 I will be live in a shaitaanir regime. Bismillahir Rahmanir Rahim. Today's topic is corporate governance. And this is one thing which is very, very important in the life of any business. Learning outcomes. Students will be able to understand that the interest of the stakeholder is protected. Stakeholders not only include the directors, employees, shareholders, but anyone who is directly or indirectly related with the business. To watch out who are actually responsible for true and fair presentation of the financial reports. The important thing is we have to watch out who are the individuals who are preparing these statements and reporting the true and fair views. The Board of Directors composition will be highlighted. The most important thing is the Board of Directors. Who are the directors? What type of directors they are? Executive directors or non-executive directors or independent directors and so on. So we must know clearly. Objective is to avoid fraudulent presentation following the code of corporate governance. The main problem is that people don't present the right figures. They play with those figures. Intentionally they do manipulation in those figures. So corporate governance means that we should try to find out who are the culprit. To fix the responsibility if there is a bad decision. If something is going wrong anywhere in the business, so we need to fix the responsibility. And it is from top to bottom. Everybody should be taken care. To understand the ethical values and mindset required by the company's officials. Again whatever we are going to, ethically we should keep in mind that we should not do something wrong, which is not ethical. And in this case I am talking about from directors to the last man, a sweeper even. All should work ethically. Beware of right practices required to perform by company's while operating. Although we have written down the best practices or right practices, but are we following it or not that is the most important thing. So we must look into it that we should keep in mind what is the best practice of doing this particular activity. Then what to avoid when functioning as a business. We must keep in mind that if I am doing a certain job, what I should not suppose to do. There are SOPs for everything. So we must keep in mind that we should not go beyond those SSP. We must keep in mind all the time those right practices. Now the introduction, corporate governance has become very important in monitoring role in the recent years. After prevalence of enormous financial standard. These scandals are all over in the world, let me tell you. You will be surprised in America, in UK, 30,000 to 40,000 companies go bankrupt every year. Not in number of years, every years. But over there, you know, thing is that if a company is not performing well, in spite of all their efforts, they can place, they can go to a court and get winding up, voluntary winding up. But if you are doing wrong something and the creditors come back and they will put you to a court, then it is creditors winding up. So they allow. It doesn't mean that the company cannot close. The company can wind up with business provided they go by the law. So corporate governance is a set of mechanism through which outside investors may protect themselves against expropriation by the insiders, managers and controlling shareholders. Here, very simple thing. That we are talking about the outside investors. So investor means not simply those who are putting money into the business. No. Even they are putting resources into the business. If they are putting their services into the business, they are all investors in my opinion. And we should protect the interest of all of them because whatever they are spending, time or money, we must care that it shouldn't be misappropriated. And who are going to misappropriate? Maybe top-level people, middle-level people or even low-level people. So we should be very, very careful keeping in mind the corporate governance that we should avoid all these misappropriations. Corporate governance comprises of private and public institutions, both formal and informal. In fact, the Code of Corporate Governors 2019, which is applicable in Pakistan, it is basically for listed companies, a company which is listed on stock exchange. But it does not mean that this is only for those companies, it is for every company, every business we should keep in mind. Which governs the relationship between those who manage these corporations and those who invest resources in these corporations. So clear. We are not just talking about money, we are talking about resources. Whichever resource you are putting into the business, you have to see what is being used and what is being performed. Now, look at the types of corporate governance. This is also a very important issue. What is our corporate governance here? Basically, what is word-wise? So look, basically there were two approaches at the beginning. One was a rule-based approach. What was in it? It is mandatory upon companies to follow the Code through Act Rules and Regulations and Pay Penalties. In the US and UK, what they have written as mandatory is that you have to follow these things as a regular company. And you have to tell it that we have followed it. If you have not followed it, then you will be penalised. It can be in the form of cash or in the form of punishment. So this is rigid that you have to do this. If you have not done anything of it, then you are liable for it and you have to pay for it. So Germany is there for it if you do not follow it. But it was very strict. That is why they have changed the principle-based approach. What is in the principle-based approach? The companies adhered to the spirit of the rules and are explaining in annual reports as to why they are not complying with the requirements of the Code. It is a bit like this. If you understand that these are mandatory, then you have to follow them. But if you follow them, then it is better. But if you are not following them, then you need to explain. That is why we followed them. We have to explain the reasons. This will leave the shareholders to draw their conclusion about the governance of the company. So let the shareholders, let the investors see whether leaving those codes are good or bad. But it is available. If you follow the mandatory, then you will do it. But other than the mandatory, you should also follow it. In Pakistan, there is a third thing called hybrid. Hybrid is that you have the rules in which there are the mandatory. After that, it is recommended that you follow these rules. Along with this, it is also recommended that you should also follow it. Now it happens that in the mandatory, if a company does not follow the mandatory rules, then believe it that it does not commit up to 5 million. And it is also that if you are not able to pay, then it should be added according to 1000 per day. This is also about the mandatory. But the one that is not recommended about the mandatory is that you have to follow it. But if for some reason, a company is not able to follow those rules, then they need to explain that this was the reason and we have not followed it. Therefore, all these things are available in the company by laws. But the Security Exchange Commission of Pakistan and the stock exchanges and the other sources have decided that these things are must. But if they are recommended, then you also have to follow them. And if they are recommended, if you do not follow them for some reason, then it will be necessary to give an explanation. After that there is the Code of 2019. Listed companies should implement them and leaders should be effective in the diversity of direct. This is also an important issue. It is necessary to be effective. It is necessary to be effective of leadership. Look, if you go with the name, sit down, no. Are you monitoring it or not? That is the important thing. And in diversity, it is that directors should have different skills. For example, if there is management, then the director should have management. If there is direct marketing, then the marketing experience should be there. If there is finance, then the finance experience should be there. There should be diversity so that the directors can see the best practices. The best practices indexes. Here we have critical performance indicators. So what do we do? We decide that these four, five, seven, whatever they are, we fix them. And then for every indicator, you see how you have performed it. And add its points. And then we add it and see which points we have properly performed. As per the code, if we have not done it somewhere, then we have to see what we have to give its explanation. So these are the types of corporate governors. Basically what we have done is that we have to follow the mandatory on. If we do not follow it, then its penalty is there. But the recommended ones are also necessary to be followed. But in case you are not able to follow them for any reason, then you need to explain. Now when you give an explanation, then let the readers decide whether the explanation you have given is appropriate or not. But you do not have to leave it. We will have to tell you that we have not followed this particular code. Thank you very much.