Pakistan amends SOEs Act for director removal

The federal government of Pakistan has recently made significant amendments to the State Owned Enterprises (SOEs) Act 2023 to tackle legal complexities related to the removal of independent directors from the boards of the Ex-Wapda Distribution Companies (XWDiscos). The latest Ordinance, State-Owned Enterprises (Governance and Operations) (Amendment) Ordinance, 2024, empowers the government to dismiss directors from the Boards of Directors (BoDs) based on recommendations from the Board Nominations Committee.

Prior to these changes, the government encountered difficulties in replacing independent directors on the boards of nine XWDiscos due to performance issues. The original SOE Act 2023 set forth stringent criteria for director removal, emphasizing adherence to laws and regulations, fulfillment of duties, and avoidance of misconduct.

With the recent Ordinance, the government has simplified the process by enabling the removal of underperforming or detrimental directors from state-owned enterprises. The amendments involve assessing director performance and proposing their dismissal to the federal government.

These modifications are aimed at improving governance and operations within state-owned enterprises by ensuring directors are held responsible for their conduct and contributions. The changes establish a clearer framework for evaluating director performance and taking necessary steps to uphold the efficiency and effectiveness of the boards.

The amendments to the SOEs Act signify a crucial step towards enhancing accountability and efficiency in the management of state-owned enterprises in Pakistan. By streamlining the process of director removal, the government aims to promote better governance practices and ultimately improve the performance of these entities for the benefit of the country.