SRO # 1163 (I)/2019 dated September 25th, 2019 issued regulations titled “Listed Companies (Code of Corporate Governance) Regulations, 2019”,.




 These Regulations require Board of Directors of the Listed Companies to use “comply or explain approach” except the requirements for which it is explicitly stated as “mandatory”.


“Comply or explain approach” means discretion of a company with respect to non-mandatory provisions of these Regulations either to comply or provide appropriate explanation as to any impediment in its compliance in the compliance report along with the financial statements.


“Mandatory” in relation to these Regulations, means such provisions that are construed to be strictly complied with by the company and non-compliance of such Regulations leads to penal proceedings under regulation 37 of these regulations.



3 No person shall be elected or nominated as director of a listed company including as an alternate director of more than seven listed companies simultaneously
6 Each listed company shall have at least two or one third members of the Board, whichever is higher, as independent directors.
6(3) Independent Director to submit consent to act as director along with declaration to the company that he qualifies the criteria of independence notified under the Act
7 The Board shall have at least one female director when it is reconstituted after the expiry of its current term.
8 Executive directors, including the chief executive officer, shall not be more than one third of the Board.
27 (1) Requirements to keep in view by the Board while constituting audit committee.
27 (2) Requirements for holding meetings of audit committee.
27 (3) Board of every company shall determine the terms of reference of the audit committee.
27 (4) Board shall provide adequate resources and authority to enable the audit committee to carry out its responsibilities effectively and the terms of reference of the audit committee shall be explicitly documented.
27 (5) Secretary of audit committee shall circulate minutes of meetings of the audit committee to all members, directors, head of internal audit and where required to chief financial officer prior to the next meeting of the Board.
32(1) No company shall appoint an external auditor, a firm of auditors, which has not been given a satisfactory rating under the Quality Control Review program of the Institute of Chartered Accountants of Pakistan and registered with Audit Oversight Board of Pakistan.
32(2) No company shall appoint as external auditors, a firm of auditors which or a partner of which is non-compliant with the International Federation of Accountants’ Guidelines on Code of Ethics, as adopted by the Institute of Chartered Accountants of Pakistan.
32(3) Board of a company shall recommend appointment of external auditors for a year and its remuneration, as suggested by the audit committee and such recommendations shall be included in the Directors’ Report and in case a recommendation for appointment of an auditor is other than the retiring auditor, the reasons for the same shall be included in the Directors’ Report.
32(4) No company shall appoint its external auditors to provide services in addition to audit except in accordance with these Regulations.
32(5) The company shall ensure that the auditors do not perform management functions or make management decisions, responsibility for which remains with the Board and management of the company.
32(6) No company shall appoint a person as an external auditor or a person involved in the audit of a company who is a close relative (spouse, parents, dependents and non-dependent children) of the chief executive officer, the chief financial officer, the head of internal audit, the company secretary or a director of the company.
32(7) Every company requires the external auditors to furnish a management letter to its Board within 45 days of the date of audit report.
33(1) All listed companies in the financial sector shall change their external auditors every five years.
33(2) All listed companies other than those in the financial sector shall, at the minimum, rotate the engagement partner after every five years.
36(1) The company shall publish and circulate a statement, as given under Annexure A to these Regulations, along with their annual reports to set out the status of their compliance.
36(2) The company shall ensure that the statement of compliance is reviewed and certified by statutory auditors as per relevant Regulations specified by Commission.
36(3) The statutory auditors of company shall highlight any non-compliance with these Regulations in their review report.




Whoever fails or refused to comply with, or contravenes mandatory Regulations, shall be punishable with penalty as provided under sub-section (2) of section 512 of the Companies Act, 2017.


Relaxation from requirements of Regulations.


Where the Commission is satisfied that it is not practicable to comply with any of the mandatory requirements of the regulation 3, 6, 7, 8, 27, 32, 33 and 36 of these Regulations, it may, for reasons to be recorded in writing, on the application by the company, extend the time for compliance of the same subject to such conditions as it may deem fit.



Code of Corporate Governance Regaltions 2019



Brief Commentary Code of Corporate Governance SECP