THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN

CHECKLIST FOR REVISED CODE OF CORPORATE GOVERNANCE 2012

INTRODUCTION AND EXPLANATORY COMMENTS

1 This checklist seeks to provide guidance to the listed companies and their auditors with
regard to the statement to be included by the directors and certification by auditors in their
annual reports in accordance with the requirements in the Listing Regulations of the Stock
Exchange relating to Code of Corporate Governance.

2 The checklist is merely a technical practice aid and in no way represents the authoritative
pronouncement of the Institute. It does not aim at interpreting the requirements set out in
the Listing Regulations.

3 This checklist seeks to represent minimum requirements and does not purport to be all-
inclusive and would need to be constantly reviewed in the light of changes in Regulations
from time to time.

4 Users of this checklist are advised to refer directly to the Code of Corporate Governance
2012. In determining the applicability of any clause of the Regulation, its effective date
should also be considered.

5 Use of the checklist requires the exercise of individual professional judgment and may
require some modification based on the circumstances of individual companies.

6 Respond to each item of the checklist with a check mark () in the appropriate column:
Yes - indicating disclosure; No: indicating disclosure not made and N/A showing items not
present or relevant.

7 Items marked “No” should be accompanied by an explanatory memorandum to document

in what manner and to what extent disclosure or compliance falls short of the Listing
Regulations. The explanation should be elaborate and comprehensive.
 CHECKLIST FOR REVISED CODE OF CORPORATE GOVERNANCE 2012

CLIENT:

PERIOD
ENDED:

Code Ref # Yes No N/A

COMPOSITION OF THE BOARD

*1.1 Is there a balance of executive and non executive directors in Board of Directors of the Company 35(i)
including independent directors and those representing minority interests with the requisite skills,
competence, knowledge and experience so that the Board as a group have core competencies and
diversity?

*1.2 Do the Board of Directors of the Company include at least one and preferably one third of the total i(b)
members of the Board as Independent directors?

*1.3 At the time of appointment of the Independent director, have the following circumstances been i(b)
considered for director's independence:

• He/she has been an employee of the Company, any of its subsidiaries or holding Company within the
last three years;

• He/she is or has been the CEO of subsidiaries, associated Company, associated undertaking or
holding Company in the last three years;
• He/she has or has had within the last three years, a material business relationship with the Company
either directly, or indirectly as a partner, major shareholder or director of a body that has such a
relationship with the Company:

• He/she has received remuneration in the three years preceding his/her appointment as a director or
receives additional remuneration, excluding retirement benefits from the Company apart from a
director’s fee or has participated in the Company’s share option or a performance-related pay scheme;

• He/she is a close relative of the Company’s promoters, directors or major shareholders:

• He/she holds cross-directorships or has significant links with other directors through involvement in
other companies or bodies;
• He/she has served on the Board for more than three consecutive terms from the date of his first
appointment provided that such person shall be deemed “independent director” after a lapse of one
term.

* Not Mandatory
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 CHECKLIST FOR REVISED CODE OF CORPORATE GOVERNANCE 2012

Code Ref # Yes No N/A

• He/she has complied all the requirements of the Companies Ordinance, for qualification/ eligibility
criteria for appointment as independent directors of the Company.

*1.4 Has it been ensured that a person nominated as a director under Sections 182 and 183 of the i(b)
Ordinance, is not taken to be an "independent director" for the purposes mentioned in 1.3 above?

*1.5 Has the director representing an institutional investor been selected by such investor through a i(b)
resolution of its Board of directors, either specifically or generally? and has the policy for selection of
such person for election on the Board of directors of the investee company been annexed to the
Directors' Report of the investor company?

*1.6 Has the professional indemnity insurance cover for independent directors been taken by the Company? i(c )

*1.7 Are executive directors, i.e. paid executives of the Company from among senior management, not more i(d)
than one third of the elected directors, including the Chief Executive?

MAXIMUM NUMBER OF DIRECTORSHIP

1.8 Are the directors of the Company not elected or nominated in more than seven listed companies, (ii)
including a unlisted company which is a subsidiary of listed company, simultaneously? (except for listed
subsidiaries of a listed holding company)

RESPONSIBILITIES, POWERS AND FUNCTIONS OF BOARD OF DIRECTORS

1.9 Has the Board of Directors ensured the following :

a) The professional standards and corporate values have been put in place in the form of 'Code of v(a)
Conduct'?

If answer to the above is Yes, has the Company disseminate the Code of Conduct throughout the
Company along with supporting policies and procedures and are these also put on the Company’s
website?

b) Adequate systems and controls are in place for identification and redress of grievances arising from v(b)
unethical practices?

* Not Mandatory
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 CHECKLIST FOR REVISED CODE OF CORPORATE GOVERNANCE 2012

Code Ref # Yes No N/A

c) A vision/ mission statement and overall corporate strategy for the listed Company has been prepared v(c)
and adopted?

d) A system of sound internal control has been established, which is effectively implemented and v(d)
maintained at all levels within the Company?

e) Within two years of coming into force of this Code, a mechanism has been put in place for an annual v(e)
evaluation of the Board’s own performance?

f) The decisions on the following material transactions or significant matters have been documented by v(f)
a resolution passed at a meeting of the Board of Directors:

i) investment and disinvestment of funds where the maturity period of

such investments is six months or more, except in the case of banking
companies, non-banking finance companies and insurance companies

ii) determination of the nature of loans and advances made by the listed
Company and fixing a monetary limit thereof.

g) The level of materiality has been defined by Board of Directors keeping in view the specific v(g)
circumstances of the Company and the recommendations of any technical or executive subcommittee of
the Board that may be set up for the purpose?

h) The significant policies along with standard operating procedures thereof have been formulated and v(c )
their complete record along with the dates on which these were approved or amended by the Board of
Directors have been maintained?

1.10 Is the Chairman and the Chief Executive Officer (CEO), by whatever name called, not the same person (vi)
except where provided for under any other law?

1.11 Has the Chairman of the Company been elected from amongst the non executive directors of the (vi)
Company?

1.12 Has the Board of Directors clearly defined the respective roles and responsibilities of the Chairman and (vi)
CEO?

* Not Mandatory
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 CHECKLIST FOR REVISED CODE OF CORPORATE GOVERNANCE 2012

Code Ref # Yes No N/A

MEETINGS OF THE BOARD

1.13 Have the written notices (including agenda) of meetings been circulated not less than seven days before (vii)
the meetings, except in the case of emergency meetings, where the notice period might reduced or
waived?

1.14 Has the Chairman of the Company ensured that minutes of meetings of the Board of Directors are (viii)
appropriately recorded?

1.15 Is the Company Secretary also the Secretary to the Board of Directors ? (viii)

1.16 In the event that director has a dissenting note and in his views it has not been satisfactorily recorded in (viii)
the minutes of a meeting of the Board of Directors, did he refer the matter to the Company Secretary?

SIGNIFICANT ISSUES TO BE PLACED FOR DECISION BY THE BOARD OF DIRECTORS

1.17 Are the significant issues as detailed in the Code being placed for the information, consideration and (ix)
decision of the Board of Directors of the Company and/or its Committees?

RELATED PARTY TRANSACTIONS

1.18 Are the details of all related party transactions placed before the Audit Committee of the Company? x(a)

1.19 Are these recommended to the Board of Directors by the Audit Committee? x(a)

1.20 Are the recommended transactions placed before the Board of Directors for review and approval? x(a)

1.21 In case, related party transactions which are not executed at arm's length price, has the Board of x(b)
Directors approved such transactions after recommendations of Audit Committee?

1.22 Has the Board of Directors of the Company approved the pricing methods for related party transactions x(c)
that were made on the terms equivalent to those that prevail in arm’s length transaction, only if such
terms can be substantiated?

1.23 Has the Company maintained a party wise record of transactions with related parties for the year along x(d)
with all relevant documents and explanations?

* Not Mandatory
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 CHECKLIST FOR REVISED CODE OF CORPORATE GOVERNANCE 2012

Code Ref # Yes No N/A

1.24 Does the party wise record of related parties transactions includes the following?
i) Name of related party; x(d)
ii) Nature of relationship with related party;
iii) Nature of Transaction;
iv) Amount of transaction; and
v) Terms and conditions of transaction, including the amount of consideration
received or given.

DIRECTORS' TRAINING PROGRAM

1.25 Did the Company make appropriate arrangements to carry out orientation courses for their directors to (xi)
acquaint them with this Code, applicable laws, their duties and responsibilities to enable them to
effectively manage the affairs of the Company?

1.26 Has the company ensured that at the reporting date the number of directors required to obtain (xi)
certification from prescribed Institutes’ directors training programs been obtained?

CHIEF FINANCIAL OFFICER (CFO), COMPANY SECRETARY AND HEAD OF INTERNAL AUDIT

APPOINTMENT AND REMOVAL (xii)

1.27 Have the appointment, remuneration and terms and conditions of employment of the Chief Financial
Officer (CFO), the Company Secretary and the Head of Internal Audit of the Company been determined
by the Board of Directors?

1.28 Have the CFO and the Company Secretary of the listed Company been removed with the approval of
Board of Directors?

1.29 Has the Head of Internal Audit of the Company been removed with the approval of Board of Directors
only upon recommendation of the Chairman of the Audit Committee?

QUALIFICATION OF CFO AND HEAD OF INTERNAL AUDIT

1.30 Is the CFO of a Company: (xiii)

* Not Mandatory
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 CHECKLIST FOR REVISED CODE OF CORPORATE GOVERNANCE 2012

Code Ref # Yes No N/A

(a) has at least five years of experience of handling financial or corporate affairs of a listed
Company or a bank or a financial institution; and

(b) a member of a recognized body of professional accountants; or

(c ) has a postgraduate degree in finance from a recognized university or equivalent.

Provided that individuals serving as CFO of a listed company for the last five years at the time
of coming into effect of this Code shall be exempted from the above qualification requirement.

1.31 Is the Head of Internal Audit has 5 years of relevant audit experience and is: (xiv)

(a) a member of a recognized body of professional accountants; or

(b) a Certified Internal Auditor; or

(c) a Certified Fraud Examiner; or

(d) a Certified Internal Control Auditor

Provided that individuals serving as Head of Internal Audit of a listed company for the last five
years at the time of coming into effect of this Code shall be exempted from the above
qualification requirement.

REQUIREMENT TO ATTEND BOARD MEETINGS

1.32 Do the CFO and the Company Secretary of the Company (or in their absence their nominee) attend
meetings of the Board of Directors?

CORPORATE AND FINANCIAL REPORTING FRAMEWORK

1.33 Have the directors of the Company annexed statements to the following effect with the Directors' Report, (xvi)
prepared under section 236 of the Companies Ordinance, 1984:

* Not Mandatory
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 CHECKLIST FOR REVISED CODE OF CORPORATE GOVERNANCE 2012

Code Ref # Yes No N/A

(a) 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.

(b) Proper books of account of the Company have been maintained.

(c) Appropriate accounting policies have been consistently applied in preparation of financial
statements and accounting estimates are based on reasonable and prudent judgment.

(d) 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.

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

(f) There are no significant doubts upon the Company's ability to continue as a going concern.

(g) There has been no material departure from the best practices of corporate governance,
as detailed in the listing regulations.

1.34 Has the Directors' Reports of the listed Company also annexed the following, where applicable:-

(a) If the Company is not considered to be a going concern, the fact along with reasons have been
disclosed.

(b) Significant deviations from last year in operating results of the Company have been highlighted
and reasons thereof explained.

(c) Key operating and financial data of last six years has been summarized.

(d) If the Company has not declared dividend or issued bonus shares for any year, the reasons
thereof have been given.

(e) Where any statutory payment on account of taxes, duties, levies and charges is outstanding,
the amount together with a brief description and reasons for the same have been disclosed.

(f) Significant plans and decisions, such as corporate restructuring, business expansion
and discontinuance of operations, have been outlined along with future prospects, risks and

* Not Mandatory
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 CHECKLIST FOR REVISED CODE OF CORPORATE GOVERNANCE 2012

Code Ref # Yes No N/A

uncertainties surrounding the Company.

(g) A statement as to the value of investments of provident, gratuity and pension funds, based on
their respective audited accounts has been included.

(h) The number of Board and committees' meetings held during the year and attendance by
each director has been disclosed.

(i) The details of training programs attended by directors;

(j) The pattern of shareholding reported to disclose the aggregate number of shares (along
with name wise details) Where required, held by:

(i) associated companies, undertakings and related parties (name wise details);

(ii) mutual funds (name wise details);

(iii) directors and their spouses and minor children (name wise details);

(iv) executives;

(v) public sector companies and corporations;

(vi) banks, Development Finance Institutions, Non-Banking Finance companies,

Insurance companies, Takaful, Modarabas and Pension funds; and

(vii) shareholders holding five percent or more voting rights in the listed Company
(name wise details).

(k) Information about loans, TFCs, sukuks or any other debt instruments in which the Company
is in default or likely to default.

(l) Disclosure of all trades in the shares of the listed Company, carried out by its directors,
executives and their spouses and minor children.

* Not Mandatory
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 CHECKLIST FOR REVISED CODE OF CORPORATE GOVERNANCE 2012

Code Ref # Yes No N/A

For the purpose of this sub-clause (l) and clause (xxiii) of this Code, the expression
“executive” means the CEO, COO, CFO, Head of Internal Audit and Company Secretary by
whatever name called, and other employees of the company for whom the board of directors
will set the threshold to be reviewed on an annual basis and disclosed in the annual report.

DIRECTORS' REMUNERATION

1.35 Is there a formal and transparent procedure for fixing the remuneration packages of individual directors? (xvii)

1.36 Has it been ensured that the director is not involved in deciding his/her own remuneration? (xvii)

1.37 Is the director's remuneration subject to prior approval of shareholders/ Board of Directors as required
by the Company’s Articles of Association?

1.38 Has the Company's Annual Report contained details of the aggregate remuneration of executive
and non-executive directors separately?

FREQUENCY OF FINANCIAL REPORTING

1.39 Are the quarterly unaudited financial statements of the Company being published and circulated along (xviii)
with directors' review on the affairs of the Company?

1.40 Are the half-yearly financial statements of the Company subject to a limited review by the statutory (xix)
auditors in accordance with terms and conditions determined by the Institute of Chartered Accountants
of Pakistan (ICAP) and approved by the Securities and Exchange Commission of Pakistan (SECP)?

1.41 Has the Company immediately disseminated all material information relating to the business and other (xx)
affairs of the listed Company to the SECP and the stock exchange on which its shares are listed that
would affect the market price of its shares in accordance with the mode of dissemination of information
as prescribed by their respective stock exchange?

1.42 Has the material information been disseminated to the SECP and Stock Exchange as soon as any (xx)
decision or any other significant issue is taken by the Board or a significant matter requiring disclosure
has come into the knowledge of company’s management?

RESPONSIBILITY FOR FINANCIAL REPORTING AND CORPORATE COMPLIANCE

* Not Mandatory
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 CHECKLIST FOR REVISED CODE OF CORPORATE GOVERNANCE 2012

Code Ref # Yes No N/A

1.43 Were the financial statements presented to the Board of Directors duly signed by the CEO and CFO of (xxi)
the Company and issued and circulated after Board of Director's approval?

1.44 Were the second quarterly and annual accounts (both separate and consolidated where applicable) (xxi)
initialed by the external auditors before presenting it to the Audit Committee and the Board of Directors
for approval?

1.45 Has the Secretarial Compliance Certificate been filed by the Company Secretary on the prescribed form (xxii)
along with the annual return of the Company?

DISCLOSURE OF INTEREST BY A DIRECTOR HOLDING COMPANY'S SHARE

1.46 Where any director, CEO or executive of a listed company or their spouses sell, buy or transact, (xxiii)
whether directly or indirectly, in shares of the listed company of which he is a director, CEO or
executive, did he/she immediately notified in writing to the Company Secretary of such transaction?

1.47 Did the Director, CEO or executive also delivered a written record of the price, number of shares, form (xxiii)
of share certificates within the Central Depository System, and nature of transaction to the Company
Secretary within four days of effecting the transaction?

1.48 Has the notice of the director, CEO or executive been presented by the Company Secretary at the (xxiii)
meeting of the Board of directors immediately subsequent to such transaction?

1.49 In the event of default by a director, CEO or executive to give a written notice or deliver a written record, (xxiii)
did the Company Secretary placed the matter before the Board of Directors in its immediate next
meeting?

1.50 Did the director, CEO or executive whether directly or indirectly, not made any deal in the shares of the (xxiii)
Company in any manner during the closed period?

COMPOSITION OF THE BOARD

1.51 Has the Board of Directors of the Company established an Audit Committee comprising of at least three (xxiv)
members who are non-executive directors?

1.52 Is the chairman of the Committee an independent director and not the chairman of the Board? (xxiv)

* Not Mandatory
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 CHECKLIST FOR REVISED CODE OF CORPORATE GOVERNANCE 2012

Code Ref # Yes No N/A

1.53 Did the Board satisfy that at least one member of the audit committee has relevant financial skills and (xxiv)
experience?

1.54 Has the Board formed a Human Resource and Remuneration (HR&R) Committee comprising of at least (xxv)
three members of which majority are non-executive directors, including an independent director
preferably?

1.55 Is the CEO a member of the HR&R Committee and not the chairman of Committee? (xxv)

1.56 Did the HR&R Committee fulfilled the following responsibilities:

(i) recommending human resource management policies to the Board of Directors; (xxv)

(ii) recommending to the Board of Directors, the selection, evaluation, compensation

(including retirement benefits) and succession planning of the CEO;

(iii) recommending to the Board of Directors the selection, evaluation, compensation

(including retirement benefits) of COO, CFO, Company Secretary and Head of
Internal Audit; and
(iv) consideration and approval on recommendations of CEO on such matters for key
management positions who report directly to CEO or COO.

1.57 Are the names of members of the Committees of the Board of Directors disclosed in each Annual Report (xxvi)
of the listed Company?

AUDIT COMMITTEE

FREQUENCY OF MEETINGS (xxvii)

1.58 Does the Audit Committee of the Company meet at least once in every quarter of the financial year?

1.59 Have the above meetings been held prior to the approval of interim results of the listed Company by its
Board of Directors and before and after completion of external audit?

1.60 Has the meeting of the Audit Committee been held with the external auditors or the Head of Internal
Audit? (if requested)

ATTENDANCE AT MEETINGS (xxviii)

* Not Mandatory
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 CHECKLIST FOR REVISED CODE OF CORPORATE GOVERNANCE 2012

Code Ref # Yes No N/A

1.61 Has the CFO, the Head of Internal Audit and external auditors represented by engagement partner (or in
his absence any other partner designated by the audit firm) attended meetings of the Audit Committee at
which issues relating to accounts and audit were discussed?

1.62 At least once a year, has the Audit Committee met the external auditors without the presence of CFO
and the Head of Internal Audit?

1.63 At least once a year, has the Audit Committee met the Head of Internal Audit and other members of the
internal audit function without the CFO and the external auditors?

1.64 Has the chairman of the Audit Committee and engagement partner of external auditor (or in his
absence any other partner designated by the audit firm) presented at the AGM for necessary feedback
to the shareholders?

TERMS OF REFERENCE

1.65 Has the Board of Directors of the Company determined the terms of reference of the Audit Committee (xxix)
as detailed in paragraph (xxix) of the Code?

REPORTING PROCEDURE (xxx)

1.66 Has the Audit Committee of the Company appointed a Secretary of the Committee who is either the
Company Secretary or Head of Internal Audit but not the CFO?

1.67 Were the minutes of meetings of the Audit Committee circulated by the Secretary to all members,
directors, Head of internal Audit and the CFO prior to the next meeting of the Board of Directors?

1.68 If the above 1.67 is not practicable, did the Chairman of the Audit Committee communicated a synopsis
of the proceedings to the Board of Directors and circulated the minutes immediately after the meeting of
the Board of Directors?

INTERNAL AUDIT (xxxi)

1.69 Is there an internal audit function in the Company?

1.70 If answer to above is yes, does the Head of internal Audit report functionally to the Audit Committee and
administratively to the CEO?

* Not Mandatory
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Code Ref # Yes No N/A

1.71 Is a director appointed in any capacity in the internal audit function to ensure independence of the
Internal Audit function?

Outsourcing of Internal Audit Function

1.72 If the internal audit function is outsourced by the Company, has the due care been exercised to ensure
that suitably qualified and experienced persons, who are conversant with the Company's policies and
procedures, are engaged in the internal audit?

1.73 Has the Company appointed a fulltime employee other than CFO, as Head of Internal Audit, to act as
coordinator between firm providing internal audit services and the Board of Directors?

1.74 Is the Head of internal audit has same qualification in case of outsourcing?

1.75 Are the Company's existing external auditors appointed as internal auditors, while outsourcing?

1.76 Have internal audit reports been provided for external auditor's review? Have any major findings in
relation to the reports been discussed with the Audit Committee?

EXTERNAL AUDITORS

1.77 Has the external audit firm obtained a satisfactory rating under the Quality Control Review program of (xxxiii)
the Institute of Chartered Accountants of Pakistan (ICAP)?

1.78 Is the firm of external auditor or a partner in compliant with the International Federation of Accountants' (xxxiv)
(IFAC) Guidelines on Code of Ethics, as adopted by the ICAP?

1.79 Has the external auditor performed services in addition to audit except as required in the IFAC (xxxvi)
Guidelines on Code of Ethics, as adopted by the ICAP?

1.80 If the Company is in financial sector, does it change their external auditors every five years? (xxxvii)(a)

1.81 If the Company is in non-financial sector, does the Company, at a minimum, rotate the engagement (xxxvii)(b)
partner after every five years?

1.82 Has the Company appointed a person as an external auditor or a person involved in the audit of a listed (xxxviii)
Company who is not a close relative, i.e., spouse, parents, dependents and non-dependent children, of
the CEO, the CFO, an internal auditor or a director of the listed Company?

* Not Mandatory
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Code Ref # Yes No N/A

1.83 Did the external auditors furnished a Management Letter to its Board of Directors within 45 days of the (xxxix)
date of audit report?

1.84 Did all the significant matters communicated in writing to the Board by the external auditor prior to the (xxxix)
approval of the audited accounts by the Board?

COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

1.85 Has the Company published and circulated a statement along with its annual report to set out (xI)
the status of their compliance with the best practices of corporate governance set out above?

1.86 Has the statement of compliance with the best practices of corporate governance been reviewed and (xIi)
certified by the statutory auditors?

1.87 In case of material non-compliance with the CCG which is disclosed in the Statement of Compliance, (xIi)
has it been properly highlighted in the review report?

* Not Mandatory
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