SECP reduced the criteria for the CFO and HOIA

Securities and Exchange Commission of Pakistan (SECP) reduced that criteria for the chief financial officer. This move to give listed companies to higher financial official on lower rates.  

The Securities and Exchange Commission of Pakistan (SECP)  amended  certain provisions of the Code of Corporate Governance for listed companies. With this  amendment SECP relaxed the criteria for the appointment of chief financial officer. Now listed companies can appoint CFO and head of internal auditor (HOIA) with minimum 3 year experience instead of 5 years.   

With this relaxation SECP claim that these amendments provide way to improve Corporate Governance according to global benchmark. “The governance standards are dynamic and changing with the development of constantly evolving corporate sector and financial markets. This calls for a constant review of the governance framework to keep pace with global benchmarks.” Announcement said.

The amendments have been made  taking into account the lessons learnt from the practical issues and considerations relevant to the listed companies and to ensure that it reflects changing governance concerns, practices and economic circumstances and best international practices.

The amended provisions relax eligibility requirements for the chief financial officer (CFO) and the head of internal audit (HOIA) for listed companies. The experience requirements of the CFO have been reduced from five years of handling financial or corporate affairs of a listed company or a bank/financial institution to three years of experience in a public practice (audit/accounting) firm or in managing financial/corporate affairs of a company. The experience requirements for HOIA have also been reduced from the earlier restrictive five years of relevant audit experience to three years in audit, finance or compliance function. As per an earlier clarification issued by the SECP, experience in a public practice (audit/accounting) firm would also be considered relevant audit experience.

 These amendments have been approved following a review focused primarily on further refining practicality of the code for listed companies. The said amendments are expected to improve compliance with the code and encourage new entrants to the fields of finance, audit and related functions, thereby expanding the existing talent pool of professionals in the country.

 Moreover, the mandatory condition of appointing an independent director as chairman of the audit committee has been made voluntarily to facilitate companies in appointing suitably qualified non-executive directors as chairmen to the said committee.

Source related with Institute Chartered Accountants of Pakistan (ICAP) told that this move will allow listed companies to higher financial official on lower rate. Appointment of CFO and HOIA with 5 years experience is much expansive. A CFO and HOIA of 5 years relevant experience costing more the one million monthly to a listed company. And supply of these high end financial experts also vary low instead of supply.

With the relaxation of 2 year in the criteria listed companies will safe a big amount in salary and other benefits. Source said.