Regulatory Impact Assessment of SECP’s Corporate Governance Code in Pakistan

Rasul Bakhsh Rais, Asif Saeed
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This paper attempts to analyze the Corporate Governance Code 2002 in the light of Regulatory Impact Assessment (RIA) framework and its enforcement and application in Pakistan in order to understand the dynamics of public decisionmaking and assess the efficacy of the regulation policy of SECP in the arena of corporate governance. The main objective of this paper is to study the method of framing the Corporate Governance Code 2002 and assess its effectiveness as well as its compatibility with international norms and guidelines. It uses RIA approach, which is being increasingly applied in both the developed and developing countries, in order to explain the process of assessing costs and benefits of a new or an existing regulation. In doing this, we use two types of questionnaires. The first type of questionnaire was used for the structured interviews with the key stakeholders for critically reviewing the process of formulating the Code. The second type of questionnaire was used to assess the extent and degree of implementation of the Code on the listed companies. The analysis shows that though the listed companies are gearing themselves up to adopt the Code, there are some constraints, and reservations about the way it was drafted and implemented. The paper concludes that the policy makers should try to apply RIA framework more rigorously for ensuring greater accountability of the regulatory actions as well as improving regulatory transparency.