PSX seeks change in law to indemnify staff against legal repercussions

• Pakistan Stock Exchange says various stock exchanges in other countries have indemnification clause available in their respective regulatory frameworks.
• PSX believes it is important laws governing it should have an indemnification clause for the protection of its directors and officials.
• Stock exchange regulator also seeking powers to relax consequential actions for listed companies in case of non-compliance.

KARACHI: The Pakistan Stock Exchange (PSX) wants to indemnify its directors and officials against any loss and liability through a legal change, which is a demand similar to what the State Bank of Pakistan is seeking, reported The News on Wednesday.

“PSX explored international practices and found that various stock exchanges in other countries have [an] indemnification clause available in their respective regulatory frameworks,” the PSX said. “Accordingly, PSX is proposing to insert an indemnity clause in PSX regulations.”

The frontline regulator wants to ensure that investors and all other stakeholders, in general, are protected.

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It interacts with different regulatory authorities and agencies, listed companies and brokers and takes enforcement actions against non-compliant regulated persons.

Because of its work, PSX believes it is important that laws governing it should have an indemnification clause for the protection of its directors and officials.

“The exchange, its directors including members of the committees constituted by the board, officers, employees and members of the arbitration panel shall not be liable to, and shall be indemnified and saved harmless at all times by regulated persons and/or the exchange, as the case may be, from and against any loss, claim, liability, damages, costs, charges, expenses,” said the PSX.

The regulator of the stock exchange is also seeking powers to relax consequential actions, including suspension in trading of shares and placing the company in defaulter segment, on a listed company in case of non-compliance.

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The regulator suggests that relaxation can be granted for a maximum of 60 days at once, which may further be extended if the relaxation is considered to be in the best interest of the shareholders/investing public. However, this will be subject to the company demonstrating improvement from the last reported progress towards the rectification of causes of its non-compliance.

The proposal by the PSX comes after the State Bank of Pakistan proposed indemnification of its employees against inquiry or investigation by the National Accountability Bureau or Federal Investigation Agency under proposed amendments into the central bank law.