INSTRUCTOR:-

SIR SULEMAN ANWAR

PRESENTERS:-
ABDUL RAZZAQ FARVA FARHAN RABIA YASMEEN
IZZA NADEEM SABA AKMAL
 Corporate
governance is all
about
“promoting
corporate
fairness,
transparency and
accountability.”
 Shareholders require managers with technical competence to maximize
their wealth
1. Managers have both personal and corporate goals.
2. If their self-interests are not aligned with the interest of the shareholders then corporate value
will not be maximized.
3. They may use resources to benefit themselves rather to benefit shareholders

 Enhances the performance by establishing and maintaining a corporate culture that

motivates directors, managers and entrepreneurs
 The set of rules and procedures that ensure that managers do indeed
employ the principles of value based management.

 Video 1 play

 Essence of Corporate Governance, “to make sure that the key

shareholder objective wealth maximization is implemented”.
 Since 1948, when Pakistan came into being.

 Corporate entities in Pakistan primarily regulated under Securities and Exchange

Ordinance, 1969 and SECP Act, 1997.

 SEC took responsibilities and powers of the Corporate Law Authority in, 1999.

 focused on encouraging businesses to adopt good corporate governance.

 Purpose is to provide transparency and responsibilities.

 To safeguard the interests of stakeholders.

 CG has existed for as long as companies have existed.
 But as a field of study it is less than 70 years old.
 Last 40 years:
 A lot of activity in this field.
 Codes, reports and laws have come out.
 Number of research papers and theories have evolved.
 Enhances performance of companies

 Enhances access to capital

 Enhances long term prosperity.

 Provides a barrier to corrupt dealings

 Impacts on the society as a whole:

BETTER COMPANIES, BETTER SOCIETIES.

“ The proper governance of companies will

become as crucial to the world economy as the

proper governing of countries”.

James Wolfensohn President of WB, 1999
Country level

Sector level

Individual firms
1. Loss of ethics
2. Earnings became every thing.
3. Ineffective boards, smart executives.
4. Huge wages for executive directors.
5. Greed leading to disparity among senior managers and other employees.
6. Short term goals and considerations.
7. Collusion between directors and auditors.
8. In Pakistan, family control of companies.
Some Scandals in USA -1
 WorldCom
• Overstatement of profits by $3.8 billion
 Adelphia Communications
• Illegal loan to founder
 Enron
• Gross misuse of power by directors
 Waste Management Inc.
• Overstatement of earnings by $17 billion over 6 yrs
Some Scandals in UK

 BCCI
• Improper accounting and policies
 Barings Bank
• Ineffective internal controls, $1.4 billion loss
 Mirror Group
• Gross misappropriation of funds including pensions
 Polly Peck
• Diversion of funds to personal use.
Some Scandals in Pakistan
 Crescent Bank
• The entire board of directors and CEO Anjum Saleem were legally stopped.
• Predicted a missing amount.
• SECP took legal action against the companies officers.
 Mehran bank
• NAB has recovered Rs1.6 billion.
• The Younus Habib Group will also pay Rs420 million.
• Younus Habib offered to settle his liability.
 PTCL
• The privatization of PTCL was also a big corporate scandal.
• The deal was closed on 2.6 billion dollars.
• Pricing decisions were made through old records.
• Secret price discount
 Evolution of CG

 Cadbury Report 1992, UK

 Greenbury Report 1995, UK
 Hampel Report 1998, UK
 Combined Code 1998, UK
 Turnbull Report 1999, UK
 OECD Principles of CG, 1999
 More Reports

 Basle Committee Guidelines 1999 (banks)

 Myners Report 2001, UK
 Cromme Report 2002, Germany
 Higgs Review 2003, UK (INEDs)
 Smith Report 2003, UK (Audit committees)
 Revised Combined Code, 2003, UK
 Kings Reports 1994, 2000, 2009, South Africa
 Sarbanes Oxley Act 2002, USA
Enhanced Performance-
• Helps a company improve overall performance.
• Without corporate governance, a company tends to be weak and sluggish.

Access to Capital-
• more easily it can access outside capital that the business can use to fund its projects.
• It connects investors with the business itself,
• these investors use their resources and contacts to support the company monetarily.
 Better Standards-
• many decisions about business operations,
• one of the most important decisions involves corporate standards.
• Standards affect the quality of products and the goals that the business has in
technology, customer service, and marketing.

 Better Talent Utilization-

• can find positions that utilize their talents more effectively,
• board of directors and top leaders of the business are always looking to add more
talented people to their numbers.
Easily Corruptible-
• Needs a certain level of government oversight to avoid increasing levels of corruption.
• lack of governmental oversight lead to a misallocation of credit that actually worked against
competition.

Family-Owned Companies-
• Such as Ford and Wal Mart, lose objectivity in business making decisions due to the family's
financial investment
• Emotional ties associated with building a worldwide corporation from the ground up.
CORPORATE GOVERNANCE
OF
ENGRO FOODS
• Officially launched as a fully owned subsidiary of Engro Corp. in 2004.
Listed in August 2011.

• Biggest and fastest growing conglomerates in Pakistan.

• Portfolio comprises some of the country's biggest and best selling brands
including

• Olper's, Olper's Lite, Olfrute, O'more, Omung, Omung Lassi and Tarang.

• Over 1,300 milk collection units providing livelihood to 160,000 farmers

across Pakistan.
• Contribute 11% of GDP in Agri-business sector.
• Footprint in 310 cities of Pakistan
• More than 1350 employees
• Rs.40Billion Sales Revenue(2015)
• 25% Market Share
• 5 Million people use Engro food’s Products every day.
• First Pakistani company to produce
• 1Billion Tetra Packs in a single year
• The Board comprises of 4 independent Directors, 5 non-
executive Directors of whom 3 are executives

PRIMARILY RESPONSIBLE FOR:

1. Ensuring the appropriate review of future company plans
2. Good governance
3. Effective control systems to protect shareholder value.
4. In essence the Board establishes corporate strategy and the
company's business objectives.
• The financial statements, prepared by the management of the company, present
fairly its state of affairs, the result of its operations, cash flows and changes in equity.

• Proper books of accounts of the company have been maintained.

• International Financial Reporting Standards, as applicable in Pakistan, have been

followed in preparation of the financial statements.

• The system of internal control is sound in design and has been effectively
implemented and monitored.

• There are no significant doubts upon the company's ability to continue as a going
concern
• Engro Corporation Limited believes in fair trade and
competition.

• policy of the Company that all of its directors and employees

shall, in carrying out their duties to the Company, comply
with relevant laws.

• All employees are responsible for familiarizing themselves

with the requirements of these laws
 Conflict of
Interest

• Employees should avoid any conflict between their

own interest and the interests of the Company, in
dealing with suppliers, customers, and all others.
 ADMINISTRATION

• If an employee wishes approval for an exception or if

an employee is in doubt about , he/she should
communicate the full circumstances to the Corporate
Audit Manager through his Department Manager.
 Directorships in
Other Companies

• Employees are generally restricted from serving as directors

of companies that are not subsidiaries or joint ventures of
Engro Corporation.

• Exceptions exists.
 Ethics and
Business Practices

• No over-ambition to SOMEHOW get the results.

• We DO care how we get results
 Gifts & Business
Entertainment
• Giving and receiving gifts in the form of cash,
commissions, abnormal loans, shares in profit, free
travel tickets or hotel/other accommodation,
membership in clubs and such other facilities are
strictly prohibited.
 Health, Safety
and Environment

• Conduct business in a manner that protects the

health and safety of employees, contractors, others
involved in our operations and the community in
which we operate.
 Insider Trading

• It applies to all employees of the Company, and all

members of the Company’s Board of Directors, any
person who receive or have access to Material Non-public
Information
 Speak Out

• The Corporation expects employees, customers, suppliers and

contractors at all affiliated companies to speak out about any
concerns they have regarding business ethics, safety,
environmental performance, harassment and other employment
related matters or other possible breaches of compliance.
CORPORATE GOVERNANCE
OF
PTC
 Corporate governance

Corporate social responsibility

of PTC
 Company profile
• Was incorporated in 1947 as the first foreign investment
in the newly born Pakistan

• Just a single factory operation to a company which is now

involved in every aspect of cigarette production.

• Significant about these 62 years is the effort that Pakistan

Tobacco.

38
Company profile
• Is one of the largest tax contributors in the private
sector in Pakistan.

• Over one million people are economically dependent.

• Have helped in the development and progress of the

agricultural and industrial sector in the country.

• The oldest multi-national of Pakistan.

39
 Core beliefs
• Creating long term shareholder value.

• Engaging constructively with our stakeholders.

• Creating inspiring working environments for our people.

• Adding value to the communities in which we operate.

• Ensuring that suppliers and other business partners have the

opportunity to benefit from their relationship with us.

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 The board

• The Board comprises of 6 non-executive directors and 3

executive directors.

• The positions of Chairman and CEO are kept separate in

line with good governance practice.

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Primarily responsibility
• Mutual benefit:
The principle of Mutual Benefit is the basis on which we build our
relationships with our stakeholders.

• Responsible product stewardship:

The principle of Responsible Product Stewardship is the basis on
which we meet consumer demand.

• Good Corporate Conduct:

The principle of Good Corporate Conduct is the basis on which all our
business should be managed.
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 Business principles
• Pakistan Tobacco Company mainly has three business principles
in which one principle support environmental impact that is good
corporate conduct.

• Business should have high level of behavior and integrity.

• Respect human rights

• High level of corporate social responsibility should be in tobacco

industry.

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 Corporate governance PTC
• The Directors confirm compliance with the Corporate and Financial
Reporting Framework of the SECP’s Code of Corporate Governance
for the following:

1. The financial statements, prepared by the management of the

Company, present fairly its state of affairs, the result of its
operations, cash flows and changes in equity.

2. Proper books of accounts of the Company have been maintained.

3. Appropriate accounting policies have been consistently applied in

preparation of financial statements and accounting estimates are
based on reasonable and prudent judgment.
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 Corporate governance

• International Accounting Standards, as applicable in Pakistan,

have been followed in preparation of all financial statements.

• The system of internal control, which is sound in design has

been effectively implemented and is being continuously
reviewed.

• There are no doubts about the Company’s ability to continue

as a going concern.
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 CORPORATE GOVERNANCE
OF
NATIONAL REFINERY LIMITED
 Introduction of NRL
 National Refinery Limited ( NRL ) was incorporated on August 19, 1963 as a public
limited company.

 Government of Pakistan took over the management of NRL under the Economic
Reforms Order, 1972 under the Ministry of Production.

 In June 2003 the Government of Pakistan decided to include NRL in its

privatization program.

 After competitive bidding NRL was acquired by Attock Oil Group in July 2005.
The Company has been privatized and the management handed over to the new
owner on July 7, 2005.
 Introduction of NRL
 NRL is engaged in the manufacturing.

 Production and sale of large range of petroleum products.

 Company comprises of three refineries, consisting of

Two lube refineries
One fuel refinery.

 First Lube Refinery commissioned in 1966 with designed capacity of 539,700 tons
per annum of Crude Processing and 76,200 tones per annum of Lube Base Oils.
 National Refinery Limited

NRL enjoys a Competitive Edge, as it is the only

refinery producing LBO in Pakistan.
 Vision of NRL
 Our passion is to attain a distinctive leadership amongst the corporate
success stories of tomorrow.

 We at NRL recognize that the realization of this passion needs superior

professional competencies, continuous value addition and improvising,
development of human capital and complete commitment to safety,
occupational health and environment.
 Mission of NRL
 To remain the premium and preferred supply source for various petroleum
products and petrochemicals.

 Offer products that are not only viable in terms of desirability and price but
most importantly give true and lasting value to our customers.

 Deliver strong returns on existing and projected investments of our stakeholders

by use of specialized and high quality corporate capabilities.
 Mission of NRL
 Business development by adoption of emerging technologies, growth in
professional competence, support to innovation, enrichment of human
resource and performance recognition.

 Be a responsible corporate citizen by serving the community through a variety

of socioeconomic acts and maintaining a high level of safety, occupational
health and environmental care.
 Company’s Information
Company’s Basic Objective Crude Oil Refining & production of
petroleum & petrochemical products

First Lube refinery Commissioned 1966

Fuel Refinery Commissions 1977

2nd lube refinery added 1985
Design Capacity 2.71 Million ton per year
Faysal Bank, Habib Bank, Bank Al Habib
Bankers Ltd, Habib Metro Bank, National bank of
Pakistan, United Bank
Shareholders ARL,POL,IDB,NIT & others
 Core Values of NRL
 Following concepts and ideas guide the Management and Staff of National
Refinery Limited in conducting its business practices in most ethical ways.

 Ethical conduct & Integrity

 Teamwork & Responsibility
 Customer Satisfaction
 Continuous Improvement
 Profitability
 Corporate Citizenship
 Corporate
Governance Of
NRL
 Statement of Compliance
 The Directors have confirmed that none of them is serving as a director
in more than seven listed companies, including this Company.

 All the resident directors of the Company are registered as taxpayers

and none of them has defaulted in payment of any loan to a banking
company, a DFI or an NBFI or, being a Broker of a stock exchange, has
been declared as defaulter by that stock exchange.

 The Directors were apprised of their duties and responsibilities from

time to time.
 Statement of Compliance

 The Company has complied with all the corporate and financial reporting
requirements of the Code.

 The directors, CEO and executives do not hold any interest in the shares
of the Company other than that disclosed in the pattern of shareholding.

 The CEO and CFO duly endorsed the financial statements of the
Company before approval of the Board.
National Refinery Limited
Integrated Management
System
 NRL Integrated Management System

NRL Integrated Management System IMS (HSEQ) provides

a mechanism for Occupational Health & Safety, Environment
and Quality Management Systems throughout all areas, units
and departments of NRL Korangi Refinery, Keamari
Terminal and Korangi-Keamari Pipeline.
 Objective of IMS
Integrated Management Program of NRL has following
objectives:

Quality
 Environmental Objectives & Targets
 Occupational Health & Safety Objectives
 Policy Statement of IMS
• Business in a manner to prevent ill health of entire workplace.

• Work on the principle that all incidents can be prevented.

• Provide safe working system through effective leadership.

• Develop contingency and emergency preparedness plans to minimize harm

from any incident.

• Prevent pollution by establishing programs .

• Periodically evaluate performance against established objectives.

• Provide training and create awareness to ensure that all stakeholders are fully
informed by HSEQ policy.
CORPORATE GOVERNANCE
OF
MCDONALD’s
COMPANY PROFILE:
• McDonald's is the world's leading global food service retailer
with over 36,000 locations in over 100 countries.

• The U.S. is the largest market in the McDonald's System in

terms of number of restaurants, revenues and operating income.

• 8 key markets across Asia and Europe (China, Korea, Russia,

Poland, Italy, Spain, the Netherlands and Switzerland) all share
a similar landscape of unpenetrated growth.

• represents about one third of global GDP growth

COMPANY PROFILE IN PAKISTAN:
• McDonald’s first restaurant opened in September 1998 in Lahore.

• Karachi opened its first restaurant a week after Lahore.

• 44 restaurants in 16 major cities of Pakistan.

• McDonald’s believes in giving back to the communities it operates

in.

• Proactive approach to charities and sponsorships.

VISION STATEMENT OF MCDONALD'S;

"To be the best quick service restaurant

experience". Being the best means
providing outstanding quality, service,
cleanliness, and value, so that we make
every customer in every restaurant smile”.
MISSION STATEMENT OF
MCDONALD'S;

• “McDonald's brand mission is to be our customers' favorite

place and way to eat and drink. Our worldwide operations are
aligned around a global strategy called the Plan to Win, which
center on an exceptional customer experience – People,
Products, Place, Price and Promotion.
 CORE VALUES:
• Conducting our activities in a manner that respects human rights

• Treating employees with fairness, respect and dignity

• Ensuring employees have the right to work in a place that is free from
harassment

• Embracing the diversity and inclusion of employees, Franchisees,

customers

• Providing equal treatment and equal employment opportunity

• Providing a safe, productive and healthy working environment

CORPORATE GOVERNANCE
OVERVIEW:
• The basis for our entire business is that we are ethical,
truthful and dependable. It takes time to build a
reputation. We are not promoters. We are business
people with a solid, permanent, constructive ethical
program that will be in style years from now even more
than it is today."- Ray Kroc, 1958
CORPORATE GOVERNANCE
OVERVIEW:
• McDonald's success is built on a foundation of personal and professional
integrity.

• Hundreds of millions of people around the world trust McDonald's.

• We earn that trust everyday by serving safe food, respecting our customers
and employees and delivering outstanding Quality, Service, Cleanliness
and Value (QSC&V).

• We build on this trust by being ethical, truthful and dependable. In short,

what Ray Kroc, founder of McDonald's Corporation said more than 50
years ago was right.
CORPORATE GOVERNANCE
OF
NESTLE
 Nestlé in Pakistan

•Nestle pakistan is a food processing company

•Nestlé Pakistan Ltd. is registered on Karachi and Lahore stock exchanges.
•Establish in Pakistan since 1988 under a joint venture with Milk Pak ltd
and took over management in 1992.
•Headquarter in Lahore
•Multi-Product Factories in Sheikhupura, Kabirwala, Karachi
•Water Factories: 1 in Islamabad , 2 in Karachi
Nestle Pakistan Vision
Our Vision
Nestlé’s vision is to be the globally recognized leading
Nutrition, Health and Wellness (NHW) Company.

◦ Leading a dynamic, passionate and professional workforce, proud

of our heritage and positive about the future.

◦ Meeting the nutritional needs of consumers of all ages – from

infancy to old age
Nestle Pakistan Mission

Our Mission
To positively enhance the quality of life of people of
Pakistan by all that we do through our people, our brands,
products and our Creating Shared Value (CSV) initiatives.
 Corporate Governance
Nestlé Pakistan is committed to maintain high standards of good corporate
governance
The Directors are pleased to state that the Company is compliant with the
provisions of the Code of Corporate Governance as required by SECP and
formed as part of stock exchange listing regulations.

Statement of compliance with Code of Corporate Governance is as under.

 financial statements prepared by the management of the Company
Proper books of accounts of the Company have been maintained.
 Corporate Governance (contd…)

Appropriate accounting policies

International Financial Reporting Standards, as applicable in Pakistan,

have been followed in preparation of financial statements and any departure
there from has been adequately disclosed and explained.

The system of internal control is sound in design and has been effectively
implemented and monitored.
CASE STUDY ANALYSIS
SATYAM
SCAM
So, How did it all begin?
 Reasons For The Fraud
1. Weak corporate governance:
– The mechanism for monitoring the actions, policies and decisions made in
Satyam was proved to be weak.

2. Dubious role of independent directors:

– It is hard to believe the independent directors could not discover the well-planned
massive fraud and manipulations.
– They should have questioned how and why the company was sitting on such a
huge pile of cash.

3. Failure at all 3 levels of auditing:

Financial irregularities were ignored by the internal & external auditors.
– Internal audit headed by the CFO
– External audit by PwC
– Board’s audit committee headed by independent directors
 • If a company claims it has huge cash on its hand,
then auditors should check whether that cash in
hand is available or not.
External audit by • There needs to be a physical verification of assets
PwC owned by the company.
• But PwC did not perform this for even a large sum of
Rs. 5040 crore.

• Board had to ensure that transparency in the

Board’s audit company, that financial disclosures and financial
committee headed statements provided a true picture
by independent • That no kind of fraud existed in the company.
directors: • But the audit committee of Satyam failed to detect
any manipulation in the accounts.
 Reasons Of The Fraud (Contd.)

4. Greed

5. Ambitious corporate growth

6. Stock market expectations

7. Whistle blower policy not being effective

Prevention of Fraud
Board
1. Must monitor the ethical practices
and the way they are implemented in
the company
2. Accountable for the financial
information being projected
3. No to inactive board members
4. Authority to independent board of
directors
5. Clear understanding of responsibility
between the board and the next level of
employees
6. Qualified board members
Government Regulation, Policies and
Intervention
1. Play an active role in company
affairs because company runs with
public money
2. Frequently check the company’s
performance in the market and take
necessary steps in curtailing any
malpractices or falsifications
3. Government intervention must be
increased in the auditor’s work to have
a foolproof mechanism in the company
policy matters
Accounting Standards
1. To check the fairness and
trueness of the financial
statements by involving proper
audit tools
2. Freedom for auditors
3. Reputation of auditing
firm/individual can’t avoid
scandals
4. Most of the companies
involved in mega scandals were
audited by reputed auditing
firms
Ethics of individual/company,
defining and implementing code of
conduct
1. Search or Nominations Committee
2. Proper code of conduct updated on
a regular basis should be
implemented
3. Every company should have fraud
detection mechanism
4. Good corporate governance
5. Good educational practices doesn’t
always mean individual has good
ethics
6. Whistle-blowing practices
CORPORATE GOVERNANCE
OF
THE END

THANKS 