any other relationship, whether pecuniary or otherwise, with the listed company, its associated companies, directors, executives or related parties. The test of independence principally emanates from the fact whether such person can be reasonably perceived as being able to exercise independent business judgment without being subservient to any apparent form of interference.
Handbook of Corporate Governance Board of Directors 47 Any person nominated as a director under sections 182 and 183 of the Companies Ordinance, 1984 shall not be taken to be an "independent director" for the above- said purposes. The independent director representing an institutional investor shall be selected by such investor through a resolution of its Board of Directors and the policy with regard to selection of such person for election on the Board of Directors of the investee company shall be disclosed in the Directors' Report of the investor company. ] 3.11 Independence of BOD SBP Directives BSD Cir Letter 32 (23/11/01) Management – Board of Directors It has been noted that as a matter of practice some of the banks have 50% of their sponsor directors from the same family on the board of the bank. With the passage of time it has been observed that sometimes the key investors puts four of his family members as directors while raising the total number of Directors to eight by including the Chief Executive or some technical person on the board and thus takes control of the bank’s management. In this way the bank becomes one man show which is not only against the interest of depositors but also detrimental to the financial institution itself. 2. Keeping the above in view it has now been decided to discontinue this practice & reduce the existing number of directors of the same family on the board of all banks as well as NBFIs from 50% to 25%. The term family member has already been defined in Section 5(ff) of the Banking Companies Ordinance, 1962. 3.12 Minimum Number of Directors CO 1984 Section 174 Minimum number of directors of company: Every listed company shall have not less than seven directors to be elected in a general meeting in the manner provided in this Ordinance.
Handbook of Corporate Governance Board of Directors 48 3.13 Prohibition of Common Director BCO 1962 Section 20 Prohibition of common directors: 1) Except with the permission of the State Bank, no banking company incorporated in Pakistan shall have as a director any person who is a director— (i) of any other banking company; or (ii) of companies which among themselves are entitled to exercise voting rights in excess of twenty per cent of the total voting rights of all the shareholders of the banking company. (IA) No banking company incorporated in Pakistan shall have as a director any person who is— (a) a Federal Minister, a Minister of State or a Provincial Minister; or (b) a person in the service of Pakistan who is not appointed or nominated by Government as a director by virtue of his office.
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