Intervention of the government in the board and management of public sector companines, damaging the applied principles extracted form code of corporate governance

Abstract

Enhancing the performance of the Public-Sector Companies and growing their access to business capital is based upon the contribution of effective corporate governance. Leading to the capital market development, functions of the corporate governance reduces risks of the financial crises, reduction of transactional costs, and costs of the capital. The Code of Corporate Governance is part of the Company Law prevailing in Pakistan. The Code is a set of principles applicable on the public-sector companies listed on the Stock-Exchange. The rules and regulations made thereunder for financial regulations and conducting the financial listing rules requires the public listed companies to disclose how they have complied with the code. In Pakistan, the major purpose of the Code of Corporate Governance is to restraint the political influence upon the public listed companies. The extracts of the Code of Corporate Governance mainly and majorly in Pakistan is upon the management, financial interests, executive remuneration, size and composition of corporate boards (Board of Governors/Directors). Corporate Governance identifies the owner of a company, and set rules for monetary returns distributed among managers, shareholders, employees and other stake-holders. Thus, the Regime of Corporate Governance for any company has reflective implications on business of the company, standards, and representation in capital markets. The governmental influence on the Public-Sector Companies in Pakistan has weaken the progressive functioning of the company. This influence has result in mega corruption scandals and has promoted nepotism. Resultantly, these issues were further proceeded to the Courts of Pakistan and intervention evidently establishes the weaknesses of the corporate governance at Public-Sector Company.