Corporate board elections
Introduction: A reform that misses the mark
In July 2023, the Securities and Exchange Commission of Pakistan (SECP) amended the Code of Corporate Governance through S.R.O. 906(I)/2023, introducing a new regulation (7A) that mandates separate, category-wise voting for director elections in listed companies. Ostensibly designed to streamline compliance with board diversity requirements—such as the presence of female and independent directors—this amendment has produced the opposite of good governance.
Rather than fostering inclusion or transparency, these reforms have imposed severe procedural limitations on minority shareholders, undermining the time-tested cumulative voting method enshrined in the Companies Act, 2017. As a result, the amended framework risks institutionalizing majority dominance and relegating shareholder democracy to a symbolic formality.
The case in point: an unwinnable election
In 2024, a minority shareholder controlling 12.51 percent equity in a listed company prepared to contest upcoming board elections under Section 159(3) of the Companies Act. With seven board seats available and the company’s free float limited to 25%, the shareholder aimed to secure one board seat —an achievable strategy under the earlier cumulative voting framework that allowed aggregation of votes to elect at least one director.
However, the company’s new voting process, aligned with Regulation 7A, subdivided the election into three separate categories: female, independent, and other directors. Critically, it rigidly........
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