The IFC Pakistan Corporate Governance Project

2 of 29 The Goal of the Pakistan CGP is to improve Corporate Governance in the Country  Provide access to capital  Build better performance  Develop trust & reputation  Minimize portfolio risk  Add value to clients  Improve regulatory framework  Build viable institutions  Develop training capacity  Strengthen vigilant press Objective 1: To build the business case for good cg among banks and companies Objective 2: To assist investors in improving the cg practices of investee companies Objective 3: To build sustainable institutional capacity for cg

3 of 29 Pakistan Corporate Governance Project Develop equity markets  Raise awareness of cg among investors  Provide institutional investors with assessment tools  Work with exchanges to develop corporate governance assessment tools Assist public sector to build appropriate legal and regulatory framework  Develop or amend laws and regulations(SECP/SBP)  Develop listing rules  Introduce cg guidelines/handbooks Help banks create demand for cg among clients  Raise awareness of cg  Provide banks with cg assessment tools  Train banks to assess cg of their corporate clients Generate demand from within banks & companies  Raise awareness  Train directors and mgmt.  Provide advisory services Build Sustainable Institutional Capacity  Strengthen the Pakistan Institute of Corporate Governance  Train press on cg  Support universities to introduce curricula, and conduct and publish research 20 of 26

4 of 29 1.MOU with SECP 2.Assist in promoting good corporate governance practices within Pakistani Companies and Financial Institutions 3.Advise Public Sector on how to improve upon legal and regulatory frameworks for Corporate Governance 4.Capacity Building of the Pakistan Institute of Corporate Governance (PICG) Pakistan Corporate Governance Project

5 of 29 IFC will Assist PICG in Five Key Areas: 1.Setting up training and certificate/certification programmes on corporate governance for company directors, managers and secretaries 2.Building capacity for research and development to conduct surveys, issue publications and produce “best practices” manuals/handbooks. 3.Developing and providing consulting and advisory services on corporate governance to Pakistani banks and companies 4.Raising awareness of corporate governance practices through conferences, seminars, roundtables and workshops 5.Providing policy advice to the government on legal and regulatory reforms relating to corporate governance Pakistan Corporate Governance Project

6 of 29 IFC’s interventions will be both direct on its own, and through the PICG. The idea is that PICG should be strengthened so that it becomes a leading provider of knowledge and awareness related to corporate governance practices in Pakistan Pakistan Corporate Governance Project

7 of 29 How IFC Can Support Companies 21 of 26

8 of 29 I. Corporate Governance Improvement Plan Objective: To demonstrably improve upon the cg practices of Companies Step 1 – Desk research and analysis - Legal and regulatory review - Internal company document - Questionnaire, completed by client Step 2 – On-site assessment-interviews - Complete set of interviews with entire board, senior management and outside stakeholders (e.g. legal counsel, external auditor) - On-site training possible Step 3 – Assessment Report - drafting final CGA - Compare current cg structure with national and int. reference points for good cg - Focus on 4 areas: (i) commitment; (ii) board practices; (iii) protection of (minority) shareholder rights and stakeholders; and (iv) transparency and disclosure, including internal and external controls 22 of 26

9 of 29 Core Tool: Simple Progression Matrices A Self-Assessmentand Client Orientation Tool 1. Acceptable2. Extra Steps 3. Major Contributions 4. Leadership Commitment to Good Corporate Governance Structure and Functioning of the Board of Directors Transparency and Disclosure Treatment of Minority Shareholders LEVELS ATTRIBUTES PROGRESSION Our aim is to assist companies in progressing to Level 4 in CG 23 of 26

10 of 29 Corporate Governance Improvement Plan – A Preliminary Timeline IDTask 2 nd Quarter 3rd Quarter AprMayJunJulAugSepOctNovDec 1 Client completes questionnaire, sends key corporate documents 2 IFC conducts on-site interviews 3 Analysis and report drafing 4 Delivery of draf report 5 Consultation with stakeholders 6 Board presentation of final report 7 Support (separate mandate) 4 weeks 1 w. 6 weeks 4 weeks Ongoing Deliverable: Final CG Improvement Plan report includes: - Corporate governance assessment - Recommendations, prioritized according to importance - Agreed-upon action plan - Model documents 24 of 26

11 of 29 II. Corporate Governance Assessment Tool to Help Companies Minimize Porfolio Risk  Develop Corporate Governance Assessment Tool -Based on IFC’s own tools, tailored to Pakistan’s market  Train relevant staff on corporate governance -Comprehensive, cover all key areas of cg -Interactive training events, based on case studies 25 of 26

12 of 29 Corporate Governance Assessment Tool – A Preliminary Timeline IDTask 2 nd Quarter 3rd Quarter AprMayJunJulAugSepOctNovDec 1 Develop assessment tool 2 IFC conducts on-site interviews 3 Analysis and drafing 4 Delivery of draf assessment tool 5 Consultation with stakeholders 6 Presentation & delivery of final report 7 Training 4 weeks 1 w. 6 weeks 4 weeks 8 weeks Deliverable: - Assessment manual on how to identify key corporate governnace issues - Comprehensive training for staff 26 of 26

13 of 29 Summary and Conclusions Put most simply, corporate governance is defined as a series of structures and processes for the direction & control of a company. Corporate governance must not to be confused with public governance, CSR or business ethics. Corporate governance finds its roots in the separation of ownership and control, as well as corporate crisis. Corporate governance is regulated by and external (laws & regulations) and internal framework (charters, by-laws, etc.). For more information, pls. visit our website under

14 of 29 Thank you for your attention! Questions?