The Commission on Tuesday issued a directive, to all three bourses, titled 'Regulations for good governance--amendment in the Articles of Association of Stock Exchanges'.
At present, the rules and regulations of stock exchanges warrant the appointment of chairman out of the member directors who are dully elected from among the members by general bodies of their exchanges.
However, the new directive would now make the member directors ineligible to take part in election as the chairman of the exchange. At the moment each of the exchange elects five member-directors, whereas four directors are appointed by SECP to sit on the board of the exchange as independent/professional directors. The managing director is the tenth director on the board of the exchange.
Through the current directive to the exchanges, each of the exchanges would amend its bylaws to pave the way for the election of non-member directors as chairmen of the exchange.
According to SECP, the decision has been taken for the promotion of good governance, transparency and efficiency in the stock market keeping in view the international best practices.
It may be mentioned that the step has been taken in line with the recommendation of the Task Force appointed to investigate the crises faced by the exchanges in 2005. Task Force constituted under the chairmanship of Justice Saleem Akhter has recommended that appointment of non-member directors as chairmen of exchanges may be considered for speedy demutualization and for removing conflicts of interest in the present governance structure of the exchanges.