wes gimost like a college reunion, though a totally unexpected, unplanned and unforeseen one. The seven friends met after fifteen years with no idea that they were ing to meet each other at this spot and have such an important common.ground to taik about. Pasheed, Afzal, labal, Naseem, Basit, Omar and Wahid were in the same class at Hgiley's College of Commerce Lahore's B Com batch that graduated in 1984. They all esed with flying colors and went back to their home towns, except Basit who was from Lahore. They remained in touch for a short while but gradually lost contact with ecch other. And now, all of sudden all seven of them met at this meeting which connected them with a common cause. When they were at college they used to be very close friends. In fact they were so close that they had coined a name for their group: RAINBOW. This had been cleverly thought of by Wahid who was the poetic type among the group. RAINBOW carried the initicis of all the seven friends and also reflected the cause of their association. They were friends, but each had his own personality (or colors). Rasheed had joined dn investment bank after graduation and was now Executive Vice President with responsibilities for investments in equities. Afzal had joined his father's family business in Faisalabad, a spinning mill. However, recently his family had acquired a significant interest in a chemicals company, though their holding was not sufficient to get a person elected on that company's board. Iabai was now working with a brokerage firm based in Karachi that specialized in issuing analysis reports on the financial performance and position of quoted companies. He also did some investment in shares on his own account. Naseem worked in a newspaper and was its business editor. He too had considerable interest in financial reports of listed companies and personally held some anares in certain companies. Basit was now a director with Chaudhary Chemicals Ltd, one of the major chemical companies in the country specializing in production of vanous industrial and household use chemicals. His family owned 52% of the shares of ot his father was the chairman while Basit served as Director Finance and chaiman of t Audit Committee. Omar was working for an insurance company that owned 7.2% be v ssued shares of CCL, As General Manager Finance of the insurance company, he was looking after its investments, particularly in listed companies. Wahid, the poet among the group, had no real interest in things like investments or shares. However, he had come to this meeting as a proxy of his cousin who held 1.8% of the issued shares of CL. It was no coincidence that this cousin was his employer who was running a fairly popular business magazine from Islamabad. 4 TH The friends met after fifteen years, at the annuai generci meeting of the sharencicer Chaudhary Chemicais Ltd heid in Lahcre on 22 March 2010 to consider the ahnu financial statements for the year ended 31 December 2009. For some reason, the chairman of the company, Basit's father, was held up elsewhere. This delayed the and also provided an opportunity to old friends to have a reailly friendly chit chat toid the friends that his father was running CCL in an autocratic and old fashioned wCI which in his opinion, was hampering the growth of the company. In his words. father is sacrificing long term beneits for the sake of petty immediate benefits", Bo wanted a truly corporate cuiture at the company which he felt could come oniyi there were professional, truly independent non-executive directors on the board, Th was some thing his father would never let happen. 4 Chapter 3: THE SHAREHOLDERS The friends just smiled. They reaiized that between the six of them (i.e. exciuding Basil they had encugh votes to put a nominee on the board of the company. At the same time, Rasheed and Omar promised that they wil get their respective employers (the investment bank and insurance company) to exert pressure on CCL board to improve its governance. Azai offered to gradually increase his sharehoiding in COCL and to try to become a vocal shareholder and maybe a regular director on its board. Iabal Naseem and Wahid undertook to use their pens for bringing about a positive changen the conduct of CCL's board. BOARD AS THE PR The shareholders but does not ow Directors whose group. This is the focus of good go have an opportu at large) can exe to not only prote controlling share QUESTIONS FOR DISCUSSION 1. What role is each of the rainbow friends playing? 2. Can these friends bring a significant change in the governance of CCL? How? 3. Would you call Rainbow a shareholders' activist group? Why? It is now widely o 4. Which of the friends will, in your opinion, be most effective? Why? a company be good ar performance capital, bett the board stakeholder company's affordable 68