Islamabad, March 29, 2006— The International Finance Corporation, the private sector arm of the World Bank, and the Securities and Exchange Commission of Pakistan, today organized a one-day corporate governance workshop for journalists from leading Pakistani print and broadcast media. The workshop  presented an opportunity for journalists to familiarize themselves with corporate governance issues and to refine their reporting skills on the topic.

“This workshop has been organized in the context of recent trends in the field of corporate governance. It is essential that the media have a clear understanding of the principles of corporate governance, as they play an important role in raising corporate awareness of it,” said Kaiser Naseem, Manager for IFC’s Pakistan Corporate Governance Project.

According to Ms. Jaweria Ather, Director of Pakistan’s Securities and Exchange Commission, “The corporate sector plays a key role in Pakistan’s economic progress.  Therefore it is vital that good corporate governance practices are inculcated in order to ensure sustainable development”. She added that, “the media has a very important role to play in not only making sure that good governance practices are adhered to but also in creating an awareness amongst the business and investment communities on the dire need to do so.”

IFC recently launched an ambitious project to improve governance practices in Pakistani banks and companies. As part of this project, IFC will work closely with the newly established Pakistan Institute of Corporate Governance. IFC will also be involved in capacity building for the Institute, as part of its strategy to create sustainable institutions.

The Securities and Exchange Commission of Pakistan was created in January 1999. Its mandate is to provide regulatory oversight of the corporate and financial sectors, as well as various external service providers to these sectors, including chartered accountants, credit rating agencies, corporate secretaries, brokers, and surveyors. The Commission introduced the Code of Corporate Governance in Pakistan in 2002 through its regulations regarding stock exchanges. Since then it has been actively involved in promoting awareness and implementation of good corporate governance practices.

The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C.  IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent.  Its 178 member countries provide its share capital and collectively determine its policies.

The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications.

What is Corporate Governance and why is it so important?

Corporate governance refers to the structures and processes for the direction and control of corporations. Corporate governance specifies the distribution of rights and responsibilities among the main participants in a corporation—including shareholders, directors, and managers—and spells out the rules and procedures for making decisions on corporate affairs. Corporate governance thus provides the structure through which company objectives are set, implemented, and monitored. A company committed to good corporate governance has well-defined shareholder rights, a solid control environment, high levels of transparency and disclosure, and an empowered board of directors.

Corporate governance is critical for banks and other companies as it improves access to capital, attracts premium valuations, and offers financing on better terms. Corporate governance also improves performance. It results in better leadership, oversight, work processes, compliance, and accountability, while reducing conflict. Corporate governance can also make (or break) reputations, by creating confidence, establishing goodwill, and building or restoring trust in the market.

Investors care about corporate governance, as well-governed companies tend to outperform their peers, safeguard and provide for higher returns on investment, protect shareholder rights, and provide assurance that management acts in the best interest of the company and all shareholders. Governments also care about corporate governance because it develops the public and private capital markets, reduces vulnerability to financial crises, and improves a country’s ability to mobilize, properly allocate, and monitor investments.  All of these benefits foster economic growth.