STATEMENT OF COMPLIANCE

WITH LISTED COMPANIES

(CODE OF CORPORATE GOVERNANCE) REGULATIONS, 2019
M/s. Arif Habib Limited (‘the company”) has complied with the requirements of the Listed Companies (Code of Corporate
Governance) Regulations, 2019 (‘the Regulations’) in the following manner:
1. The total number of directors are 7 as per the following:
a. Male: 6 members
b. Female: 1 member
2.The composition of board is as follows:
Category Names
a) Non-Executive Directors: Mr. Zafar Alam
Dr. Muhammad Sohail Salat
Mr. Muhammad Haroon
Mr. Mohsin Madni
Ms. Sharmin Shahid
Mr. Syed Muhammad Manzoor Raza (incoming Director)
Ms. Nida Ahsan (Outgoing Director)
b) Executive Director: Mr. Muhammad Shahid Ali Habib
c) Female Director: Ms. Sharmin Shahid
3. The directors have confirmed that none of them is serving as a director on more than seven listed companies,
including this company.
4. The company has prepared a Code of Conduct and has ensured that appropriate steps have been taken to
disseminate it throughout the company along with its supporting policies and procedures.
5. The board has developed a vision/mission statement, overall corporate strategy and significant policies of the
company. A complete record of particulars of significant policies along with the dates on which they were
approved or updated / amended has been maintained by the company.
6. All the powers of the board have been duly exercised and decisions on relevant matters have been taken by
board/ shareholders as empowered by the relevant provisions of the Companies Act, 2017 (‘the Act’) and the
Regulations.
7. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the
board for this purpose. The board has complied with the requirements of Act and the Regulations with respect
to frequency, recording and circulating minutes of meeting of board.
8. The board of directors have a formal policy and transparent procedures for remuneration of directors in accordance
with the Act and these Regulations.
9. The company stands complied with the requirement of having all the directors of the board Director’s Training Program
(DTP) certified as prescribed under the sub clause 1(i) of regulation no. 19 of the Regulations as out of total seven (7)
directors, the total number of certified directors of the Company stands five (5) and one (1) of the director meets the
exemption requirement of the DTP and the remaining one (1) newly appointed director will attain DTP certification
in the year FY2025 well before the period of one year from date of his appointment as director.
10. The board has approved appointment of CFO, Company Secretary and Head of Internal Audit, including their
remuneration and terms and conditions of employment and complied with relevant requirements of the Regulations.
11. CFO and CEO duly endorsed the financial statements before approval of the board.
12. The board has formed committees comprising of members given below:
a) Audit Committee
Dr. Muhammad Sohail Salat Chairman
Mr. Muhammad Haroon Member
Mr. Mohsin Madni Member

55 AHL Annual Report | 2024

b) HR and Remuneration Committee
Dr. Muhammad Sohail Salat Chairman
Mr. Muhammad Shahid Ali Habib Member
Mr. Muhammad Haroon Member
Ms. Nida Ahsan Member
c) Risk and Compliance Committee
Dr. Muhammad Sohail Salat Chairman
Mr. Muhammad Haroon Member
Mr. Mohsin Madni Member
13. The terms of reference of the aforesaid committees have been formed, documented and advised to the committee
for compliance.
14. The frequency of meetings of the committee were as per following:
a) Audit Committee Four quarterly meetings were held during the financial year ended June 30,
2023.
b) HR and Remuneration Committee Three meetings were held during the financial year ended June 30, 2023.

c) Risk and Compliance Committee Two biannual meetings were held during the financial year ended June 30, 2024.

15. The board has set up an effective internal audit function who are considered suitably qualified and experienced
for the purpose and are conversant with the policies and procedures of the company.
16. The statutory auditors of the company have confirmed that they have been given a satisfactory rating under
the quality control review program of the ICAP and registered with Audit Oversight Board of Pakistan, that
they and all their partners are in compliance with International Federation of Accountants (IFAC) guidelines
on code of ethics as adopted by the ICAP and that they and the partners of the firm involved in the audit are
not a close relative (spouse, parent, dependent and non-dependent children) of the Chief Executive Officer,
Chief Financial Officer, Head of Internal Audit, Company Secretary or Director of the Company;

17. The statutory auditors or the persons associated with them have not been appointed to provide other services
except in accordance with the Act, these regulations or any other regulatory requirement and the auditors have
confirmed that they have observed IFAC guidelines in this regard.
18. We confirm that all requirements of the Regulations 3, 6 7, 8, 27, 32, 33 and 36 of the Regulations have been
complied with except as stated below:

The company currently has two elected independent directors out of a total of seven directors on the Board.
Both independent directors possess the requisite competencies, skills, knowledge, and experience to competently
discharge their duties in accordance with applicable laws and regulations, thereby fulfilling the necessary requirements
for their roles. However, following the completion of their three consecutive terms, their independence has been
impaired and therefore, Audit Committee is not being chaired by an independent director. In light of this, the
company intends to elect new independent directors by the end of December 2024.

19. We confirm that all other requirements of the Regulations have been complied with except as explained below:

As per the Regulation 10A, the Board is responsible for governance and oversight of sustainability risks
and opportunities and, for this purpose, is required / encouraged to take a number of measures including,
in particular, implementation of policies to promote diversity, equity and inclusion (DE&I); taking steps
to proactively understand and address the principal as well as emerging sustainability risks and opportunities;
ensuring that the Company’s sustainability and DE&I related strategies, priorities and targets as well as
performance against these targets are periodically reviewed and monitored; and establishment of
dedicated sustainability committee having at least one female director, or assignment of additional
responsibilities to an existing board committee.

Since the said requirements have been recently introduced vide S.R.O. 920 (I)/2024 dated June 12,
2024, as of the reporting date, the Company was yet in the process of setting up the requisite policies,
procedures and processes to address the sustainability risks and opportunities and, accordingly, expects
to ensure compliance with all of the above new requirements in due course of time.

AHL Annual Report | 2024 56

 For the requirement that the position of Chief financial officer and Company secretary has been held by
the same person, as the Listed Companies (Code of Corporate Governance) Regulations, 2019 (‘Regulations”)
allowed the Companies to either comply or explain the reason otherwise. Therefore, the Company has
adopted explanation approach as the management is of the view, that the current CFO & Company Secretary
is suitably qualified and professionally capable to act and fulfill the duties and responsibilities of both the
roles. In addition, it is also a cost-effective measure that is in the better interest of the shareholders of the
Company, therefore hiring a separate person for both position is not feasible. However, the Company
shall create a separate position of a Secretary as soon as such a demand appears in our operations.

The company currently has two elected independent directors out of a total of seven directors on the
Board. Both independent directors possess the requisite competencies, skills, knowledge, and experience
to competently discharge their duties in accordance with applicable laws and regulations, thereby fulfilling the
necessary requirements for their roles. However, following the completion of their three consecutive
terms, their independence has been impaired and therefore, Human Resource Committee is not being
chaired by an independent director. In light of this, the company intends to elect new independent directors by
the end of December 2024.

The board currently includes individuals with extensive expertise in the areas of nominations. As such, the
immediate formation of separate committees is not deemed necessary at this stage, as the board is fully
capable of managing these matters effectively without a formalized committee structure. However,
recognizing the increasing need for a dedicated sub-committee in the future, we intend to establish this
committee when the governance framework evolves and the demand for more structured oversight
grows.

On behalf of the Board of Directors

Zafar Alam
Chairman

October 30, 2024

Karachi

57 AHL Annual Report | 2024

INDEPENDENT AUDITOR’S REVIEW REPORT
To the members of M/s. Arif Habib Limited

REVIEW REPORT ON THE STATEMENT OF

COMPLIANCE CONTAINED IN LISTED
COMPANIES
(CODE OF CORPORATE GOVERNANCE) REGULATIONS, 2019

We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of
Corporate Governance) Regulations, 2019 (the Regulations) prepared by the Board of Directors of
Arif Habib Limited (the Company) for the year ended June 30, 2024 in accordance with the requirements
of regulation 36 of the Regulations.

The responsibility for compliance with the Regulations is that of the Board of Directors of the Company.
Our responsibility is to review whether the Statement of Compliance reflects the status of the Company’s
compliance with the provisions of the Regulations and report if it does not and to highlight any
non-compliance with the requirements of the Regulations. A review is limited primarily to inquiries
of the Company’s personnel and review of various documents prepared by the Company to comply
with the Regulations.

As a part of our audit of the financial statements we are required to obtain an understanding of the
accounting and internal control systems sufficient to plan the audit and develop an effective audit
approach. We are not required to consider whether the Board of Directors’ statement on internal
control covers all risks and controls or to form an opinion on the effectiveness of such internal controls,
the Company’s corporate governance procedures and risks.

The Regulations require the Company to place before the Audit Committee, and upon recommendation
of the Audit Committee, place before the Board of Directors for their review and approval, its related
party transactions. We are only required and have ensured compliance of this requirement to the
extent of the approval of the related party transactions by the Board of Directors upon recommendation
of the Audit Committee.

Based on our review, nothing has come to our attention which causes us to believe that the Statement
of Compliance does not appropriately reflect the Company’s compliance, in all material respects,
with the requirements contained in the Regulations as applicable to the Company for the year
ended June 30, 2024.

Further, we highlight below the instances of non-compliance made by the Company with certain
requirements of the Code as stated in paragraphs no. 2, 18 and 19 of the Statement of Compliance:

AHL Annual Report | 2024 58

 S. No. Nature of the Paragraph No. Description of the Non-Compliance
Requirement
As per Regulation no. 06 of the Regulations, a listed company
shall have at least two or one-third members of the Board of
Directors (‘the Board’), whichever is higher, as independent
directors. In this relation, the proviso to Section 166(2) of
the Companies Act, 2017 lists down the various circumstances
in which a director is not considered as independent and
goes on to state that, if a director has served on the Board
for more than three consecutive terms from the date of his
first appointment, he shall not be regarded as an independent
director.

In its last elections of directors held on October 28, 2023,

Mr. Zafar Alam and Dr. Muhammad Sohail Salat were elected
as independent directors notwithstanding the fact that they
had already served on the Board for three consecutive
terms though they were no longer eligible for election as
(1) Mandatory 18 independent.

Furthermore, in terms of the Regulation no. 27(1) of the

Regulations, the Audit Committee shall comprise of three
members at least one of whom shall be an independent
director. In addition, the said committee shall also be chaired
by an independent director. However, since the Audit Committee
of the Company is chaired by Dr. Muhammad Sohail Salat,
this was hence also in contravention of the requirements of
the Regulation 27(1).

In this relation, as stated in paragraph 18 of the Statement of

Compliance, the Company intends to rectify the above
non-compliances by appointing new independent directors
on the Board by the end of December 2024.

As per the Regulation 10A, the Board is responsible for

governance and oversight of sustainability risks and opportunities
and, for this purpose, is required / encouraged to take a
number of measures including, in particular, implementation
of policies to promote diversity, equity and inclusion (DE&I);
taking steps to proactively understand and address the
principal as well as emerging sustainability risks and opportunities;
ensuring that the Company’s sustainability and DE&I related
strategies, priorities and targets as well as performance
Explanation for against these targets are periodically reviewed and monitored;
(2) non- compliance 19 and establishment of dedicated sustainability committee
is required having at least one female director, or assignment of
additional responsibilities to an existing board committee.

Since the said requirements have been recently introduced

vide S.R.O. 920 (I)/2024 dated June 12, 2024, as of the
reporting date, the Company was yet in the process of
setting up the requisite policies, procedures and processes
to address the sustainability risks and opportunities and,
accordingly, expects to ensure compliance with all of the
above new requirements in due course of time.

59 AHL Annual Report | 2024