Allied Bank

This statement is being presented to comply with the terms of the Code of Corporate Governance as contained in Prudential Regulation No. G-1, and Listing Regulations of Karachi, Lahore & Islamabad Stock Exchanges Ltd. for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of Corporate Governance.

The Bank has adopted the Code of Corporate Governance and applied the principles contained in the Code in the following manner:

• The directors have confirmed that none of them is serving as a director in more than seven listed companies including the Bank.
• The Bank encourages representation of independent directors on its Board of Directors. At present, the Board comprises of 3 Independent Directors, 3 Non-Executive Sponsors’ Directors, 1 Executive Director in addition to the Chief Executive Officer and 1 Government nominee director. Independent directors meets the criteria of independence under clause i(b) of the Code of Corporate Governance.
• All the directors of the Bank have confirmed that they are registered tax payers and none of them has defaulted in payment of any loan to a banking company, a DFI and NBFC.
• Last Election of the Directors of the Bank was held on August 23, 2012 for a next term of three years.
• The Bank has adopted a “Code of Conduct” and disseminates the same.
• The mission / vision statement, overall corporate strategy and significant policies have been approved by the Board. The Bank maintains a complete record of the particulars of significant policies along with the dates on which these were approved or amended.
• All the powers of the Board have been duly exercised and decision on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO, CFO, Head of Internal Audit and the Company Secretary are taken by the Board.
• Related party transactions were carried on “Arm’s Length Basis” in accordance with the Related Party Transaction Policy and placed before Audit Committee of the Board and Board of Directors for their approval.
• The meetings of the Board were presided over by the Chairman. The Chairman of the Board is a non-executive director. The Board met at least once in every quarter and written notices along with agenda and working papers were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.
• Appropriate arrangements were made for Orientation of Directors to acquaint them with their duties and responsibilities. Pakistan Institute of Corporate Governance (PICG) had awarded six of the Board members title of
  Certified Director. Whereas two directors (GoP Nominee) are exempt from such course on account of the experience and qualification and one director is in process of completion of course. The Bank also encourages participation of members of Board to attend seminars / workshops conducted by various forums.
• The Directors’ Report for the year ended December 31, 2012 has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed.
• The financial statements of the Bank were duly endorsed by the Chief Executive Officer and Chief Financial Officer before their approval by the Board.
• The Directors, Chief Executive Officer and Executives do not hold any interest in the shares of the Bank other than that disclosed in the pattern of shareholding.
• The Bank has complied with all the corporate and financial reporting requirements of the Code.
• The Board has formed an Audit Committee which comprises three members; and Chairman of the Committee and members are independent directors.
• The meetings of the Audit Committee are held at least once in every quarter, prior to the approval of interim and the annual financial statements of the Bank as required by the Code.
• The Board has approved the Charter of the Audit Committee.
• The Board has formed Human Resource & Remuneration Committee which comprises four members including the CEO; the Chairman of the Committee is an independent director.
• The Board has setup an effective and independent internal audit group.
• The statutory joint auditors of the Bank have confirmed that they have been given a satisfactory rating under the Quality Control Review Program of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Bank and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on Code of Ethics as adopted by the Institute of Chartered Accountants of Pakistan.
• The statutory joint auditors or the persons associated with them have not been appointed to provide services other than approved services and the auditors have confirmed that they have observed IFAC guidelines in this regard.
• We confirm that all other material principles contained in the Code have been complied with.

On behalf of the Board:
Khalid A. Sherwani
Chief Executive Officer
Place & Date: Lahore, February 14, 2013