The State-Owned Enterprises (Governance and Operations) (Amendment) Ordinance, 2024 was unanimously passed by the National Assembly Standing Committee on Finance and Revenue. The federal government can now designate or remove board members of government entities thanks to the new legislation.
The revised law makes a number of significant adjustments. The Ministry of Energy (Power Division) expressed concerns, and the Law and Justice Division collaborated with the preparation of the SOE (Governance and Operations) (Amendment) Ordinance, 2024. The federal government has directed the Board Nomination Committee to take charge of finding and endorsing applicants for nomination as independent directors, a role that the government is authorized to assign to boards.
The committee will suggest that appropriate federal divisions, public sector entities, or, if required, provincial governments, hold ex-officio roles. The most recent revisions state that the committee will also be in charge of assessing the independent and ex-officio directors’ performance and making recommendations about the removal of a director or directors based on that evaluation.
In accordance with Section 166 of the Companies Act, 2017, the committee will designate headhunting firms or choose applicants from the databank of independent directors that the Securities and Exchange Commission of Pakistan (SECP) has notified.
Once nominated, a director will serve for the duration allowed by the relevant legislation, unless he resigns in anticipation of being removed sooner in a bill was first adopted last week by the Senate Standing Committee on Finance and Revenue. These reforms, approved by the National Assembly today, seek to replace the existing standards that mostly concentrated on misbehavior or corrupt acts and allow for the dismissal of board members based on performance assessments.in compliance with this Act’s requirements.
