors, nominees express concern regarding “weakening of governance”

KARACHI: Nominee directors of the Karachi Stock Exchange (KSE) met with the chairman of the Securities and Exchange Commission of Pakistan (SECP) on Monday to discuss possible recourses to differences amongst the members of the board of directors of the exchange. The meeting was also attended by other high-ranking officials of the SECP along with nominee directors: Farrukh Junaidi, KSE Chairman Zubyr Soomro, Farhan Malik and Adnan Afridi.

Sources privy to the meeting revealed that nominee directors expressed concerns regarding the “weakening of governance at KSE”. However the regulator decided not to issue an official press release regarding the meeting. When contacted, SECP’s spokesperson responded by saying, “SECP has no comment on the KSE issue”. However The Express Tribune has also learnt that participants of the meeting will convene once again today (Tuesday) morning to continue deliberations.

The meeting was called following an altercation between members of the board of the local bourse on Thursday during an annual general meeting (AGM). Last Thursday, the AGM of the KSE ended on a sour note with member-directors exchanging harsh words with their nominee counterparts. Sources familiar with the proceedings revealed that differences arose among board members over two key issues: compensation packages of the human resources department staff and the appointment of auditors for KSE. While nominee directors were of the view that these issues are outside the scope of an AGM, members of the exchange remained adamant that the issues must be discussed. “Differences arise amongst groups everywhere and civilized people sit down and sort them out,” said KSE member Munir Khanani. “Instead of getting into personal attacks all stakeholders should have been trying to resolve these differences,” he added.

Regardless of the bone of contention at Thursday’s meeting, there remains the underlying issue of a difference in opinion about who should occupy the top slot at KSE. Various members have stressed that the chairman should only be appointed from amongst members of the exchange. “Only someone with a stake in the market will have the necessary knowledge and motivation to address the concerns faced by its participants,” said a KSE member who was present at Thursday’s AGM.

An extraordinary general meeting of KSE members is scheduled for November 4. However, The Express Tribune has also learnt from official sources that this “meeting will probably be delayed or cancelled”. The official contended that “such meetings cannot be convened without the consent of the board of directors”.

Adnan Afridi has left the building

Haroon Askari has been appointed as the acting managing director of Karachi Stock Exchange. An official release issued by the KSE said that the term of the previous MD, Adnan Afridi, concluded on October 31. Upon completion of 3 years in office, Afridi had “intimated his unavailability for the next term and relinquished his charge accordingly,” said KSE’s spokesperson Munawar Ali. The official release said that “the board has appointed Haroon Askari as acting MD of KSE with immediate effect”. Askari has served as general manager for operations at KSE since December 1st, 2005.

Published in The Express Tribune, November 2^nd, 2010.