LAHORE: The Punjab government is yet to remove the incumbent chairman of Punjab Board of Investment & Trade (PBIT) Khwaja Muzaffar Miraj and one of the members of board of directors despite the recommendations of the provincial industries, commerce & investment department which has declared the chairman`s appointment in `violation` of board rules.

Interestingly, Mr Miraj, who joined PBIT as adviser on Feb 1, 2016 and replaced Abdul Basit as chairman on April 29, 2016 had also been appointed under a notification issued by the same department which initially did not object to his appointment.

A summary prepared for the chief minister by the commerce secretary on Sept 20, 2016, states: `This is with reference to a meeting chaired by the chief minister on April 17, 2016 wherein revamping of PBIT was desired by him.

It may be noted that the planning & development department had engaged World Bank in October 2015 to review the mandate, institutional set-up, organisational structure, strategic direction, management and support systems, human resources and promotional activities.

`Extensive meetings of the consultants were held with public as well as private sector in Punjab. The PBIT assessment report was submitted byWB group to the commerce department. The report reviews the institutional structure at PBIT and inter alia states, PBIT`s board as a whole is virtually non-operational. The report goes on to add that there is a need to revise formal duties and responsibilities of PBIT`s board of directors in line with the international best practices, as well as strengthening its governance capacity. The report assesses the interplay of institutional oversight on performance of PBIT and highlights that lack of a meaningful engagement by the BoD has deprived PBIT of a valuable tool.

`The Public Sector Companies (Corporate Governance) Rules 2013 require disclosure of attendance of BoDs. Section 180 of the Companies Ordinance 1984 sets term of the office for director at three years to ensure that changes in BoDs of a company benefit it in getting access to wider horizons, effective supervision, accountability and transparency. Rule 5(1) also sets tenure of directors at three years.

Section 183 of the ordinance exempts directors nominated by the provincial government of BoDs of PBIT from application of Section 180.

`To assess efficacy of PBIT`s BoDs the attendance of directors was reviewed and it was observed that one of the members Amir Iqbal has attended only three board meetings out of seven and his attendance comes to 37 per cent only. His attendance is the lowest amongst the male members.

It is therefore proposed that his nomination may be withdrawn immediately and Junald Ashraf Khwaja, managing partner ASSAC Corporation, may be nominated at his place.

`One of the PBIT board members,Faisalabad Chamber of Commerce & IndustrypresidentnamelyMuhammad Nawaz, had forwarded a letter raising certain objections to the nomination of the chairman. The issue has already been highlighted in media also.

`Since the incumbent has been full time on pay roll of PBIT as adviser immediately prior to his nomination as chairman he is not an independent director.

`In view of the above, guidance of the law department was solicited as to whether the nomination of the incumbent chairman is in accordance with SECP and federal rules since he has been taking financial benefits from PBIT in the capacity of adviser, just prior to joining as chairman. The relevant para of the advice of the law department is reproduced as under `A chairman can be appointed only from amongst independent directors of PBIT under the Public Sector Companies (Corporate Governance) Rules 2013. A person who has been an employee of a public sector company during the last two years cannot be appointed as independent director and obviously not as the chairman either.

Subject to the vires of the said rules, since the sitting chairman was a paid employee of PBIT within two years of his assuming office as chairman he was prima facie not eligible for appointment as independent director and resultantly as chairman PBIT under rule 4 (4) read with rule 2(d) of the rules.

`In view of the above, the PBIT chairman does not seem to be eligible for the post. It is therefore proposed that his nomination may be revoked and a suitable person may be nominated as chairman.