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The Securities and Exchange Commission of Pakistan (SECP) has uncovered multiple violations of corporate and public-sector laws in the appointment and salary increase of the former acting CEO of Pakistan Reinsurance Company Limited (PRCL), following a detailed inquiry into the matter.
According to an official communication sent to the Ministry of Commerce on October 14, the SECP concluded that the PRCL Board acted without lawful authority when it appointed and approved a generous compensation package for the acting chief executive.
The regulator stated that neither federal government approval nor SECP clearance was obtained before the appointment. It also noted that the appointee lacked the required professional experience when assuming the role.
The inquiry found that the PRCL board exceeded its powers by approving additional benefits under the Special Professional Pay Scale (SPPS-III) without federal consent.
The SECP observed that these actions violated the Companies Act 2017, Insurance Ordinance 2000, Insurance Companies (Sound and Prudent Management) Regulations 2012, and Public Sector Companies (Corporate Governance) Rules 2013. Consequently, it recommended adjudication proceedings against the individuals involved and PRCL itself.
The inquiry also highlighted a new violation after the enactment of the State-Owned Enterprises (Governance and Operations) Act, 2023. During PRCL’s 178th board meeting on October 2, 2023, the company retrospectively enhanced the CEO’s pay from February 2023, citing alignment with the new SOE law.
However, the SECP clarified that this action breached Section 36(3) of the Act, which bars retrospective application. The matter has been referred to the Ministry of Commerce for appropriate action, with a copy of the findings sent to the Ministry of Finance.
