ICSB Journal (Apr-Jun) 2012 by ICSB Bangladesh

Volume : XIV

Issue : 2

April - June 2012

NATIONAL

BUDGET 2012-13

Institute of Chartered Secretaries of Bangladesh A Statutory Body Under an Act of Parliament

CONTENTS Institute of Chartered Secretaries of Bangladesh (ICSB) Institute of Chartered Secretaries of Bangladesh (ICSB), established under an Act of Parliament i.e. Chartered Secretaries Act 2010, is the only recognized professional body in Bangladesh to develop, promote and regulate the profession of Chartered Secretary in Bangladesh. The affairs of the Institute of Chartered Secretaries of Bangladesh (ICSB) are managed by a Council consisting of thirteen elected members and five nominees of the Government. The major contribution of a Chartered Secretary is in the corporate sector. Chartered Secretary is a requisite qualification to become a Company Secretary. Company Secretary is an important professional, aiding the efficient management of the corporate sector. Company Secretary is a statutory officer under the Companies Act 1994. According to Securities and Exchange Commission (SEC) all the listed companies should have a Company Secretary. Company Secretary is the compliance officer of the company, who has to interact, coordinate, integrate and cooperate with various other functional heads in a company.

THE COUNCIL : 2010-2013 Mohammad Sanaullah FCS

: President

Md. Shahid Farooqui FCS

: Senior Vice President

M. Naseemul Hye FCS

: Vice President

Md. Monirul Alam FCS

: Treasurer

Mohammad Asad Ullah FCS Itrat Husain FCS N.G.Chakraborty FCS Md Abdus Salam FCS Safiar Rahman FCS Md. Selim Reza FCS

: Councilor

THE COUNCIL 2010-2013

EDITORIAL

FROM THE PRESIDENT

INSTITUTE NEWS

ARTICLES 15 29 31 35 38

: Councilor : Councilor : Councilor : Councilor : Councilor

A.K.M Mushfiqur Rahman FCS : S. Abdur Rashid FCS : Gopal Chandra Debnath FCS : Md. Shawkat Ali Waresi Joint Secretary, GoB : Moinul Islam Joint Secretary, GoB : Nasreen Begum Joint Secretary, GoB : Prof. Md. Helal Uddin Nizami Member, SEC : Ahmedur Rahim Registrar, RJSC, GoB :

EDITORIAL BOARD

Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor

Salient Features of Finance Act, 2012 - Income Tax Portion Ranjan Kumar Bhowmik FCMA Budget FY2012-13: Expectations from GRB Perspective Mamunur Rashid Reflections on ADP 2013 KMSA Kaiser Corporate Governance Guidelines 2012: A Time-befitting Step of the SEC Hossain Sadat FCS Disclosure Practices of Accounting Policies - A Study of Selected Cement Companies Dr. Md. Shakawat Hossain

Knowledge Bank Compiled by Itrat Husain FCMA, FCS

Bangladesh Secretarial Standards -1

Bangladesh Secretarial Standards -2

107 Kakrail, 1st Floor G.P.O. Box : 3100, Dhaka-1000, Bangladesh

Notifications

Phone : 880 2 934 9578 & 933 6901 Fax : 880 2 933 9957 E-mail : secretary@icsb.edu.bd icsb@icsb.edu.bd Web : http://www.icsb.edu.bd

The views and opinions expressed in the articles published in this Journal are those of the writers only Published by the Institute of Chartered Secretaries of Bangladesh (ICSB)

Editor Itrat Husain FCS Members Mohammad Sanaullah FCS M. Naseemul Hye FCS Kazi Ashiqur Rahman FCS Hossain Sadat FCS

Design & Production

(A Concern of Tradex BD)

Subscription Rate For Students : per copy Tk. 100; per year Tk. 350 Others : per copy Tk. 150; per year Tk. 560

The Council

THE COUNCIL : 2010-2013

President Mohammad Sanaullah FCS

Senior Vice President Md. Shahid Farooqui FCS

Vice President M. Naseemul Hye

Immediate Past President & Councilor Past President & Councilor Mohammad Asad Ullah FCS Itrat Husain FCS

Councilor Safiar Rahman FCS

Councilor Md. Shawkat Ali Waresi Joint Secretary, GoB

Councilor Md. Selim Reza FCS

Treasurer Md. Monirul Alam

FCS

Councilor N.G. Chakraborty FCS

Councilor Md Abdus Salam FCS

Councillor A. K. M. Mushfiqur Rahman FCS

Councilor S. Abdur Rashid FCS

Councilor Gopal Chandra Debnath FCS

Councilor Md. Ekhlasur Rahman

Councilor Nasreen Begum

Councilor Prof. Md. Helal Uddin Nizami

Joint Secretary, Finance Division, MoF

Additional Secretary, GoB

Member, SEC

Councilor Ahmedur Rahim

Secretary to the Council

FCS

THE CHARTERED SECRETARY APRIL - JUNE 2012

Dr. A. K. M. Delwar Hossain

Registrar, RJSC, GoB

EDITORIAL NATIONAL BUDGET 2012-2013 What is a budget? It is a plan for a specified time in the future, generally expressed in financial terms. The principles of a national budget are similar to that of a commercial organization.

The tax net has to be widened without imposing any additional levies. The devaluation of the Taka has to be checked so that import costs do not rise to ensure stability of the retail prices of goods.

The annual budget of the government is a routine annual exercise outlining the sources of income and allocation for expenditure. The annual development plan is a part of the budget. The deficit is financed from external aid and borrowing.

There has to be a marked improvement in the services provided by the government agencies, e.g. WASA. For this sufficient funds must be allocated. Employment generation schemes must be taken up seriously to reduce unemployment.

The government has announced the budget for the fiscal year 2012-2013 recently. As usual there have been comments and criticisms. We will only present some observations without getting into a detailed analysis.

Growth has been achieved mainly through private sector led initiatives. This trend is likely to continue. The government should therefore ensure that suggestions of the private sector are evaluated and considered seriously. More incentives can also be considered for the exporters.

We have seen year after year that funds remain unutilized and ultimately some funds are returned to the donor agencies. This situation is totally unacceptable and can be avoided if proper planning and monitoring mechanism is initiated. For a poor country like ours proper utilization of funds is imperative! Government has developed a habit of borrowing. This has to be reduced to ensure stability in the banking sector. A growth of 7.2 % is achievable. But in order to achieve success many related issues have to addressed on a priority basis. Significant improvement has to be made in the Energy Sector, improvements and developments have to be ensured in the infrastructure, the deteriorating law and order situation has to be handled with an iron hand, inflation has to be controlled and brought down to a much lower level of around 7 %, purchasing power of the ordinary people must not be eroded, etc.

Stress must be given on generation and mobilization of internal resources and gradually reduce the dependence on borrowing from banks. Sources of black money should be identified and steps initiated to reduce it and bring it into the formal economy. Prior to the implementation of the ADB there should be a list of priority projects which should be followed methodically with close monitoring of costs and progress of implementation. Let us hope that the government will be proactive and achieve its targets through good governance.

Itrat Husain FCMA, FCS Editor

THE CHARTERED SECRETARY APRIL - JUNE 2012

FROM THE PRESIDENT Dear Professional Colleagues, A s ’ S a l a m u A’laikum! I inform all of you with utmost pleasure that our Institute has stepped into its third year on June 16, 2012. It has been an outstanding second year for us and I hope in time we shall only keep on elevating to new standards and not otherwise. Some of the most important issues that ICSB has been dealing with on the second quarter are mentioned as follows. Second Anniversary of ICSB The Members of the Institute celebrated its second anniversary on June 16 2012, standing on new platforms of success and sophistication. It was fifteen years ago when the journey was started by ICSMB and after long hurdles and endless pursuits, ICSB had been formed under the Chartered Secretaries Act 2010, following which the Chartered Secretaries Regulations 2011, have been published in the National Gazette, providing fresh standards to our operations. The day was celebrated with an excellent Reminiscing and Tributes to ICSB and its Founder Members, along with a fantastic cultural programme organized by the members of ICSB. ICSB became Full Member of CSIA I am pleased to inform you that ICSB has been elected as a full member of the Corporate Secretaries International

Association (CSIA), with its inclusion in the official website of CSIA. 30th Batch Admissions The admissions for the 30th batch of students for ICSB began from the second half of June 2012. There has been a very high response from professionals and students alike in the collection of forms and enrolling for the examination for admissions. But the prime concern for ICSB remains to maintain quality of education with meritorious students, in order to establish role models of excellence in governance. The admissions have taken place after the completion of the written and oral examinations, and a large number of students have been enrolled for the upcoming session. Workshops and Training Sessions A two days long workshop, a day-long workshop and a few training sessions have been conveyed so far during the second quarter of 2012. The two days long workshop was organized in collaboration with the International Finance Corporation (IFC), on Corporate Governance Board Leadership for Chartered Secretaries. The workshop comprised of distinguished speakers, who discussed various contemporary issues in the relevant topic. An impressive number of members attended this workshop. The Day-long Workshop was based on “Effective Audit Committee” and the most important training session was based upon “Management of Provident Funds”. All training sessions and the workshop received an intense response from various companies from diverse industries, enrolled

THE CHARTERED SECRETARY APRIL - JUNE 2012

From The President

by a very good number of participants. National Convention 2012 I am pleased to inform all of you that the Institute is going to hold its National Convention 2012 and 4th Convocation has been finalized to be held on September 28-29, 2012 at the Bangabandhu International Conference Centre (BICC) at Agargaon, Sher-E-Bangla Nagar, Dhaka. The Council strongly believes that the success of the program depends on the spontaneous participation of the Members, which we have been getting since its inception. In addition, the image of our country will grow further through this Convention. We know that it may be a financial burden sometimes to participate in all programs if frequently arranged. As our Institute is at promotional stage, management development programs should be arranged as many as possible. We are expecting the Hon’ble Finance Minister Mr. Abul Maal Abdul Muhith to attend at the occasion as our Chief Guest. I am also expecting that a good number of participants from the member countries of CSIA and other organizations as well will be attending the Convention.

THE CHARTERED SECRETARY APRIL - JUNE 2012

I would like to thank the concerned committees for working together wholeheartedly for organizing the coming National Convention 2012 and 4th Convocation. Conclusion While concerns are shifting perspective from local to international and global onward, here we are with our second quarterly journal on “National Budget 2012-13”. I surely hope it will provide our readers with diverse information and insight of the various writers about the current budget situation of Bangladesh. Wish you a good read and an excellent Holy Ramadan ahead. Kind Regards,

Mohammad Sanaullah FCS PRESIDENT

Institute News

INSTITUTE ACTIVITIES APRIL - JUNE 2012 The second quarter of 2012 has been full of events, including Internal and External Meetings, Continuing Professional Development Program, Workshop, Training Programs, Celebration of the 2nd Anniversary of the Institute etc. These were as follows: MEETINGS INTERNAL Council Meeting The 12th Meeting of the Council of the Institute of Chartered Secretaries of Bangladesh was held on Tuesday, June 12, 2012. The Meeting was presided over by Mohammad Sanaullah FCS, President of the Institute. The following important decisions were taken in the Meeting: • The “Guidelines for Good Council Practices” was approved, and thereafter passed for circulation among the Members of the Council; • The Implementation of the Action Plan-2011-12 by different Standing and Sub-Committees were reviewed;

pending with the Government was reviewed; and, • The Second Anniversary of the Institute was decided to be celebrated on Saturday, June 16, 2012. Secretarial Standards Board The first Meeting of the Secretarial Standard Board was held on Tuesday, June 05, 2012, under the Chairmanship of Mohammad Sanaullah FCS. The Chairman stated that this board is rather a special type of board that is neither a Standing nor a Sub Committee. A presentation was made by M. Naseemul Hye FCS on “Secretarial Standards on Meetings of Board of Directors” and “Secretarial Standards on General Meetings”, after which a discussion was held on different aspects of the proposals made in the two standards. Significant decisions were made regarding further reviews and finalization of the Secretarial Standards, the drafts of these standards can be found towards the end of this issue of our journal.

• The reports of the Standing Committees were reviewed and considered; • The Examination Policy of the Institute was approved; • The Secretarial Practice Guideline for Issuing Private Practice Certificate were considered and approved; • The date for the Annual General Meeting (AGM) of the Institute was fixed to be on Saturday, July 28, 2012; • The theme of the National Convention 2012 was decided to be “Modernization of the Companies Act: Enhancing Good Governance”; • The Program and Budget for the National Convention 2012 and 4th Convocation was reviewed; • The progress of the different issues

Council Meeting in Progress

Faculties Meeting The Institute organized a Faculty Members’ Meeting on Saturday, May 12, 2012, at the Institutes own premises, presided over by the Chairman of the Education Committee Md. Shahid Farooqui FCS. Members of the Education Committee and most of the adjunct

THE CHARTERED SECRETARY APRIL - JUNE 2012

Institute News

faculty members attended the meeting, where they exchanged their views and made suggestions for the development of the Institute. The Chairman in his speech also highlighted some issues such as the performance of the Faculty Members, timely completion of the courses, maximum use of available logistic support in the class, cooperation and coordination among the faculties, their professional and ethical standards etc. The meeting was very lively and fruitful and was followed by dinner. MEETINGS EXTERNAL Meeting with the Chairman of National Board of Revenues (NBR) Mohammad Sanaullah FCS, President of the Institute of Chartered Secretaries of Bangladesh (ICSB) made a courtesy call on Dr. Nasir Uddin Ahmed, Chairman, National Board of Revenue at his office on Wednesday, May 23, 2012. Dr. A.K.M Delwar Hossain, Secretary of the Institute accompanied the President during the visit.

Secretaries in the Section 174 (2)(e) and 174 (3) (b) of the IT Ordinance, 1984. During the meeting Syed Aminul Karim, Member (Income Tax Policy) was also present. The Chairman gave a patience hearing to the President and appreciated the activities of the Institute. The Chairman assured of all his possible cooperation towards the Institute by ensuring the inclusion of the profession of Chartered Secretaries in the Income Tax Ordinance. ADMISSION OF THE 30TH BATCH OF STUDENTS The admission notice of the Chartered Secretary (CS) Course of ICSB was published in the major National Dailies from June 03, 2012 to June 12, 2012. The last date for the submission of forms was June 25, 2012. The written test for the admission of the 30th batch of students was held on Friday, June 29, 2012, at the Institutes own premises. Based on the screening system a total of 200 students enrolled in the July to December Session.

The President discussed at length the issues concerning the profession of Chartered Secretary in Bangladesh as well as various activities under taken by ICSB for the development of the Institute.

TRAINING PROGRAM

The President appraised the Chairman, NBR that Chartered Secretaries are professionally qualified in corporate management including Income tax and VAT. In this regard they have the adequate knowledge on Direct and Indirect tax. He also submitted the ICSB Syllabus. Pursuant to Section 19 of the Chartered Secretaries Act 2010 and Regulation 16 of the Chartered Secretaries Regulations 2011, Chartered Secretaries are authorized to have private practice in Taxation.

Institute of Chartered Secretaries of Bangladesh organized this training program from June 9 to June 11, 2012 at the Institutes own training facility. The program was designed for Senior and Mid-Level Executives of Human Resources, Accounts, Finance and Fund Management departments of every public as well as private Company and also NGOs to enable them to be familiar and reoriented with important aspects of the program.

The President requested the Chairman to include the profession of Chartered Secretary as the authorized representatives of their clients before any authority of the NBR by inserting the profession of Chartered

The sessions of the training included the topics – Management of Employee Provident Fund, Workers Participation and Welfare Fund, and Management of Gratuity Fund, followed by a Review Session. The sessions were

THE CHARTERED SECRETARY APRIL - JUNE 2012

Professional Training Program on “Management of Provident Fund, Profit Participation Fund, and Gratuity Fund”

Institute News

conducted by Mohammad Sanaullah FCS, President of ICSB and N E A Shibly, CEO & Chief Consultant of PRO-EDGE ASSOCIATES (Management & HR Consulting).

President along with the Participants at the Workshop for Effective Audit Committee

Training Session in Progress

The significant number of participants was in this three days long training session from renowned National, Multinational corporate level as well as from NGO in different trade like MJL Bangladesh Ltd., Caritas Bangladesh, Epyllion Group, AB Investment ltd., Trust Bank ltd., Power Grid Company of Bangladesh Ltd, Islamic Finance & Investment ltd, Incepta Pharmaceuticals ltd, Agrani Bank ltd, BRAC Bank ltd., Investment Corporation of Bangladesh. WORKSHOP Day-Long Workshop on Effective Audit Committee Institute of Chartered Secretaries of Bangladesh organized a Day-long Workshop on “Effective Audit Committee” on June 09, 2012 at the Training Room of the Institutes facilities. The Workshop had been designed for Audit Committee Members, Directors, Secretary, CFO and Head of Internal Audit of any public as well as private company to enable them to be familiar and reoriented with important aspects of the program. The attendance turned out to be delightful and with professionals from diverse local and Multi-National Companies.

This interactive full day workshop covered the role, responsibilities, and terms of reference for audit committee. The program included the roles of committees, their terms of references and the interplay between the individuals who assemble on them. The committees' contribution towards good governance practice is a major theme, including the corporate governance guidelines prosecuted by the Securities and Exchange Commission in Bangladesh. The Resource Person for the Workshop was Mohammad Sanaullah FCS, President of the Institute. The workshop was divided into five sessions, composed of topics such as Formation of Audit Committees, Role and Functions of Audit Committees, Securities and Exchange Commission Guidelines and Application of Audit Committee, Terms of Reference, Practices of an Audit Committee, and, the Role of the Chair, the Committee and the Executives – Ownership, Accountability and Responsibility. CONTINUING PROFESSIONAL DEVELOPMENT (CPD) PROGRAM A two days long workshop was held under the Continuing Professional Development (CPD) Program of the Institute during April 7 and 8, 2012 at Hotel Ruposhi Bangla, Dhaka. The title of the CPD Program was Corporate Governance Board Leadership for Chartered Secretaries, organized by the Institute of Chartered Secretaries of Bangladesh (ICSB) in collaboration with the International Finance

THE CHARTERED SECRETARY APRIL - JUNE 2012

Institute News

Corporation (IFC). It was attended by a large group of Members of ICSB who are working in reputed listed and non-listed companies as Directors and Company Secretaries in Bangladesh. The program was inaugurated by Mohammad Sanaullah FCS, President of ICSB. Zakiullah Sayeed Munshi, Project Manager at IFC (Dhaka) spoke at the occasion where distinguished speakers discussed various issues relating to Corporate Governance, Board Practices and Procedures, Governance of Strategy and Risk, Corporate Responsibility, Financial Reporting and the Control Environment with special references to Bangladesh in the global perspective. The certificates were distributed among the participants at the closing ceremony by Professor Md. Helal Uddin Nizami, Member, Securities and Exchange Commission (SEC).

secretaries, company secretaries, board secretaries and other governance professionals. • Establish and maintain good relations and exchanges between organizations dedicated to the promotion and practice of secretaryship and/or the promotion of good governance. • Develop and improve their services and professionalism of their members. • Assist in the creation of such organizations in countries or regions in which they do not currently exist. • Promote the growth, development, study and practice of secretaryship and assist their members develop and improve their services and professional standards. • Advocate for good governance through carrying out research, developing standards and raising awareness. • Promote the recognition and influence in respect of secretaryship and its professional practitioners to national governments and their supplementary/ sponsored organizations, international organizations and the global business community.

Participants of the CPD Program with the President

MEMBERSHIP OF CORPORATE SECRETARIES INTERNATIONAL ASSOCIATION (CSIA) The Institute of Chartered Secretaries of Bangladesh recently has been elected as Full Member of the Corporate Secretaries International Association (CSIA). CSIA has been established in order to assist member organizations to: • Promote the professional status of suitably qualified chartered secretaries, corporate

THE CHARTERED SECRETARY APRIL - JUNE 2012

CSIA is an association entered into the commercial register in Switzerland. It is governed by a Council that elects an Executive Committee to manage the operational aspects of running the federation. The Full Members of CSIA are: Australia, Hong Kong, India, Kenya, Malaysia, Nigeria, Singapore, Southern Africa, UK, USA, Zimbabwe, Pakistan and Bangladesh. More details about the Association and its Member countries can be found at the web address of CSIA: http://www.csiaorg.com/

Institute News

ICSB PRESIDENT HONORED BY THE UNIVERSITY OF DHAKA The Accounting Alumni of the Department of Accounting and Information Systems of the University of Dhaka organized a Reception Program on April 21, 2012, at the Conference Hall of the Faculty of Business Studies (FBS) of the University. The program was held to honor the Presidents of Institute of Chartered Secretaries of Bangladesh (ICSB), along with those of Institute of Chartered Accountants of Bangladesh (ICAB) and Institute of Cost & Management Accountants of Bangladesh (ICMAB).

Alumni, and the Department of Accounting and Information Systems for organizing such a wonderful Reception Program. SECOND ANNIVERSARY OF ICSB The Members of ICSB celebrated its second anniversary on June 16, 2012, at the Senate Bhaban of Dhaka University. There was ample response and cooperation from the members on the beautiful rainy evening, inaugurated with a wonderful reminiscing session by a few council members, followed by a fitting cultural program and a feast of unity. The inauguration of the ceremony was arranged by the Dhaka Regional Chapter. The inauguration began with a recitation from the Holy Qurâ&#x20AC;&#x2122;an by member of the council S. A. Rashid FCS, who then gave an explanation of his recital in Bengali as well.

President at the Reception Program of the University of Dhaka

Mohammad Sanaullah FCS, President of the Institute of Chartered Secretaries of Bangladesh (ICSB) was honored by the Accounting Alumni at the program. Wahiduzzaman Babar, President of the Accounting Alumni, Dr. M. Harunur Rashid, Founder President of the Accounting Alumni, and Begum Khaleda Khanam, Chairman of the Department of Accounting & Information Systems, spoke on the occasion and appraised the activities of ICSB and the President as well. A large number of participants, along with Members of the Accounting Alumni, Faculty Members, and students, were present at the program. The President of ICSB in his speech acknowledged the warm reception given by the Accounting Alumni, requested the inclusion of Chartered Secretary courses in the syllabus of the Business Faculty. He also expressed his gratitude to the Accounting

Dr. A K M Delwar Hossain, Secretary of the Institute, gave his welcome speech to the members present along with a brief history of the birth of ICSB, how it had evolved from ICSMB, being successful in having the enactment of the Chartered Secretaries Act, 2010. He then invited the office bearers and past Presidents to take place an the dais. The Secretary then gave his speech on the current procedures and the operational situation of ICSB, emphasizing on the Instituteâ&#x20AC;&#x2122;s dire need of aid and increased finances from the government; along with the Institutes own campus, which remains to be an issue of supreme significance.

President & other Council Members cutting the cake at the 2nd Anniversary Celebration of ICSB

THE CHARTERED SECRETARY APRIL - JUNE 2012

Institute News

The session for reminiscing was should by the Immediate Past President and member of the Council Mohammed Asad Ullah FCS, who gave a brief history of the Institute, especially to have the Chartered Secretaries Act, 2010, enacted. He spoke of the necessity of a Company Secretary in business organizations, and how this profession does not have conflicts with any other profession in the world, and rather facilitates procedures of all intertwined professionals. The next speech was by Past President Itrat Husain FCS who reminisced about his involvement with ICSMB since the very beginning, how he, along with the twelve other founding members, started their pursuit of having the profession of Company Secretaries acknowledged countrywide. He praised the President Mohammad Sanaullah for all his hard work behind the success with which ICSB stands high at present. He finished his brief speech by thanking all members and others who were present at the ceremony, and by wishing the best for ICSB in its future. Late on a wonderful cake (sponsored by the President) was cut by the founding members present and office bearers in order to mark the second anniversary. All members and guests were served with refreshments at this point as well. Next was the speech by N. G. Chakraborty FCS. He gave everyone an insight behind his pursuit in life to become a Chartered Accountant, and from there on to become a Chartered Secretary, and his whole story was filled with humors from the past that kept everyone lively, and before finishing his speech he recited an extraordinary poem for everyone. After that Monirul Alam FCS, Member of the council and also the Treasurer of ICSB, came up with his short speech. He acknowledged those members who have put themselves through everything that came their way in order to establish ICSB. The next speech was delivery by Vice President of ICSB, Naseemul Hye FCS. He

THE CHARTERED SECRETARY APRIL - JUNE 2012

mused over being a student of the very first batch of ICSMB, and how proud it made him feel as little did he know about the corporate world before being a part of the Institute. He accentuated on how the course had aided his transformation into a corporate executive, and how highly he is respected and acknowledged worldwide being a Chartered Secretary. He expressed his hopes to take ICSB far ahead with cooperation from everyone else. Following this, the Senior Vice President Shahid Farooqui FCS paid his respect to the founder members and acknowledged their achievements over the years, for which ICSB is where it stands today. The President Mohammad Sanaullah FCS, who was also the Chief Guest of the ceremony, gave his speech next. He recollected his memories on his personal hardships against institutes and organizations both national and international, in order to establish ICSB with a Chartered Secretaries Act that would be defined separately. He spoke of the pursuit of having the Chartered Secretaries Act passed. In this regard he specially praised Asad Ullah FCS for his exemplary contributions in the enactment of the Chartered Secretaries Act, 2010. The President urged the members to be more cooperative and responsive in the formulation of the Secretarial Standards, and Secretarial Audit. He mentioned that ICSB will be issuing licenses for the Private Practices as per the CS Act and Regulations. He further added the contributions of the Institute in formulation of the new Corporate Governance Guidelines issued by the Securities and Exchange Commission (SEC), and the formation of a new Companies Act, Financial Reporting Council Act, and others as well. The speech session was ended with a vote of thanks by Khandoker Saad Ullah FCS, Chairman, Dhaka Regional Chapter (DRC). An exquisite stage play took place during the cultural program of the ceremony, organized by Naseemul Hye, along with a few other members, followed by a wonderful music

Institute News event and dinner. The stage play named “Janmasutra” received high applauses and great appreciation from the audience. The music event was made more enjoyable by the participation of some of the Members of the Institute. Following the dinner everyone decided to call it a day and end the celebrations of the Second Anniversary of ICSB. Stage play “Janmasutra” in progress

Secretarial Standard Board Chairman Members

Secretary

: President, ICSB : Immediate Past President, ICSB : Member, SEC : Registrar of Joint Stock Companies & Firms : Rep. (Joint Secretary), Ministry of Commerce : Rep. (Joint Secretary), Ministry of Law : Rep. (Joint Secretary), Ministry of Finance : Senior Vice President, ICSB : Vice President, ICSB : Secretary of the Institute

Formation of Organizing Committee for the 4th National Convention 2012 & 4th Convocation ORGANIZING COMMITTEE

FUNCTIONAL COMMITTEES

Chairman Co-Chairman Members

1. Delegate Committee

: Mohammad Sanaullah FCS : Md. Asad Ullah FCS : Itrat Husain FCS : Md. Shahid Farooqui FCS : M Naseemul Hye FCS : Md. Monirul Alam FCS : Shawakat Ali Waresi, JS, : Prof. Helal Uddin Nizami Member, SEC : Nasreen Begum, Additional Secretary : Bijon Kumar Baishya, Registrar, RJSC Member Secretary : Dr. A K M Delwar Hossain

Chairman Co-Chairman Members

: Mohammad Sanaullah FCS : N G Chakraborty FCS : Muzaffar Ahmed FCS : A K A Muqtadir FCS : Sarwar Azam Khan FCS : Shaikh Mohammadullah FCS : Md. Nazrul Islam FCS : Md. Abdus Salam Khan FCS : Sharmi Noor Nahar ACS : Mohammad Bul Hassan FCS : Abu Hanif Bari ACS : Abdullah AL- Mamun ACS Member Secretary : Dr. A K M Delwar Hossain

THE CHARTERED SECRETARY APRIL - JUNE 2012

Institute News

2. Fund Raising & Convocation Committee

5. Public Relations Committee

Chairman Co-Chairman Members

Chairman Co- Chairman Members

: Md. Asad Ullah FCS : Md. Shahid Farooqui FCS : Mohammad Sanaullah FCS : M Naseemul Hye FCS : Md. Monirul Alam FCS : Safiar Rahman FCS : Mushfiqur Rahman FCS : Md. Azizur Rahman FCS : M. Nurul Alam ACS : Hossain Sadat FCS : A K M Kamrul Islam ACS : Md. Bul Hassan ACS : Md. Kawsar Alam ACS : Iqbal Chowdhury ACS : Khandaker Habibuzzaman ACS : J Q M Habibullah ACS : Mizanur Rahman ACS : Sorwar Alam ACS : Hossain Ahmed Bhuiyan ACS Member Secretary : Gopal Chandra Debnath ACS

3. Event Management and Cultural Committee Chairman Co-Chairman Members

: Itrat Husain FCS : Md. Selim Reza FCS : Sadhan Chandra Das FCS : Md. Sabir Ahmed FCS : Md. Atiqur Rahman Talukder ACS : Nur-E-Alam ACS : ATM Tahmiduzzaman ACS : Md. Ruhan Miah ACS : Shahidul Islam ACS : Hasanur Rahman Rakib ACS : Israt Jahan Rimi ACS Member Secretary : Myeen Uddin Mazumder ACS

4. Reception & Registration Committee Chairman Co-Chairman Members

: Md. Monirul Alam FCS : Shamsudduha A. Rashid ACS : Md. Bazlur Rahman Sikder FCS : Mohammed Mohashin FCS : Aviram Bhowmik ACS : Imrul Ahmed ACS : Md. Ataur Rouf ACS : Mohammad Zubair Uddin Bhuiyan ACS : Sarwar Jahan Tarafder ACS : Syed Amimul Ihsan ACS : Md. Arif Hossain ACS Member Secretary : Salim Ahmed FCS

THE CHARTERED SECRETARY APRIL - JUNE 2012

: Md. Shahid Farooqui FCS : Md. Abdus Salam FCS : Md. Enamul Hye FCS : Mohd. Abdur Rahman FCS : Md. Hasan Kabir ACS : Raja Mahmudul Haque ACS : Md. Mazharul Islam ACS : Jashim Uddin ACS : Lorens Shamol Mollick ACS : Mokammel Hossain ACS : Mohammad Asadur Rahman ACS : Md. Hurmot Shah ACS Member Secretary : Mizanur Rahman ACS 7. Convocation, Gift & Presentation Committee Chairman Co-Chairman Members

: M Naseemul Hye FCS : Safiar Rahman FCS : Mohammad Sanaullah FCS : Nazmul Karim FCS : Tauhidul Ashraf FCS : Khandoker Saad Ullah FCS : Md. Mahbubur Rahman ACS : Md. Munirul Hoque ACS : Nazmun Nahar ACS Member Secretary : Md. Ruhan Miah ACS 8. Souvenir Committee Chairman Co-Chairman Members

: Itrat Husain FCS : M Naseemul Hye FCS : Mohammad Sanaullah FCS : N G Chakraborty FCS : Akhter Matin Chowdhury FCS : Hossain Sadat FCS : Md. Bul Hassan ACS : Md. Hasan Imam ACS Member Secretary : Kazi Ashiqur Rahman FCS

SUCCESS GREETINGS A-0182 Mohammad Zubair Uddin Bhuiyan ACS has recently been appointed as Deputy Director of Capital Market Regulatory Reforms and Compliance Department (CMRRCD) of Securities and Exchange Commission (SEC).

Article

SALIENT FEATURES OF FINANCE ACT, 2012 - Income Tax Portion Ranjan Kumar Bhowmik FCMA

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

The writer is the Commissioner of Taxes, Mymensingh

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

BUDGET FY2012-13: EXPECTATIONS FROM GRB PERSPECTIVE Mamunur Rashid

The

impact or result has been achieved in terms of reducing discrimination and capitalizing on the potentialities that had opened up through the allocations made for women's advancement in the previous year's budget. Without that, we cannot understand or justify which way we are going. In such cases, programmes or activities undertaken in a year's budget are nothing but scattered initiatives and cannot make expected impact on identified goals or targets. Keeping that in mind, women and human rights organizations have been demanding establishment of a national-level gender budget monitoring cell, which really needs to be recognized by the government.

This year, the government is going to publish GRB reports of 25 ministries, which is definitely a major boost towards establishing gender equality. However, with these achievements, there arises a need to specify the government's position with regard to monitoring of the programmes taken under GRB. We really need to monitor the impact and changes that have occurred through ongoing programmes as well as interventions taken so far. And if there are any gaps or challenges, we need to take measures to address those. That is because gender responsive budgeting is not just about making allocations for women's advancement and rights, but also about constant monitoring and evaluation. It is particularly so because of the changing issues and challenges facing us. What seems most suitable today might not be the same tomorrow. So we need to change the strategies and approaches at times. On the other hand, as a result of steps taken, there may arise various opportunities and scopes that should be utilized. Keeping these in mind, our specific points for further attention of the government are as follow:

In the backdrop of growing population and reduction of cultivable land, one major challenge Bangladesh is facing is achieving food security. Recently, the government took a bold decision, against the prescription of World Bank and IMF, to give agricultural subsidy. We all know the result -- rice and other crops have grown in abundance this year and Bangladesh is even considering exporting the surplus food grains!

journey towards gender responsive budget (GRB) has gained momentum in recent years. A concrete evidence of government's positive intention to make the budget gender responsive is that a culture of sharing with civil society representatives has started. Sharing and exchange of opinions takes place both before and after the budget declaration. The government now regularly publishes gender budget report as a part of its budget documents. We express our thanks for that. Over the years, the number of GRB reports has increased from 4 (in 2005-06) to 10 (in 2010-11) to 20 (in 2011-12).

Gender budget reports are published with an indication of how much of the allocations given in different sectors will benefit women. But there are no mechanisms to monitor what

Women farmers (though they are still not recognized as farmers) play a huge role -- e.g. in producing different types of food grains on the same piece of land. The budget needs to capitalize on this potentiality. Women need capital, skill and subsidy to able to contribute more effectively in ensuring food security. They also need market management and cold storage facilities to be able to sell their products easily. Strategies to stop intermediaries have to be developed in order to ensure that women farmers obtain fair price of the crops or products they produce. Early marriage, dowry, sexual harassment and domestic violence prevent women from playing an effective role in rural development. This is because gender issues are not considered in the planning and budgeting of local government institutions. As a result,

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

most of the money allocated is spent for physical infrastructural development like bridges, culverts, repairing roads and building construction. Because of lack of directions or policy, local elected bodies and representatives cannot spend the money to address issues that affect women and girls. Special or separate allocations need to be made in the budget so that local government institutions can take effective measures against violence against women. If that can be done, it could also help resolve the debate on the role and responsibilities of the elected women representatives. Bangladesh is recognized as the most affected country when it comes to climate change. Different initiatives have been taken to fight natural disasters and climate change. But we have not seen any specific policy to meet the gender needs and challenges of climate change. It is now widely recognized that women and adolescent girls are victims in this regard. Their sources of income become limited, girls' education get hampered, many women become widows and are abandoned, violence against women multiplies, and elderly women become particularly helpless. All these create a huge barrier against women's rights and advancement, especially in the coastal areas. Women and girls can also be strong actors in addressing climate vulnerabilities. These realities can be addressed only through affirmative action. However, we have not seen any specific programmes in the previous budgets to address climate change from gender perspective. Resource mobilization is an important area when it comes to ensuring sustainable

THE CHARTERED SECRETARY APRIL - JUNE 2012

development and reducing aid dependency in budget planning. So far, the major sources of revenue generation for Bangladesh are foreign exchange, income tax and remittance. One important source, which we have hardly considered with much conviction, is local resource mobilization. In Bangladesh, local resources are controlled by the central government. If local governments had the authority and control to utilize local resources, then they could easily generate the money to meet local needs. In that case, local government bodies could make their own budget to address education, health and other social issues. Government needs to pay serious attention to this huge potentiality. Such an initiative would definitely contribute towards ensuring self-reliance and reducing aid dependency. Bangladesh has made significant progress in ensuring gender responsive budgeting over the last several years. What we need to do now is to capitalize on the prospects created by a series of programmes and interventions to date. It is undeniable that government's positive intention is the key for that. NGOs and civil society can play the role of pressure group or watchdog. We believe that the government will consider these recommendations seriously and urgently. If they are adopted, then another milestone will be set in ensuring equity, equality and social justice.

The writer is Coordinator, GDCC, Steps Towards Development

Article

REFLECTIONS ON ADP 2013 KMSA Kaiser

The Annual Development Programme (ADP),

by and large, is very familiar, mundane, and of course, routine exercise by the government in power. However, in reality, its framework, composition, preparation process, outcomes are pretty much puzzling even to actors involved in various degrees. Its fundamental identity is that it is an integral component of the national budget which is essentially an annual exercise. It might not be na誰ve to briefly focus on some salient aspects of ADP before reflecting on the ADP for fiscal 2012-13, approved by the National Economic Council (NEC). We may address the following basic questions: i) Why is ADP prepared? ii) How is ADP prepared?; iii) What is ADP's framework and components?; iv) and What is ultimately achieved by ADP? ADP, as mentioned earlier, constitutes an integral component of the national budget; the other integral component of the national budget is the revenue budget. ADP is essentially development budget. However, one may note that ADP is concerned with public sector development programmes only. Nowadays, public-private partnership (PPP) development projects are also incorporated in the ADP. ADP is a pivotal instrument for implementing the time-bound national development plan of various durations when such a plan is in place. Plan holiday, by the way, is not an unknown phenomenon in Bangladesh. Since the launching of the First Five Year Development Plan in 1973, there has been as many as three plan holidays. ADP is also a legitimate tool for proper implementation of mandated manifesto of the ruling political authority as their development commitment in the public sector gets realized through ADP implementation.

The ADP preparation is kicked off with the circulation of a call-notice from the Planning Commission to all ministries, agencies, sector corporations etc. ADP proposals for the ensuing fiscal year are invited within a given timeline through this call-notice. Clearly defined guidelines, reflecting objectives, and priorities are spelt out in this call-notice. Guidelines also reflect linkage with medium-term budget framework (MTBF), which has been introduced in the recent past as part of budget reform programme. MTBF, inter alia, aims at drawing up consistent ADP allocation over three-year timeframe. It also reflects resource requirements/allocations for ADP-included projects on a three-year timeframe both under development budget and revenue budget over a three-year timeframe. However, in reality, projected and actual ADP allocations for projects gradually drift afar by a considerable margin. Hence, relevance/utility of MTBF gets seriously handicapped. Ministries, in their turn, prepare ADP proposals with interacting actively with the agencies, departments and sector corporations concerned and submitting the same to the relevant sector division of the Planning Commission. Sector-wise draft ADP proposals are prepared by the sector divisions. A consolidated ADP proposal is then prepared by the programming division of the Planning Commission, which is placed for final approval by the NEC. This approved ADP is then incorporated in the national budget as the development budget component. As mentioned earlier, in conjunction with the development goals and priorities of the development plan, the manifesto of the ruling political authority has to be properly incorporated in the ADP proposal. It also needs to respond to the demand-side of the development programme of the line ministries and resource supply position, as estimated by the national authorities concerned. The important task of estimated resource

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

availability for the ADP is carried out by a high-level inter-ministerial committee titled Resource Committee under the aegis of the finance division. This takes into account all sources of resource flow, both from internal and external sources. Traditionally, in addition to project-wise allocation, the published ADP document also incorporates the following information: i)

ii)

Total project cost, including foreign exchange (FE) cost, and project implementation period along with its sponsoring and executing authority, ADP allocation in local currency and foreign exchange,

iii) Capital and revenue breakup of ADP allocation, iv) Cumulative expenditure of the project from commencement of project implementation till current fiscal, and v)

Source of project financing through Government of Bangladesh (GoB), external assistance and other sources.

The apparently simple-looking ADP document is actually a fairly complicated working document. This time around, the NEC approved the ADP for fiscal 2012-2013 in the third week of May 2012 which marks an improvement in terms of timing. In the past it used to be delayed until late June. The total outlay of the ADP for fiscal 2012-2013 is Taka 550 billion (55000 crore). Out of which Taka 310 billion (31000 crore) is to be financed from GoB's own source and the remaining Taka 240 billion (24000 crore) from external sources, primarily external assistance. For a quick review of the proposed ADP, reference to the ADP of the outgoing fiscal year is unavoidable. We may recall here that the total financial outlay of the latter was Taka

THE CHARTERED SECRETARY APRIL - JUNE 2012

460 billion (46000 crore) which had to be scaled down to Taka 410 billion (41000 crore) against the backdrop of extremely unsatisfactory implementation. The official announcement shows hardly 50% of the revised ADP 2011/12 could be implemented till the end of the third quarter of the fiscal year. Since ADP revision is prepared in the light of actual ADP implementation over three fourths of a year, the implementation rate of revised ADP should be well above 90 per cent - way beyond even the most optimistic expectation. During post-NEC press briefing, the official spokesman of the governmentsaid that the ADP tabled for approval by the NEC proposed a total size of Taka 543 billion (54300 crore) and the chair was pleased to enhance it by Taka 7.0 billion (700 crore). Of course, the raison-d'etre for this impromptu benevolence remains unknown. The approved ADP for the next fiscal includes a total number of 1037 projects. Most of the projects are carried over from the previous ADP as on-going ones. Moreover, another 720 unapproved projects, included in the green coloured attachment of the ADP, are likely to find their berths in the main compartment once they are approved, inflating the final number of projects in the ADP 2012-13 to more than 1750. If we glance at the priorities of the various sectors/sub-sectors reflected through ADP allocations, we may find inconsistencies with those spelt out in the Sixth Five Year Plan. As a matter of fact, a yawning gap between the medium-term development plan and the relevant ADPs has become an agonisingly routine practice over the years. The predominance of on-going projects, particularly projects which couldn't be implemented within the approved timeframe, is causing delay in envisaged benefit flow from development projects, on the one hand, and cost enhancement, on the other. Another adverse effect of this phenomenon is that the option for new projects, warranted by the dynamics of socio- economic realities, gets seriously impaired. We may recall that in due

Article

recognition of this ailment the NSPR (National Strategy for Poverty Reduction), popularly known as poverty reduction strategy, suggested doing away with the "tyranny" of ongoing projects in the ADP. Unfortunately, this remains a far cry till date. An umpteen number of studies on project implementation reports have identified the following major causes of nagging failure in ADP implementation: i)

Impact of subjective consideration in project selection with a view to accommodating demands of various pressure groups,

ii)

Over-crowding of ADP by disproportionately large number of projects in the context of resource availability and implementation capacity of relevant government machinery,

iii) Conception and preparation of projects on unrealistic and/or tentative assumptions and estimates, iv) Inadequate work implementation, and v)

plan

for

ADP

Dearth of required know-how, manpower, logistics, procurement of goods and services.

A down-to-earth approach, in the light of resource availability, implementation capability, objective and reliable appraisal, needs to be adopted in order to ensure targeted benefit from ADP. But the history of ADP implementation shows extremely low performance during first three quarters of the fiscal year and sky-rocketing progress in the dying moments of the year. This tradition often turns out to be a major source of wastage. This also causes deep suspicion in the public mind that a good proportion of resource goes into well-aligned private pockets, the size of which is any body's guess. In order to arrest this ruthless onslaught on public resource, the involvement of effective community vigilantes on implementation from amongst the real stakeholders is the crying need of the hour. Or else, no amount of analyses/seminars/dialogues/talk-shows will ensure any perceptible positive change.

The writer is a former Member, Bangladesh Planning Commission and former Chairman, Bangladesh Krishi Bank

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

Training Calendar (July â&#x20AC;&#x201C; September 2012)

Sl. No.

Name of the Course

Tentative Date

Duration

TAX Management

July 04- 07,2012

3 Days Program

Customs & VAT Management

July 08- 12,2012

5 Days Program

Human Resource Management in Practice

August 2529,2012

5 Days Program

TAX Management (2nd Batch)

September1719,2012

3 Days Program

Customs & VAT Management (2nd Batch)

September 2226,2012

5 Days Program

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

CORPORATE GOVERNANCE GUIDELINES 2012: A TIME-BEFITTING STEP OF THE SEC Hossain Sadat FCS

The Securities and Exchange Communication

(SEC) has issued the much awaited Corporate Governance (CG) Guidelines through a notification dated 3rd July 2012. In fact, the above CG guideline is the revised of the guideline that was first issued by the SEC back in 2006. Bangladesh Capital Market has been eventful in 2011 - experienced a prolonged market correction, street protest by investors, probe of market manipulation and sporadic regulatory measures. The SEC prescribed several steps – under Short, Medium and Long-term, in an effort to protect the interest of the small-investors and thereby develop the capital market. Under the Medium-term approach, the SEC talked about to develop a CG guidelines – this actually triggered our expectation in receiving a fully revised CG guidelines. Consequently, during February 2012, the SEC issued the revised CG guidelines (draft) inviting feedback/suggestion on it from related stakeholders including the professionals, but not limited to, Chartered Secretaries. Amongst others, the Institute of Chartered Secretaries of Bangladesh (ICSB) – a professional body of the Chartered Secretaries submitted its feedback as well as suggestion on the revised CG guidelines. The SEC, after due evaluation of all the feedback and suggestion being received from related parties, has issued the final version of the revised CG Guidelines. In the process, the SEC has kindly considered several feedback and suggestion provided by the ICSB – we, as Chartered Secretaries, feel honored in knowing that! Following issuance of the revised CG guidelines, we now need to be familiar with the requirements/conditions for us to be able to stay complaint! The objective of writing this article is to present the highlights of the

related changes and elaborate the conditions attached to the guidelines. Here, we need to bear in mind that all the listed companies of Bangladesh are required to be compliant with the above conditions within 31 December 2012. Thus, we, be a member of the Company Secretarial function/department of a listed company or a member of the ICSB, need to be equipped with the insight of the revised CG guidelines when it comes to ensure compliance! For the sake of convenience (limited to this article), lets name the earlier CG guidelines as “2006 guideline” and the revised CG guidelines as “2012 guideline”. In comparison with the 2006 guideline, we the see the revision in 2012 guideline is of the following nature: 

There has been inclusion of completely new condition ;



The earlier condition (of 2006 guideline) has been revised some cases; and



Some cases, related explanation has been provided for right interpretation

Whatever the nature of revision is, the bottom-line message of 2012 guideline is that this is imposed on “comply” basis. Until 2011, in reference to the 2006 guideline, the listed companies could either “comply” with the conditions or provide “explanation”. However, in 2012 guideline, no provision for providing any explanation is kept i.e. all the conditions of the 2012 guideline are made compulsory for compliance by the listed companies. In order to capture the related changes and provide elaboration thereto, let us break down the related areas of conditions in the following manner:

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

1. 2. 3. 4. 5.

as 2.6 – in this case, the required number Independent Directors will be considered the immediate next full figure i.e. Consequently, “Y” company will have Independent Directors to its Board.

Let’s touch upon the above areas one-by-one.

[In the above examples, market understanding in dealing with the fraction figures has been considered. However, the above understanding can be double checked with the SEC.]

Board of Directors Independent Directors Audit Committee Subsidiary Company Duties of Chief Executive Officer (CEO) & Chief Financial Officer (CFO) 6. Reporting & Compliance

Board of Directors There has not been any change to the extent of the Board size i.e. the requirement of keeping minimum members – not less than 5 (five) and maximum members – not more than 20 (twenty) in the Board remain un-changed. However, the Board is required to develop a Code of Conduct (CoC) for its members to comply with.

Independent Directors As per the 2012 guideline, 1/5 i.e. 20% of the Board size will be presented by the Independent Directors. In other words, the number of Independent Directors will represent 20% of the total number of the Directors of the Board. This condition has created a complicacy in arriving at the right number of the Independent Directors required. This is due to the fact that 20% of the Board size does not all time will give a full/absolute number – rather, some cases; this may appear with the fractional number. This can be explained by the following ways. Example-1: Let’s say, Company “X” has 12 (twelve) members in its Board. Thus, 20% of 12 come as 2.4 – in this case, the required number of Independent Directors will be considered to the immediate last full figure i.e. 2. Consequently, “X” company will have 2 Independent Directors to its Board. Example-2: Let’s say, Company “Y” has 13 (thirteen) members in its Board. Thus, 20% of 12 come

THE CHARTERED SECRETARY APRIL - JUNE 2012

of to 3. 3

Individually, an Independent Director will not either hold any shares or hold less than one percent (1%) shares of the total paid-up shares of the company. Family members of an Independent Director will not also hold one percent (1%) or more shares of the total paid-up shares of the company. The 2012 guideline also provides explanation to the “family members’’ – this include spouse, son, daughter, father, mother, brother, sister, son-in-law and daughter-in-law. Following the requirement of 2012 guideline, the listed companies shall be in the process of exploring and appointing additional Independent Director to its Board. In this case, it is to be noted that an individual can only be appointed as Independent Directors maximum for 3 (three) listed companies. The above appointed will be approved by the Shareholders in the Annual General Meeting (AGM) being nominated by the Board of Directors. The tenure of such appointment shall be for a period of 3 (three) years with a provision for extension for 1 (one) more term. The condition, procedure and tenure related to the appointment of Independent Directors are newly inserted in 2012 guideline. The 2012 guideline also spells out the qualification of Independent Directors – this was missing in the case of 2006 guideline. To be an Independent Director, a person should be a Business Leader/Corporate Leader/ Bureaucrat/University Teacher with Economics or Business Studies or Law background/Professionals like Chartered Secretaries, Chartered Accountants, Cost & Management accounts. In relation to above background/qualification/profession, a person

Article

must have at least 12 (twelve) years of corporate management/professional experiences to be appointed as Independent Director. In special cases, the above qualifications may be relaxed subject to prior consent of the SEC.

Audit Committee The 2006 guideline talked about the Audit Committee – its composition, roles and responsibilities. However, the 2012 guideline appears with enhanced conditions to the extent of constitution of Audit Committee. As per 2012 guideline, all members of the audit committee should be “financially literate” and at least 1 member shall have accounting or related financial management experience. The above guideline also presented explanation for the term “financially literate”. The audit committee shall be composed of at least 3 (three) members of which at least 1 (one) will be Independent Director – his presence is required to constitute the quorum and will act as the Chairman of the committee. The Company Secretary has been made responsible to act as the secretary to the audit committee. In addition, the 2012 guideline presents a detailed list of areas where the Audit Committee shall play its role. The areas can be found under condition 3.3 of the 2012 guideline. The above listing was absent in the 2006 guideline.

Subsidiary Company This area is completely new in 2012 guideline. With the above, the SEC puts some conditions for compliance of a subsidiary company. The provisions as to the size & composition of parent/holding company will be followed in the case of a company which is the subsidiary of the said parent/holding company. In addition, one of the Independent Directors will be common both for parent/holding company and its subsidiary company. Besides, the Minutes of the Board meeting of the subsidiary company will be

placed to the Board meeting of parent/holding company for its review and record.

Reporting on Compliance At the beginning of this article, it was said that the revised corporate governance guideline is issued for mandatory compliance of the listed companies. Whether a company is in compliance or not – how this can be evaluated? In this connection, the SEC inserted a new condition in its 2012 guideline. As per this condition, the listed companies are required to obtain a certificate as to the status of compliance of the conditions of the 2012 guideline. This certificate will be issued by a Professional Accountant/Secretary (Chartered Accountant/Cost & Management Account/Chartered Secretary) upon review of the compliance status. The company concerned is required to publish the above certificate through its Annual Report to be sent to its Shareholders. Besides, CEO and CFO are now required to make certification on the Financial Statements concerned. The above certificate will be made on the yearly Financial Statements to be presented and shared to/with the Board of Directors.

Closing Remarks The Corporate Governance Guideline is revised/updated by the SEC to address the growing needs of the capital market as a whole. We believe that the SEC will continue its journey in bringing further revision to make this guideline time-befitting. We, the Chartered Secretaries, are responsible for compliance of the conditions laid down in the revised Corporate Governance Guidelines. Let’s join our hands together to Stay Complaint!

The writer is a fellow member of the ICSB, and Company Secretary, Grameenphone Ltd.

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

DISCLOSURE PRACTICES OF ACCOUNTING POLICIES - A Study of Selected Cement Companies Dr. Md. Shakawat Hossain

Abstract Companies in Bangladesh disclose accounting policies in accordance with the requirements of IAS-1 Presentation of Financial Statements and the Companies Act, 1994. Sample listed cement companies disclose accounting policies in the Notes to Accounts Section of their Annual reports. Such disclosure has increased the understandability of the financial accounting information and contributed to the decision making process of the users. Though the disclosure practices regarding accounting policies broadly meet the requirements of IAS-1 and Companies Act, 1994, there is scope for improvement keeping in view their nature of operation and the needs of the users.

Objectives of the study The objectives of the study are (i) to highlight the disclosure practices regarding accounting policies and (ii) to evaluate the same vis-a-vis IAS-1 Presentation of Financial Statements.

Methodology of the study The study involves an in-depth perusal of IAS-1 and other relevant literature. It selected the listed cement companies as sample companies Annual reports of the sample companies for the last few years were collected and perused for acquiring a first hand knowledge regarding the accounting policies provided by them and their disclosure in the financial statements.

Introduction

Limitations of the study

Accounting policies are an integral component of financial statements as per IAS-1 Presentation of Financial Statements revised in 1997 and made effective for financial statements covering periods beginning on or after July, 1998. The earlier IAS-1 Disclosure of Accounting Policies also adopted by the Council of ICAB as Bangladeshi Accounting Standard (BAS), brought about a significant change in financial statements by incorporating accounting polices as a component of financial statements. The Companies Act, 1994, also made it obligatory for the companies to disclose accounting policies.1 Listed companies are required to disclose accounting policies along with their financial statements. Keeping in view the legal requirements and the overriding importance of accounting policies, it was thought necessary to study the disclosure practices of the accounting policies of listed cement companies.

The study covers the listed cement companies only. Due to time and resource constraints it does not cover the non-listed cement companies and other types of companies.

THE CHARTERED SECRETARY APRIL - JUNE 2012

Accounting parameters

policies

and

their

Accounting policies are the specific principles, bases, conventions, rules and practices adopted by an enterprise in preparing and presenting financial statements.2 (para-21) Accounting policies are presented in the Notes to the Financial Statements of an enterprise which should: a)

Present information about the basis of presentation of financial statements and the specific accounting policies selected and applied for significant transactions and events;

Article

b) Disclose the information required by International Accounting Standards that is not presented elsewhere in the financial statements; and c)

Provide additional information which is not presented on the face of financial statements but that is necessary for a fair presentation. (Para-91)

The accounting policies section of the Notes to the financial statements should describe the following: a)

The measurement basis (or bases) used in preparing the financial statements;

b) Each specific accounting policy that is necessary for a proper understanding of the financial statements. (para-97) In selecting and applying enterprises accounting policies: management should ensure that the financial statements comply with all the requirements of each applicable International Accounting Standard and Interpretation of Standing Interpretation Committee. In the absence of specific requirement, management should develop policies to ensure that the financial statements provide information that is: a)

relevant to the decision-making needs of uses; and

b) reliable in that they: i)

represent faithfully the results and financial position of the enterprise; ii) reflect the economic substance of events and transactions and not merely the legal form; iii) are neutral that is free from bias; iv) are prudent; and v) are complete in all material respects (para-20) So, the management should bear in mind the above guidelines in developing accounting policies.

Disclosure of Accounting Policies by the Sample Companies a) Placement of Accounting Policies: All the sample companies provided accounting policies in "Notes to Financial Statements": Four of the sample companies presented Accounting Policies under the heading Significant Accounting Policies, two of them presented the same under the heading â&#x20AC;&#x153;Summary of Significant Accounting Policies and one of them used the heading ' Accounting policies-Disclosure under IFRS-1 Presentation of Financial Statements. b) Policy regarding Basis of Accounting: Two of the sample companies disclosed the same under the heading basis of Accounting. One company used the heading 'Accounting Basis and Conventions', while another company stated the same under the heading 'Accounting Conventions and Basis. Two of the sample companies used the heading 'Measurement bases used in preparing financial statements'. The heading 'Basic of Accounting' was used by one of the sample companies. Although they used different headings but they basically presented the same information. They mentioned about the observance of generally accepted accounting principles by following historical cost convention, accrual and going concern bases of accounting. Four of the sample companies stated the observance of Companies Act, 1994 and the relevant requirements of the schedule to the Securities and Exchange Rules, 1987 in the preparation and presentation of financial statements. Though the other sample companies have not mentioned the same specifically, they also complied with these legal requirements. c)

Policy regarding valuation of fixed assets: All the sample companies valued their fixed assets at cost less accumulated depreciation except land & land development.

THE CHARTERED SECRETARY APRIL - JUNE 2012

Article

Three of the sample companies gave explanation regarding cost which comprises purchase price including import duties and non refundable purchase taxes and any directly attributable cost of bringing the asset to working condition for its intended use. One of the sample companies stated that the value of land and land development comprised of the purchase value and development cost. One of the sample companies revalued some of their fixed assets in 1998. This company stated that these assets were shown at revalued amount less depreciation. (d) Taxation: The entire sample companies provided polices regarding taxation. Six of them used the head 'taxation' and one of them used the heads 'Current Income Tax' and 'Deferred Income Tax'. Six of the sample companies are enjoying tax holiday under the Income Tax Ordinance, 1984. Five of them stated that they provided 30% of net profit against tax holiday reserve as per the requirements of I.T.O., 1984 and stated the completion of the assessment procedure. One of them stated that no tax holiday reserve has been accounted for as the same will be adjusted against dividend declared in accordance with Income Tax Ordinance, 1984. One of the sample companies not enjoying tax holiday stated that 'provision is made at the ruling rate of tax applied on estimated taxable profit'. Two of the sample companies disclosed that no reserve for deferred income tax was provided for. e) Foreign currency translation: All the sample companies disclosed the mode of foreign currency translation. They stated that transactions denominated in foreign currencies are translated into Bangladesh Taka and recorded at rates of exchange ruling on the date of transaction. f)

Staff Provident Fund : Four of the sample

THE CHARTERED SECRETARY APRIL - JUNE 2012

companies stated that they maintained a Recognized Provident Fund for all eligible permanent employees. g) Workers' Profit Participation Fund: Three of the sample companies disclosed that they made a provision of 5% of net profits/operating profit for Worker's Profit Participation Fund. h) Revenue Recognition : Four of the sample companies provided policies regarding revenue recognition. They recongised revenues at the time of delivery after making invoice when the risk of the ownership is transferred to the buyer i.e. sales represent products invoiced and dispatched to the buyers. One of the sample Companies stated that interest revenue is recognized on accrual basis and other on receipt or due basis. i)

Earning per share (EPS): Two or the sample companies provided information regarding EPS which was shown on the face of profit and loss Account/ Income Statement. Basic EPS was computed dividing net profit by weighted average number of ordinary shares outstanding during the year. No diluted EPS was calculated as there was no scope for dilution.

Cash and cash equivalents : Three of the sample companies disclosed that they considered cash in hand and bank balances as cash and cash equivalents in the light of the provisions of IAS-1, Presentation of financial statements and IAS-7, Cash Flow Statement.

Evaluation of disclosure accounting policies

The sample companies provide accounting policies in the Note to Accounts Section of their annual reports in accordance with the requirements of Companies Act, 1994 and International Accounting Standard 1: Presentation of Financial Statements. The disclosure of accounting policies has

Article

increased the understandability of the financial statements and made them user oriented. The following suggestions may be put forward to meet the needs of the users: 1. The sample companies provided the rate of depreciation on the principal categories of their fixed assets. The rate of depreciation should be specifically provided for each type of depreciable asset. 2. The sample companies which did not state the basis of valuation of different components of inventory should provide the same. In valuing inventories the requirements of IAS-2 Inventories (revised 1993) should be complied with. 3. The companies which are liable to pay Income tax should specifically mention the rate at which provision has been made in respect of income tax. 4. Though all the sample companies disclosed the mode of foreign currency translation they did not mention the amount of exchange differences included in the net profit or loss for the period as required by IAS-21. The Effects of Changes in Foreign Exchange Rate (revised 1993). 5. Three of the sample companies did not provide any policy regarding revenue recognition; they should specifically mention their revenue recognition policy. 6. Five of the samples companies did not include any information regarding Earning per Share in their significant accounting policies although the said information was shown on their profit & loss statement/Income Statement. They should include the same in their accounting policies.

Conclusion The sample companies are disclosing accounting policies in their annual financial statements in the light of the requirements of Companies Act, 1994 and IAS-1 Presentation

of Financial Statements. Disclosure practices meet largely the requirements of IAS-1 but the management of some Companies must come out of their shell and provide policies on matters that are significant for the users of the financial accounting information. In this respect they should keep in mind the broad outlines given in IAS-1 and the needs of the users. There is also a scope for being innovative keeping in view the nature of their operation and the user needs.

References 1. People's Republic of Bangladesh, Ministry of Commerce. Companies Act, 1994 (Authentic English Text), October, 1995. 2. International Accounting Standards Committee (IASC), international Accounting Statdard-2000, IAS-1, Presentation of Financial statements, para-5, P-81, London, IASC, 2000. 3. Based on the Annual Reports of the seven sample companies viz. i) Confidence Cement Ltd. ii) Meghna Cement Mills Ltd. iii) Chittagong Cement Clinker Grinding Co. Ltd. iv) Aramit Cement Ltd. v) Niloy Cement Industries Ltd. vi) Modern Cement Ltd. vii) Padma Cement Ltd. 4. Islam, K.S. and Pramanik, S. (1996) “Disclosure of Accounting Policies: A Study of the Commercial Banks in Bangladesh”, Working Paper. 5. Akter, M. & Hoque, M.(1993), “Disclosure Practices in Bangladesh: A Case study of the Banking sector”. Dhaka University, Journal of Business Studies, Vol. 14, No-2.

The writer is Assistant Professor of Accounting Department of Accounting & Information Systems Jagannath University

THE CHARTERED SECRETARY APRIL - JUNE 2012

Notifications

KNOWLEDGE BANK Compiled by Itrat Husain FCMA, FCS

LEGALLY SPEAKING Accomplice A partner in crime; a person who knowingly and voluntarily participates with another in a criminal activity. Adjudication Giving or pronouncing a judgement or decree; also the judgement given. Admissible Evidence Evidence that can be legally and properly introduced in a civil or criminal trial. Censure An official reprimand or condemnation of a attorney. Civil Action An action brought to ensure or protect private rights. Extradition The surrender of an accused criminal by one state to the jurisdiction of another. Forfeiture A cancellation. A legal action whereby a contract purchaser, following default, loses all his interests in a property. Incapacity Lack of legal ability to act; disability, incompetence, lack of adequate power. Sustain A court ruling upholding an objection or a motion. Treatise A formal and systematic book or writing containing a narrative statement on a field of law.

QUOTATIONS There is nothing heavier in scales than good character.

- Hazrat Muhammad (SAW)

Riches are not from an abundance of worldly goods but from a contented mind.

- Hazrat Muhammad (SAW)

A fanatic is one who canâ&#x20AC;&#x2122;t change his mind and wonâ&#x20AC;&#x2122;t change the subject.

- Sir Winston Churchill

However beautiful the strategy, you should occasionally look at the results.

- Sir Winston Churchill

Everything has its beauty but not everyone sees it.

THE CHARTERED SECRETARY APRIL - JUNE 2012

- Confucius

ICSB BSS-1

INSTITUTE OF CHARTERED SECRETARIES OF BANGLADESH

BSS–1 SECRETARIAL STANDARD ON MEETINGS OF THE BOARD OF DIRECTORS

CONTENTS PREFACE TO THE SECRETARIAL STANDARDS DEFINITIONS

SECRETARIAL STANDARDS 1.

Convening of a Meeting

Frequency of Meetings

Quorum

Attendance at Meetings

Chairman

Passing of Resolution by Circulation

Minutes

Attendance in Meetings and their Recording in the Minutes

Preservation of Minutes and Supporting Papers

10. Disclosure 11. Effective Date

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-1

Formulating Secretarial Standards; Clarifying issues arising out of the Secretarial Standards; Issuing Guidance Notes; and Reviewing and updating the Secretarial Standards/Guidance Notes at periodic intervals.

Need for Secretarial Standards Companies follow diverse secretarial practices and, therefore, there is a need to integrate, harmonies and standardize such practices so as to promote uniformity and consistency. Scope of Secretarial Standards The Secretarial Standards do not seek to substitute or supplant any existing laws or the rules and regulations framed there under but, in fact, seek to supplement such laws, rules and regulations. Secretarial Standards that are issued will be in conformity with the provisions of the applicable laws. However, if, due to subsequent changes in the law, a particular Standard or any part thereof becomes inconsistent with such law, the provisions of the said law shall prevail. ICSB will endeavor to persuade the Government of Bangladesh and appropriate authorities to enforce these Standards, to facilitate the adoption thereof by industry and corporate entities in order to achieve the desired objective of standardization of secretarial practices. Procedure for issuing Secretarial Standards The following procedure shall be adopted for formulating and issuing Secretarial Standards: 1. SSB, in consultation with the Council, shall determine the areas in which Secretarial Standards need to be formulated and the priority in regard to the selection thereof. 2. In the preparation of Secretarial Standards, SSB may assign to Secretarial Practice Sub Committee to formulate preliminary drafts of the proposed Standards.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-1

3. The preliminary draft of the Secretarial Standard prepared by the Secretarial Practice Sub Committee shall be circulated amongst the members of SSB for discussion and shall be modified appropriately, if so required. 4. The preliminary draft will then be circulated to the members of the Council of ICSB or other bodies/organizations as may be decided by SSB, for ascertaining their views, specifying a time-frame within which such views, comments and suggestions are to be received. A meeting of SSB with the representatives of such bodies / organizations may then be held, if considered necessary, to examine and deliberate on their suggestions. 5. On the basis of the preliminary draft and the discussion with the bodies/organizations referred to in 4 above, an Exposure Draft will be prepared and published in the â&#x20AC;&#x153;Chartered Secretaryâ&#x20AC;?, the journal of ICSB, and also put on the Website of ICSB to elicit comments from members and the public at large. 6. The draft of the proposed Secretarial Standard will generally include the following basic points: (a) Concepts and fundamental principles relating to the subject of the Standard; (b) Definitions and explanations of terms used in the Standard; (c) Objectives of issuing the Standard; (d) Disclosure requirements; and (e) Date from which the Standard will be effective. 7. After taking into consideration the comments received, the draft of the proposed Secretarial Standard will be finalized by SSB and submitted to the Council of ICSB. 8. The Council will consider the final draft of the proposed Secretarial Standard and finalize the same based on the recommendation of the SSB. The Secretarial Standard on the relevant subject will then be issued under the authority of the Council. Compliance with Secretarial Standards The Institute will request the Government and other appropriate authorities to enforce these Standards and will endeavor to educate the users about the utility and need for compliance with these Standards. The Standards will be made mandatory thereafter.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-1

ICSB BSS â&#x20AC;&#x201C; 1 SECRETARIAL STANDARD ON MEETINGS OF THE BOARD OF DIRECTORS DEFINITIONS The following terms are used in this Standard with the meaning specified: Act: means the Companies Act, 1994 (Act 18 of 1994), or any statutory modification or re-enactment thereof and includes any Rules and Regulations framed there under. Article or Articles: means the Articles of Association of a company, as originally framed or as amended from time to time, including, where they applicable or appropriate, the Regulations contained in the Tables in Schedule I to the Act. Board: means the Board of Directors of a company. Chairman: means the Chairman of the Board, or the Chairman appointed or elected for presiding over a Meeting. Committee: means a Committee of the Board and includes any Sub-committee under a Committee to act on its behalf. Disinterested Director: means a director who is not, directly or indirectly, an Interested Director to an agenda or item of a meeting. Interested Director: means a director who is directly or indirectly concerned or interested in any contract, arrangement or item of the business which is under consideration of the Board. Meeting: means a Meeting, duly been convened, constituted and held, of the Board or any Committee or Subcommittee thereof. Original Director: means a Director in whose place the Board has appointed any other individual. Quorum: means the minimum number of Directors whose presence is necessary for a Meeting. Secretary: means the Company or Chartered Secretary of a company or companies. Unpublished price sensitive information : means any data or information which is material or generally not yet known or disclosed or published by the company for information of general public but which, if published, disclosed or known, is likely to materially affect the price of the securities of the company in the secondary market. Such information includes financial results or basic information relating thereto, intended declaration of dividend, announcement of bonus, rights shares and other corporate benefits, issue of securities, buy and sale of fixed assets, BMR&E, setting up of new unit or projects, any major expansion plans, amalgamation, merger and takeovers, de-mergers, compromise or arrangement with creditors and members, disposal of the whole or substantially the whole of the undertaking, any changes in policies, companyâ&#x20AC;&#x2122;s activities (viz. products, produced goods, planning, implementation or policy formulation relating thereto, plans or operations of the company), and such other information as may affect the earnings of the company. Words and expressions used herein and not defined shall have the meaning respectively assigned to them under the Act.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-1

ICSB BSS – 1 SECRETARIAL STANDARD ON MEETINGS OF THE BOARD OF DIRECTORS 1. Convening of a Meeting 1.1 Authority Any Director of a company including the Chairman may, and the Secretary on the requisition of a Director shall, at any time, summon a Meeting of the Board unless the Articles of the company provide otherwise. 1.2 Notice i.

Every Director of the Company shall be entitled to get the Notice of every Meeting in writing in any mode including by hand or by post or by facsimile or by e-mail or by any other electronic mode. A director may specify any particular mode to receive such notices. If any of the Directors so specifies, the Notice shall be sent to him by such mode.

ii.

The Notice of the Meeting shall specify the day, date, time and full address of the venue wherein the Meeting be held. A Meeting may be held at any place, any time, on any day.

iii. The Notice of a Meeting shall be given in respect of all meetings including the Meetings which are held on pre-determined dates or at pre-determined intervals. iv. Notice shall be given at least seven (7) days before scheduled date of the Meeting unless the Articles of the company denote a longer period for such notice. Notice need not to be given of an adjourned Meeting other than a Meeting that has been adjourned “sine die”. However, Notice of the reconvened adjourned Meeting shall be given to those Directors who were absent in the Meeting which had been adjourned. v. Unless a Notice has not been given to the directors then no business shall be transacted at a Meeting. vi. The Agenda as to be transacted at the Meeting along with Notes to the Agenda shall be circulated or sent at least three (3) days before the date of the Meeting. vii. Each Agenda to be transacted in the meeting shall be supported by notes, details of the item and, where a Resolution is required to be passed, the draft Resolution shall be attached with the Notice. viii. The Notice may be given at shorter period of time than those respectively stated above if the majority of members of the Board or Committee so agree. The proposal to hold the Meeting at a shorter notice shall be stated in the Notice and the fact that consent thereto was obtained shall also be recorded in the Minutes. Notice, Agenda and Notes on Agenda shall be given to all Directors or to all Members of the Committee, as the case may be, at their respective addresses as provided by them, whether in Bangladesh or abroad, and shall also be given to the Original Director, even when the Notice, Agenda and Notes on Agenda have been sent to the Alternate Director. ix. Any supplementary item not originally included in the Agenda may be taken up for consideration with the permission of the Chairman and with the consent of the majority of the Directors present in the Meeting. However, no supplementary item which is of significance or is in the nature of unpublished price sensitive information shall be taken up by the Board without prior written Notice. THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-1

The items of business to be transacted shall be arranged in order of those items that are of a routine or general nature or which merely require to be noted by the Directors, and those items which require discussions and specific approval. Besides the items of business that are required by the Act or any other applicable law to be considered at a Meeting of the Board and all material items having a significant bearing on the operations of the company, there are certain items which, if applicable, shall also be placed before the Board. An illustrative list of such items is given at Annexure â&#x20AC;&#x2DC;Aâ&#x20AC;&#x2122;. There are certain specific items which shall be placed before the Board at its first Meeting and there are certain items which shall be placed before the Board at the Meeting held for consideration of the year-end accounts. 2. Frequency of Meetings i. Meetings of the Board The Board shall meet at least once in every quarter of a calendar year i.e in three months, and at least four Meetings are to be held in each year. The maximum interval between any two Meetings shall not be more than 90 days. Each Meeting shall be of such duration to enable proper deliberations to take place on agenda or items placed before the Board. ii. Meetings of Committees Committees shall meet at least as often as stipulated by the Board or as prescribed by any other authority. 3. Quorum 3.1 Meetings of the Board i.

Quorum shall be present throughout the Meeting. No business shall be transacted unless the Quorum is so present. The Quorum for a Meeting of the Board shall be one-third of the total strength of the Board (any fraction contained in that one-third being rounded off as one), or two Directors, whichever is higher. Where the requirements for the Quorum, as provided in the Articles, are stricter, then the Quorum shall conform to such requirements. If the number of Interested Directors exceeds or is equal to two-thirds of the total strength, the remaining Directors present at the Meeting, being not less than two, shall be the quorum during such time.

ii.

Where the number of Directors is reduced below the minimum fixed by the Articles, no business shall be transacted unless the number is first made up by the remaining Director(s) or through a general meeting. If a Meeting of the Board could not be held for want of quorum, then, unless the Articles otherwise provide, the Meeting shall automatically stand adjourned to the same day in the next week, at the same time and place.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-1

3.2 Meetings of Committees The presence of all the members of any Committee constituted by the Board is necessary to form the Quorum for Meetings of such Committee unless otherwise stipulated by the Board while constituting the Committee. Certain guidelines, Rules and Regulations framed under the Act or by any statutory authority may contain provisions for the Quorum of a Committee and such stipulations shall then be followed. 4. Attendance at Meetings i.

An Attendance Register shall be maintained containing the names and signatures of the Directors present at the Meeting. If an attendance register is maintained in loose-leaf form, it shall be bound at reasonable intervals.

ii.

Leave of absence shall be granted to a Director only when a request for such leave has been communicated to the Secretary or to the Board or to the Chairman.

5. Chairman 5.1 Meetings of the Board i.

Every company shall have a Chairman who will preside over the Meetings of the Board.

ii.

It will be the duty of the Chairman to look into that the Meeting is duly convened and constituted as per the provisions of the Act or any other applicable guidelines, Rules and Regulations before it proceeds to transact business.

iii. The Chairman shall then conduct the proceedings of the Meeting and ensure that only those items of business as have been set out in the Agenda are transacted and ideally in the order in which the items appear on the Agenda. iv. The Chairman shall encourage deliberations and debate and assess the sense of the Meeting. The Chairman shall ensure that the proceedings of the Meeting are correctly recorded and, in doing so, he may include or exclude any matter as he deems fit. v. In the case of a public company, if the Chairman himself is interested in any item of business, he shall entrust any other dis-interested Director present to conduct the proceedings in respect of such item. After the transaction of the item of business is over then the Chairman may resume his position. 5.2 Meetings of Committees The Board, while constituting any Committee, shall also appoint the Chairman of the Committee so constituted. 6. Passing of Resolution by Circulation i.

A Resolution proposed to be passed by circulation shall be sent in draft, together with supporting papers to all the Directors separately, and in the case of a Committee, to all the members of the Committee. It will be appropriate if only those matters, which are of an urgent nature are approved through the Resolutions by circulation. THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-1

ii.

The Resolution as to be passed by circulation and the supporting papers shall be circulated by hand, or by post, or by facsimile, or by e-mail or by any other electronic mode.

iii. The Resolution shall be deemed to have been passed on the date on which it is signed and dated as approved by all the Directors then in Bangladesh, being not less than the Quorum, or on the date on which it is approved by the majority of the Directors entitled to vote on the Resolution, whichever is earlier. iv. Resolutions sent for passing by circulation shall be noted along with the decision thereof, at the next Meeting of the Board or Committee, as the case may be, and to be recorded in the Minutes of such Meeting. v. The annual accounts of a company shall be approved at a Meeting of the Board and shall not be by a Resolution by circulation. vi. Quarterly or half-yearly financial results shall be approved at a Meeting of the Board or its Committee and shall not be by a Resolution by circulation. vii. In the case of a listed company, if there is any material variance between un-audited and audited results, the review report of the Auditors shall also be discussed and approved at a Meeting of the Board and not approved by a Resolution by circulation. 7. Minutes i.

Within fifteen days from the date of the Meeting of the Board or Committee or of an adjourned Meeting, the draft Minutes thereof shall be circulated to all the members of the Board or the Committee, as the case may be, for their necessary comments.

ii.

The Directors shall forward their comments on the draft Minutes within seven days from the date of circulation thereof, so that the Minutes are finalized and entered in the Minutes Book within the specified time limit of thirty days.

iii. The Minutes of proceedings of a Meeting shall be entered in the Minutes Book within thirty days from the conclusion of the Meeting. iv. In any case a Meeting is adjourned; the Minutes shall be entered in respect of the original Meeting as well as the adjourned Meeting within thirty days from the date of the respective Meetings. In respect of a Meeting adjourned for want of Quorum, a statement to that effect shall be recorded in the Minutes Book by the Chairman or any Director as designated by the Board who was physically present at the Meeting. v. The date of entering the Minutes shall be specified in the Minutes Book by the Secretary. vi. The Chairman shall put his initial on each page of the Minutes, and put his full signature on the last page of the Minutes along with the date of signing of the Minutes. vii. While the law requires that Minutes of the proceedings shall be entered in the Minutes Book within thirty days of the Meeting, there is no prescribed time limit within which such Minutes have to be signed. They could be signed beyond a period of thirty days if the succeeding Meeting is held after a period of thirty days from the date of the earlier Meeting. However, it is also not obligatory to wait for the next Meeting in order to have the Minutes of the previous Meeting signed. Such Minutes may be signed by the Chairman of the Meeting at any time before the next Meeting is held. viii. The Minutes of Meetings of the Board can be inspected by the Directors only. While the Auditors of the company or Chartered Secretary in Practice appointed by the company can also inspect the Minute

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-1

Books in the course of their audit or certification. A member of the company or any other person has no right to inspect the Minutes of Meetings of the Board or any Committee thereof. ix. Officers of the Registrar of Joint Stock Companies & Firms, other Government or regulatory bodies duly authorized in this behalf under law, during the course of an inspection, can also inspect the Minutes for discharging of their official duties. x. Minutes shall not be pasted or attached to the Minutes Book. xi. Minutes, if maintained in loose-leaf form, shall be bound at intervals coinciding with the financial year of the company. The pages of the Minutes Book shall be serially numbered and there shall be proper locking device to ensure security and proper control to prevent any sort of removal of the loose leaves of the Minutes Book. xii. Extracts of the Minutes shall be given only after the Minutes have duly been signed. However, certified copies of any Resolution passed at a Meeting may be issued even pending signing of the Minutes by the Chairman, if the draft of that Resolution had been placed at the Meeting and was duly approved. xiii. Minutes of an earlier Meeting shall be noted at the next Meeting. xiv. Any alteration, other than grammatical, typographical or minor corrections, in the Minutes as entered, shall be made only under the approval taken in the subsequent Meeting in which such Minutes are sought to be altered. xv. The Minutes of Meetings of any Committee shall be circulated to the Members of the Board along with the Agenda for the Meeting of the Board next following such Meeting of the Committee and shall be noted at the Board Meeting. xvi. At the time of circulating the Agenda for the Meeting of the Board, if the Minutes of Meetings of any Committee are pending noting by the Committee on such Minutes shall be circulated to the Board in draft form. 8. Attendance in Meetings and their Recording in the Minutes i.

The names of the Directors present in the Meeting along with the names of persons who were in attendance and the names of invitees in the Meeting, if any, shall be recorded in the Minutes.

ii.

Apart from the Resolution or the decision, the Minutes shall mention the brief background of the proposal and the rationale for passing the Resolution or taking of the decision.

iii. The names of the Directors who have dissented or have abstained from the decision shall be recorded. Similarly, the fact that an interested Director who did not participate in the discussion or vote on the agenda shall also be recorded in the Minutes. iv. Wherever any approval of the Board or of the Committee is taken on the basis of certain papers laid before the Board or the Committee, proper identification by initialing of such papers by the Chairman or any Director shall be made and a reference thereto shall be made in the Minutes. 9. Preservation of Minutes and Supporting Papers i.

The Minutes of all Meetings shall be preserved permanently.

ii.

If a company has been merged or amalgamated with any other company, the Minutes of all Meetings THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-1

of the Board and Committees of the transferor company shall be preserved permanently by the transferee company for any future references notwithstanding the fact that the identity of the transferor company may not survive under such arrangement. iii. All office copies of Notices, Agenda and Notes to Agenda and other related papers shall be preserved in orderly manner for as long as they remain current or for twelve years, whichever is later, and may not be destroyed thereafter without the authority of the Board. 10. Disclosure The Annual Report of a company shall disclose the number of Meetings of the Board and Committees held during the year indicating the number of Meetings attended by each Director. 11. Effective Date This Standard shall come into effect from the date fixed by the Council.

Annexure ‘A’ Illustrative list of items of business which shall be placed before the Board 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27.

Calls on shareholders in respect of money unpaid on their shares. Issue of debentures. Borrowing money otherwise than by issue of debentures. Investing the funds of the company. Making loans. Filling casual vacancies in the office of Directors. Making donation to political parties. Granting loans to Directors. According sanction for specified contracts in which one or more Directors are interested and to sign the Register of Contracts. Disclosure of interest by a Director. Receiving notice of disclosure of Directors’ interest. Receiving notice of disclosure of Directors’ shareholdings. Appointment or Resignation of Managing Director or Whole-time Director or Manager. Appointment and removal of the Company or Chartered Secretary, Chief Financial Officer and HIA. Appointment of sole-selling agents. Making a declaration of solvency where it is proposed to wind up the company voluntarily. Forfeiture of shares. Approval of the quarterly financial results. Approving the half-yearly financial results. Noting Minutes of Meetings of Committees of the Board. Quarterly results for each operating division or business segment. Annual operating plans and budgets. Any material default in financial obligations. Non-compliance of any regulatory/statutory provisions or listing requirements. Sale of investments, subsidiaries or assets which is not in the normal course of business. Show cause notices, prosecutions and penalty notices of material nature. Any material effluent or pollution problems, industrial accidents, labor problems, signing of wage agreement, implementation of Voluntary Retirement Scheme, etc.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-1

28. Any issue which involves possible public or product liability claims. 29. Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property. 30. Foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movements. 31. Information on recruitment and remuneration of senior officers and transfers or resignations. 32. Details of any joint venture or collaboration agreement. 33. Material liability â&#x20AC;&#x201C; legal or contractual. 34. Report of the Compliance Officer regarding share transfer process and analysis of movement of bulk transfers. 35. Fixed deposit advertisements. 36. Certificate regarding compliance with various applicable laws. 37. Events which are significant or have material commercial / financial implications, such as: (a) strikes, lockouts, lay-off, closure of units/factory, etc; (b) change in the general character or nature of business; (c) major expansion plans or execution of new projects; (d) disruption of operations due to natural calamity or Act of God; (e) commencement of commercial production/commercial operations; (f) developments with respect to pricing/realization arising out of change in the regulatory framework; (g) litigation/dispute with a material impact; (h) revision in ratings assigned by credit rating agencies; (i) issue of any class of securities; (j) acquisition, merger, demerger, amalgamation, restructuring, scheme of arrangement, spin off of divisions of the company; (k) change in market lot and sub-division of equity shares of the company; (l) voluntary delisting of securities from the Stock Exchange(s); (m) default in the repayment of any deposits or redemption of any securities including debentures and in payment of interest, if any, due thereon; (n) any action which will result in alteration in the terms regarding redemption / cancellation / retirement in whole or in part of any securities issued; (o) information regarding opening, closing of status of ADR, GDR or any other class of securities issued abroad; (p) cancellation of dividend / rights / bonus, etc; (q) formation of a subsidiary company and/or de-subsidiarization of an existing subsidiary company.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-1

Annexure ‘B’ Illustrative list of items of business for the Agenda for the First Meeting of the Board of Directors of the Company 1. To appoint the Chairman of the Meeting. 2. To note the Certificate of Incorporation of the company, issued by the Registrar of Joint Stock Companies and Firms. 3. To take note of the Memorandum and Articles of Association of the company, as registered. 4. To note the situation of the Registered Office of the company. 5. To confirm/note the appointment of the first Directors of the company. 6. To read and record the notices of disclosure of interest given by the Directors. 7. To consider the appointment of Additional Directors. 8. To consider the appointment of the Chairman of the Board. 9. To fix the financial year of the company. 10. To consider the appointment of the first Auditors. 11. To adopt the Common Seal of the company. 12. To appoint Bankers and to open bank accounts of the company. 13. To authorize printing of share certificates. 14. To authorize the issue of share certificates to the subscribers to the Memorandum and Articles of Association of the company. 15. To approve preliminary expenses and preliminary contracts. 16. To consider the appointment of the Managing Director/Whole time Director/Manager and Company or Chartered Secretary, if applicable and other senior officers.

Annexure ‘C’ Illustrative list of items of business for the Agenda for the Meeting of the Board of Directors at which annual accounts, etc. are to be considered. (Besides regular Agenda items, such as confirmation of Minutes, granting leave of absence to Directors, reading Notices of disclosure of interest of Directors) 1. To consider and approve matters arising out of the accounts such as commission to Directors, write-offs, provisions, legal cases, etc. 2. To consider and approve transfers to Reserves and other appropriations. 3. To consider recommendation of dividend. 4. To consider and approve the Balance Sheet and the Profit & Loss Account as well as the abridged Accounts or statement of financial results. 5. To consider and take note of the Directors to retire by rotation at the Annual General Meeting. 6. To consider the draft Notice of the Annual General Meeting and to authorize issuance thereof. 7. To consider the appointment of Auditors and the payment of remuneration to them, to be proposed for members’ consideration. 8. To take note of the draft Auditor’s report. 9. To consider the draft Directors’ Report and to authorize issuance thereof. 10. To open a Bank Account for payment of dividend. 11. To approve/note the closure of the Register of Members or Record date and the Share Transfer Books for the purposes of the Annual General Meeting or other circumstances. 12. To approve the text of the advertisement inviting fixed deposits. 13. To discuss the Compliance Certificate issued by a Chartered Secretary in whole-time practice.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2

INSTITUTE OF CHARTERED SECRETARIES OF BANGLADESH

BSS–2 SECRETARIAL STANDARD ON GENERAL MEETINGS CONTENTS PREFACE TO THE SECRETARIAL STANDARDS SECRETARIAL STANDARD ON GENERAL MEETINGS INTRODUCTION SCOPE DEFINITIONS SECRETARIAL STANDARDS 1. 2. 3. 4. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

Convening a meeting Frequency of Meetings Quorum Presence of Directors and Auditors Voting Proxies Conduct of Poll Withdrawal of Resolutions Rescinding of Resolutions Modifications to Resolutions Reading of Report/Certificate Distribution of Gifts Adjournment of Meetings Minutes Recording in the Minutes Preservation of Minutes and other Records Disclosure

EFFECTIVE DATE Annexure ‘A’: Form of Proxy THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2

PREFACE TO THE SECRETARIAL STANDARDS Secretarial Standards Board and its Objectives The Institute of Chartered Secretaries of Bangladesh (ICSB), recognizing the need for integration, harmonization and standardization of diverse secretarial practices, has constituted the Secretarial Standards Board (SSB) with the objective of formulating Secretarial Standards. Scope and Functions of the Secretarial Standards Board The scope of SSB is to identify the areas in which Secretarial Standards need to be issued by the Council of ICSB and to formulate such Standards, taking into consideration the applicable laws, business environment and best secretarial practices. SSB will also clarify issues arising out of such Standards and issue guidance notes for the benefit of members of ICSB, corporate and other users. The main functions of SSB are: (i) Formulating Secretarial Standards; (ii) Clarifying issues arising out of the Secretarial Standards; (iii) Issuing Guidance Notes; and (iv) Reviewing and updating the Secretarial Standards/Guidance Notes at periodic intervals. Need for Secretarial Standards Companies follow diverse secretarial practices and, therefore, there is a need to integrate, harmonize and standardize such practices so as to promote uniformity and consistency. Scope of Secretarial Standards The Secretarial Standards do not seek to substitute or supplant any existing laws or the rules and regulations framed there under but, in fact, seek to supplement such laws, rules and regulations. Secretarial Standards that are issued will be in conformity with the provisions of the applicable laws. However, if, due to subsequent changes in the law, a particular Standard or any part thereof becomes inconsistent with such law, the provisions of the said law shall prevail. ICSB will endeavor to persuade the Government and appropriate authorities to enforce these Standards, to facilitate the adoption thereof by industry and corporate entities in order to achieve the desired objective of standardization of secretarial practices. Procedure for issuing Secretarial Standards

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2

The following procedure shall be adopted for formulating and issuing Secretarial Standards: 1. SSB, in consultation with the Council, shall determine the areas in which Secretarial Standards need to be formulated and the priority in regard to the selection thereof. 2. In the preparation of Secretarial Standards, SSB may constitute Working Groups to formulate preliminary drafts of the proposed Standards. 3. The preliminary draft of the Secretarial Standard prepared by the Working Group shall be circulated amongst the members of SSB for discussion and shall be modified appropriately, if so required. 4. The preliminary draft will then be circulated to the members of the Council of ICSB, various professional bodies, Chambers of Commerce, regulatory authorities such as the Ministry of Commerce, the Ministry of Finance, the Ministry of Law and Parliamentary Affairs, the Securities and Exchange Commission, Bangladesh Bank, Registrar of Joint Stock Companies & Firms and to such other bodies/organizations as may be decided by SSB, for ascertaining their views, specifying a time-frame within which such views, comments and suggestions are to be received. A meeting of SSB with the representatives of such bodies / organizations may then be held, if considered necessary, to examine and deliberate on their suggestions. 5. On the basis of the preliminary draft and the discussion with the bodies/organizations referred to in 4 above, an Exposure Draft will be prepared and published in the â&#x20AC;&#x153;Chartered Secretaryâ&#x20AC;?, the journal of ICSB, and also put on the Website of ICSB to elicit comments from members and the public at large. 6. The draft of the proposed Secretarial Standard will generally include the following basic points: (a) Concepts and fundamental principles relating to the subject of the Standard; (b) Definitions and explanations of terms used in the Standard; (c) Objectives of issuing the Standard; (d) Disclosure requirements; and (e) Date from which the Standard will be effective. 7. After taking into consideration the comments received, the draft of the proposed Secretarial Standard will be finalized by SSB and submitted to the Council of ICSB. 8. The Council will consider the final draft of the proposed Secretarial Standard and finalize the same in consultation with SSB. The Secretarial Standard on the relevant subject will then be issued under the authority of the Council. Compliance with Secretarial Standards In the initial years, the Secretarial Standards will be recommendatory. The Institute will request the Government and other appropriate authorities to enforce these Standards and will endeavor to educate the users about the utility and need for compliance with these Standards. The Standards will be made mandatory thereafter.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2

SECRETARIAL STANDARD ON GENERAL MEETINGS

The following is the text of the Secretarial Standard-2 (BSS-2), issued by the Council of the Institute of Chartered Secretaries of Bangladesh, on â&#x20AC;&#x153;General Meetingsâ&#x20AC;?. In the initial years, adherence by a company to this Secretarial Standard will be recommendatory. (In this Secretarial Standard, the Standard portions have been set in bold type. These shall be read in the context of the background material). INTRODUCTION This Standard seeks to prescribe a set of principles for the convening and conduct of General Meetings and matters related thereto. The decision-making powers of a company are vested in its Members and the Board of Directors (the Board). Such powers are exercisable through Meetings of the Members and the Board respectively. Except where the law expressly provides that certain powers of a company are to be exercised only by the company in General Meeting, the Board is entitled to exercise all the powers of the company. Although Members acting through the forum of a General Meeting exercise ultimate check over a company, they shall not interfere with the exercise by the Board of the powers which are vested in the Board. Every company is required to hold, every year, a Meeting of its Members called the Annual General Meeting and may also hold any other meeting, called an Extra-Ordinary General Meeting, as and when required or on the requisition of Members. The business to be transacted at an Annual General Meeting may consist of items of ordinary business as well as special business. The items of ordinary business specifically required to be transacted at an Annual General Meeting shall not be transacted at any other General Meeting. Every public company having a share capital is also required to hold a Statutory Meeting. If a company defaults in holding its Annual General Meeting in any year, any Member of the company has a statutory right to approach the prescribed authority to direct the company to hold the Meeting. A company may also hold Meetings of its Members, or class of Members or debenture holders or creditors under the directions of the High Court Division of the Supreme Court of Bangladesh or any other prescribed authority, and any such Meeting shall be governed by the Articles or by the rules, regulations and directions prescribed for the conduct of any such Meeting. SCOPE The principles enunciated in this Standard for General Meetings may also be applicable to class meetings of Members, debenture holders and creditors. These principles may, however, not be applicable to any meeting convened on the directions of the High Court Division of the Supreme Court of Bangladesh or any other prescribed authority unless the directions themselves so prescribe. This Standard does not deal with passing of resolutions by postal ballot.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2

DEFINITIONS The following terms are used in this Standard with the meaning specified: ”Act” means the Companies Act, 1994 (Act No.18 of 1994), or any statutory modification or re-enactment thereof and includes any Rules and Regulations framed thereunder. ”Article or Articles” means the Articles of Association of a company, as originally framed or as altered from time to time, including, where they apply, the Regulations contained in the Tables in Schedule I to the Act. ”Board” or “Board of Directors” means the Board of Directors of a company. ”Chairman” means the Chairman of the Board or the Chairman appointed or elected for a Meeting. ”Member” means any person who agrees, either by subscribing to the Memorandum of Association of the company or by applying in writing, to become a Member of the company and whose name is entered either in the Register of Members of the company or in the records of the depository as a beneficial owner in respect of the equity shares of the company held by him. ”Meeting” or “General Meeting” or “Extra-Ordinary General Meeting” means a Meeting of Members duly convened by the Board or on the requisition of Members. ”Ordinary Business” means business to be transacted at an Annual General Meeting relating to (i) the consideration of the accounts, balance sheet and the reports of the Board of Directors and Auditors; (ii) the declaration of a dividend; (iii) the appointment of Directors in the place of those retiring; and (iv) the appointment of, and the fixing of the remuneration of, the Auditors. ”Ordinary Resolution” means a Resolution when, at a General Meeting of which the Notice required under the Act has been duly given, the votes cast (whether on a show of hands or on a poll) in favour of the Resolution (including the casting vote, if any, of the Chairman) exceed the votes, if any, cast against the Resolution by Members entitled to vote thereon either in person or, where proxies are allowed, by Proxy. ”Proxy” means an instrument in writing signed by a Member, authorizing another person, whether a Member or not, to attend and vote on his behalf at a Meeting and also means the person so appointed by a Member. ”Quorum” means the minimum number of Members whose presence is necessary for a Meeting. ”Special Business” means business other than the Ordinary Business to be transacted at an Annual General Meeting and all business to be transacted at any other General Meeting. ”Special Resolution” means a Resolution in respect of which (a) the intention to propose the Resolution as a Special Resolution has been duly specified in the Notice calling the Meeting or other intimation of the Resolution has been given to the Members; (b) the Notice required under the Act has been duly given of the Meeting; and (c) the votes cast in favour of the Resolution (whether on a show of hands or on a poll) are not less than three times the number of the votes, if any, cast against the Resolution by Members entitled to vote thereon either in person or, where proxies are allowed, by Proxy. Words and expressions used herein and not defined shall have the meaning respectively assigned to them under the Act.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2

SECRETARIAL STANDARDS - II 1. Convening a Meeting 1.1 Authority As per the provisions of the Act, a General Meeting shall be convened on the authority of the Board. The Board of its own accord or on the requisition of Members shall, either at a Meeting of the Board or by passing a resolution by circulation, convene or authorize the convening of a General Meeting. If, on a requisition having been made in this behalf, the Board fails to call a Meeting, the requisitionists may themselves call the Meeting in the same manner, as nearly as possible, as that in which Meetings are to be called by the Board. 1.2 Notice i.

Notice of every General Meeting shall be given to every Member of the company in writing. Such Notice shall also be given to the every Director and the Auditors of the company, and to the Practicing Chartered Secretary, if any, who has given the Compliance Certificate, to Debenture Trustees, if any, and, wherever applicable or so required, to any other specified recipients.

ii.

Notice shall be given to all persons entitled to receive such Notice, at the address provided by them in Bangladesh or outside Bangladesh. In the case of joint-shareholders, the Notice shall be given to the person whose name appears first in the Register of Members or in the records of the depository, as the case may be.

iii. On receipt of intimation of death of a Member, the Notice of a Meeting shall be sent to the surviving first joint-holder or to the nominee of the sole shareholder or to the person entitled to a share in consequence of the death of the Member. In case of insolvency of a Member, the Notice shall be sent to the assignees of the insolvent or to the person entitled to a share in consequence of the insolvency of the Member. iv. Notice shall be given by hand or by post and shall also be placed on the website, if any, of the company. 1.3 Notification specifying day, date, time and venue of General Meeting i.

The Notice shall specify the day, date, time and venue of the General Meeting with complete address.

ii.

General Meetings shall commence during business hours, on a working day, at the Registered Office of the company or at some other place within the city, town or village in which the Registered Office is situated.

iii. If the venue of the Meeting is not a prominent place, a site map of the venue shall be enclosed with the Notice. iv. The Notice shall prominently contain a statement that a Member entitled to attend and vote is entitled to appoint a Proxy to attend and vote instead of himself and that, except in the case of a private company and a company not having a share capital where the Articles may provide otherwise, a Proxy need not be a Member. 1.4 Notification on nature of Meeting and business to be transacted i.

The Notice shall clearly specify the nature of the Meeting and the business to be transacted thereat.

ii.

In respect of items of Special Business, each such item shall be in the form of a Resolution and shall be accompanied by an explanatory statement which shall set out all such facts as will enable a Member to take an informed decision on the matter.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2 iii. In respect of items of Ordinary Business, Resolutions are not required to be specified in the Notice except where the appointment of Auditors has to be made by a Special Resolution, or where the Auditors or Directors to be appointed are other than the retiring Auditors or Directors, as the case may be. ii.

All Resolutions and the explanatory statement shall be framed in simple and intelligible language so as to enable Members to understand the meaning, scope and implications of the proposed items of business.

iii. The nature of the concern or interest, if any, of Directors in any item of business or in a proposed Resolution shall be disclosed in the explanatory statement, along with the extent of such concern or interest where the item relates to transactions with any other company. iv. Where reference is made to any document, contract, agreement or the Memorandum of Association and Articles, the relevant explanatory statement shall state that such documents are available for inspection and such documents shall be so made available for inspection for not less than two hours during business hours at the Registered Office of the company and copies thereof shall also be made available at the head/corporate office of the company, if such office is situated elsewhere, and also at the Meeting. v. In all cases relating to the appointment or re-appointment of Directors, details of each such Director shall be given, including age, qualifications, experience, date of first appointment on the Board, shareholding position in the company, relationship with other Directors of the company, Directorship in other companies, Membership/Chairmanship of Committees of Boards of other companies and the number of Meetings of the Board attended during the year. vi. In the case of appointment/re-appointment or varying of the terms of remuneration of managerial personnel of the company, their personal resume, terms and conditions of appointment/re-appointment including full details of remuneration sought to be paid and the remuneration last drawn by such person shall be stated in the explanatory statement. 1.5 Sending of Notice and supporting documents to Members Notice and supporting documents shall be sent to all the members at least 14 days before the scheduled date of the Meeting. Where the Notice also is to be published in a newspaper, it shall appear at least twenty-one days before the date of the Meeting and such Notice need not be accompanied by an explanatory statement. 1.6 Notice and accompanying documents may be given at a shorter period of time if consent in writing, in the prescribed form, is given thereto by, in the case of an Annual General Meeting, all the Members entitled to vote at the Meeting and, in the case of any other Meeting, Members holding ninety-five percent of the paid-up share capital carrying voting right or, where the company has no share capital, ninety-five percent of the total voting power. Consent for shorter Notice may be given before or at the Meeting. 1.7 For the listed companies the Notice of the General Meeting shall be published in at least two national daily newspapers, one in Bangla and another in English, having a wide circulation within Bangladesh. 1.8 No business shall be transacted at a Meeting if Notice in accordance with this Standard has not been given. 1.9 Items not specified shall not be transacted i.

At the General Meeting no items of business other than those specified in the Notice shall be taken up for consideration.

ii.

In respect of an item of business if not contained in the Notice convening the Meeting then no Resolution shall be valid if it is passed in the General Meeting. THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2 iii. Where Special Notice is required of any Resolution and Notice of the intention to move such Resolution is received by the company at least fourteen days before the Meeting, such item of business shall be placed for consideration at the Meeting after giving Notice of the Resolution to Members in the manner specified. iv. Any amendment to the Notice, including the addition of any item of business, can be issued provided the notice of amendment is sent to all persons entitled to receive the Notice of the Meeting and is sent within the time limit prescribed for giving of the original Notice. 1.10 The Notice shall be accompanied by an Attendance slip and a Proxy form with clear instructions for filling, stamping, signing and depositing of the Proxy form. 1.11 A Meeting convened upon due Notice shall not be postponed or cancelled If, for reasons beyond the control of the Board, a Meeting cannot be held on the date originally fixed, the Board may defer the Meeting. The Meeting shall be reconvened after giving not less than seven days fresh Notice published in a newspaper having a wide circulation within such Cities of Bangladesh where more than 1,000 Members reside. 2. Frequency of Meetings 2.1

Statutory Meeting

Every public company having a share capital and every public company limited by guarantee and having a share capital shall, after one month but not later than six months from the date on which it is entitled to commence business, hold a Meeting called the Statutory Meeting. 2.2

Annual General Meeting

Every company shall, in each year, hold a Meeting called the Annual General Meeting.

ii.

Every company shall hold its first Annual General Meeting within eighteen months of the date of incorporation and thereafter in each year within six months of the close of the financial year, with an interval of not more than fifteen months between two successive Meetings. The aforesaid period of six months or interval of fifteen months may be extended by a period not exceeding three months with the prior approval of the Registrar of Companies.

2.3 Extra-Ordinary General Meeting Items of business of an urgent nature which need to be transacted before the next Annual General Meeting shall be considered at an Extra-Ordinary General Meeting. 3. Quorum i.

To conduct a valid meeting quorum shall be present at the commencement and throughout the Meeting.

ii.

In the case of a public company a minimum of five Members personally present and entitled to vote, and in the case of a private company, two Members personally present and entitled to vote, shall constitute the Quorum for a valid General Meeting.

iii. Where more stringent requirements for Quorum is prescribed in the Articles then the Quorum shall conform to such requirements. iv. A Meeting must be constituted of at least two individuals present in person. The Quorum requirement of five Members in the case of a public company will be fulfilled where a person acting as an authorized representative of five bodies corporate is present in the Meeting along with another Member personally present. However, if there is no such other Member personally present, the Quorum requirement will not be fulfilled.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2 v. At a General Meeting since Members need to be personally present to constitute the Quorum, Proxies are to be excluded for determining the Quorum. However, a duly authorized representative of a body corporate is deemed to be a Member personally present and enjoys all the rights of a Member present in person. 4. Presence of Directors and Auditors 4.1 Directors i.

The Directors of the company shall attend all Meetings of the company, particularly the Annual General Meeting, and shall be seated with the Chairman.

ii.

If any Director is unable to attend the Meeting for reasons beyond his control, the Chairman shall explain such absence at the Meeting.

iii. The Chairman of the Audit Committee, where such a Committee exists, shall attend the Annual General Meeting. 4.2 Auditors The Auditors of the company are entitled to attend the Annual General Meeting, the Auditors, represented by the proprietor or a partner, as the case may be, shall attend the Meeting if there are any reservations, qualifications or adverse remarks in the Auditorâ&#x20AC;&#x2122;s Report. 4.3 Practicing Chartered Secretary The Practicing Chartered Secretary who has given the Compliance Certificate to a company shall be entitled to attend the Annual General Meeting of that company. 5. Chairman 5.1 Appointment i.

The Chairman of the Board shall take the chair of a general meeting and conduct the Meeting.

ii.

If there is no Chairman or if he is not present within twenty minutes after the time as appointed for holding of the general meeting, or if he express his inability or is unable to act as Chairman of the Meeting, the Directors present shall elect one of themselves to act as the Chairman of the Meeting.

iii. If the Directors fails to elect or if no Director is willing to take the chair, then the Members present shall elect one of themselves to be the Chairman of the Meeting. iv. In the absence of any express provision contained in the Articles, the Members personally present at the Meeting shall elect one of themselves to be the Chairman of the Meeting. v. The Chairman shall ensure that the Meeting is duly constituted in accordance with the Act and the Articles or any other applicable laws, before it proceeds to transact business. The Chairman shall then conduct the Meeting in a fair and impartial manner and ensure that only such business as has been set out in the Notice is transacted. 5.2 The Chairman shall explain the objective and implications of each Resolution before the Resolution is put to vote. 5.3 The Chairman shall provide a fair opportunity to Members who are entitled to vote to raise questions and/or offer comments and ensure that these are answered. 5.4 The Chairman shall not propose any Resolution in which he is deemed to be concerned or interested nor shall he participate in the discussion or vote on any such Resolution. 5.5 If the Chairman is interested in any item of business, he shall entrust the conduct of the proceedings in respect of such item to the Vice-Chairman, if there is one, or to any dis-interested Director or to a THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2 Member and resume the Chair after that item of business has been transacted. A person who so takes the Chair can exercise his casting vote in the event that a vote on such item of business results in a tie. 6. Voting 6.1 Proposing a Resolution i.

Every Resolution shall be proposed by a Member and seconded by another Member entitled to vote thereon.

ii.

Every Member holding equity shares and, in certain events as specified in the Act, every Member holding preference shares, shall be entitled to vote on a Resolution.

iii. A Director shall not propose any Resolution in which he is deemed to be concerned or interested nor shall he participate in the discussion or vote on any such Resolution. 6.2 Vote by Show of Hands i.

Every Resolution shall, in the first instance, be put to vote on a show of hands.

ii.

Every Member entitled to vote on a Resolution and present in person shall, on a show of hands, have only one vote irrespective of the number of shares held by him. Unless the Articles otherwise provide, a Proxy cannot vote on a show of hands.

6.3 By Poll i.

A Member present in person or by Proxy shall, on a poll, have votes in proportion to his share of the paid up equity capital of the company, subject to differential rights as to voting, if any, attached to certain shares as stipulated in the Articles or by the terms of issue of such shares.

ii.

While a Proxy cannot speak at the Meeting, he has the right to demand or join in the demand for a poll.

6.4 Casting Vote i.

The Chairman shall have a casting vote in a poll.

ii.

If the Articles otherwise provide or restricts on any casting vote, then the Chairman shall have no such casting vote.

7. Proxies 7.1 Notice of Right to Appoint Every Notice calling a Meeting of a company which has a share capital or the Articles of which provide for voting at a Meeting by Proxy, shall prominently contain a statement that a Member entitled to attend and vote is entitled to appoint a Proxy to attend and vote instead of himself and that, unless the Articles provide otherwise, a Proxy need not be a Member. 7.2 Form of Proxy i.

An instrument appointing a Proxy shall be either in the Form specified in the Articles or in any of the Forms set out in the Act.

ii.

If the Articles do not provide a form for ‘two way voting’ as per the format set out in Annexure ‘A’, the Articles shall be amended so as to provide accordingly.

iii

An instrument of Proxy duly filled, stamped and signed, is valid only for the Meeting to which it relates including any adjournment thereof.

7.3 Stamping of Proxies An instrument of Proxy is valid only if it is properly stamped. Unstamped or inadequately stamped Proxies or Proxies upon which the stamps have not been cancelled are invalid.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2 7.4 Execution of Proxies i.

In addition to the Member appointing a Proxy, the Proxy-holder also shall sign the instrument of Proxy.

ii.

An authorized representative of a body corporate or of the President of the country, holding shares in a company, may appoint a Proxy under his signature.

7.5 Proxies in Blank and Incomplete Proxies i.

A proxy form shall not be considered valid if it does not state the name of the Proxy.

ii.

In case of an undated Proxy, if it is found otherwise complete in all respects, is lodged within the prescribed time limit, it shall be considered valid.

iii. If a company receives multiple Proxies for the same holdings of a Member, which are either not dated or bear the same date without specific mention of time, all such multiple Proxies shall be treated as invalid. 7.6 Deposit of Proxies i.

Proxies shall either be deposited with the company in person or received through post not later than forty-eight hours before the commencement of the Meeting at which they are to be used and a Proxy shall be accepted even on a holiday if the last date by which it could be accepted is a holiday.

ii.

Proxies may be accepted at a shorter period, being not less than twenty-four hours before the commencement of the Meeting, if the Articles so provide.

iii. A Member who has not appointed a Proxy to attend and vote on his behalf at a Meeting may appoint a Proxy for any adjournment of such Meeting, not later than forty-eight hours before the time of such adjourned Meeting. 7.7 Revocation of Proxies i.

If a Proxy had been appointed for the original Meeting and such Meeting is adjourned, any Proxy given for the adjourned Meeting revokes the Proxy given for the original Meeting.

ii.

A Proxy later in date revokes any Proxy/Proxies dated prior to such Proxy.

iii. A Proxy is valid until written notice of revocation has been received by the company before the commencement of the Meeting or adjourned Meeting, as the case may be. iv. A Proxy need not be informed of the revocation of the Proxy issued by the Member. Even an undated letter of revocation of Proxy shall be accepted. Unless the Articles provide otherwise, a notice of revocation shall be signed by the same person who had signed the Proxy. 7.8 Inspection of Proxies i.

Requisitions, if any, for inspection of Proxies shall be received in writing from a Member at least three days before the commencement of the Meeting.

ii.

Proxies shall be made available for inspection during the period beginning twenty-four hours before the time fixed for the commencement of the Meeting and ending with the conclusion of the Meeting. iii. A fresh requisition, conforming to the above requirements, shall be given for inspection of Proxies in case the original Meeting is adjourned. 7.9 Record of Proxies i.

All Proxies received by the company shall be recorded chronologically in a register kept for that purpose.

ii.

In case any Proxy entered in the register is rejected, the reasons therefore shall be entered in the remarks column of the register. THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2 8. Conduct of Poll i.

When a poll is demanded on any Resolution, the Chairman shall get the validity of the demand verified and shall order the poll forthwith if it is demanded on the question of appointment of the Chairman or adjournment of the Meeting and, in any other case, within forty-eight hours of the demand for poll.

ii.

In the case of a poll which is not taken forthwith, the Chairman shall announce at the Meeting the date, venue and time of taking the poll to enable Members to have adequate and convenient opportunity to exercise their vote. The Chairman shall also announce that any Member who so desires may be present at the time of counting of votes.

iii. A Member who did not attend the Meeting cannot participate and vote in the poll. iv. Each Resolution on which a poll is demanded shall be put to vote separately. v. One ballot paper may be used for two or more items for which poll has been ordered. vi. The Chairman shall appoint at least two scrutinizers to ensure that the scrutiny of the votes cast on a poll is conducted fairly, accurately and properly. At least one of the two scrutinizers shall be a Member who is present at the Meeting and is not an officer or employee of the company. vii. Based on the scrutinizers’ report, the Chairman shall declare the result of the poll, with details of the number of votes cast for and against the Resolution and the final result as to whether the Resolution has been carried or not. viii. The result of the poll shall be displayed on the notice board of the company at its Registered Office and its Corporate/Head Office, if such office is situated elsewhere, and also placed on the website, if any, of the company. In the case of listed companies with more than 5,000 Members, the result of the poll shall also be published in a leading newspaper circulating in the neighborhood of the Registered Office of the company. 9. Withdrawal of Resolutions Any Resolution on an Agenda or items of business which are likely to affect the market price of the securities of the company or regarded as price sensitive if passed shall not be withdrawn. 10. Rescinding of Resolutions A Resolution passed at a Meeting shall not be rescinded other than by a specific Resolution passed at a subsequent Meeting. 11. Modifications to Resolutions Modifications to any Resolution which do not change the purpose of the Resolution materially may be proposed, seconded and adopted by the requisite majority at the Meeting and, thereafter, the amended Resolution shall be duly proposed, seconded and put to vote. No amendment to any proposed Resolution shall be made if it in any way alters the substance of the Resolution as set out in the Notice. Grammatical and clerical errors may be corrected or words translated into more formal language and, if the precise text of the Resolution was not included in the Notice, it may be corrected into a formal Resolution, provided there is no departure from the substance as stated in the Notice. 12. Reading of Report/Certificate i.

The entire Auditor’s Report including the Statement pursuant to the Manufacturing and Other Companies Auditor’s Report Order shall be read at the Annual General Meeting.

ii.

The Compliance Certificate given by the Chartered Secretary in Practice and attached to the Directors’ Report shall also be read at the Annual General Meeting.

THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2 13. Distribution of Gifts At or in connection with the General Meeting no gifts, gift coupons, or cash in lieu of gifts shall be distributed to Members. 14. Adjournment of Meetings i.

A duly convened Meeting shall not be adjourned arbitrarily by the Chairman. The Chairman may adjourn a Meeting with the consent of the Members and shall adjourn a Meeting if so decided by the Members.

ii.

Meetings may be adjourned for want of requisite Quorum. The Chairman may adjourn a Meeting in the event of disorder or other like causes, where it becomes impossible to conduct the Meeting and complete its business.

iii. If a Meeting is adjourned sine-die or for a period of thirty days or more, a Notice of the adjourned Meeting shall be given in accordance with the provisions contained hereinabove relating to Notice. iv. If a Meeting is adjourned for a period of less than thirty days, in the case of listed companies with more than 5,000 Members, Notice thereof specifying the day, date, time and venue of the Meeting shall be published immediately in a newspaper having a wide circulation within such cities of Bangladesh where more than 1,000 Members reside. v. If a Meeting, other than a requisitioned Meeting, stands adjourned for want of Quorum, the adjourned Meeting shall be held on the same day, in the next week at the same time and place or on such other day and at such other time and place as may be determined by the Board. In the case of listed companies with more than 5,000 Members, Notice thereof, specifying the day, date, time and venue of the Meeting, shall be published immediately in a newspaper having a wide circulation within such Cities of Bangladesh where more than 1,000 Members reside. vi. If, at an adjourned Meeting, a Quorum is not present within half an hour from the scheduled time, the Members present, being not less than two in number, will constitute the Quorum. vii. If, within half an hour from the time appointed for holding a requisitioned Meeting, a Quorum is not present, the Meeting shall stand dissolved. viii. At an adjourned Meeting, only the unfinished business of the original Meeting shall be considered and transacted. ix. Any Resolution passed at an adjourned Meeting shall be deemed to have been passed on the date of the adjourned Meeting and not on any earlier date. 15. Minutes i.

Minutes shall contain a summary of the proceedings of the Meeting, recorded fairly, correctly, completely and in unambiguous terms, and shall be written in third person and past tense.

ii.

The Minutes shall be entered and signed within thirty days from the conclusion of the Meeting. In case a Meeting is adjourned, Minutes shall be entered in respect of the original Meeting as well as the adjourned Meeting within thirty days from the dates of the respective Meetings. The pages of the Minutes Book shall be consecutively numbered. The Minutes shall be dated and signed by the Chairman of the Meeting within a period of thirty days or, in the event of death or inability of the Chairman within that period, by a Director who was present in the Meeting and authorized by the Board for the purpose.

iii. The Chairman shall initial each page of the Minutes, sign the last page of the Minutes and append to such signature the date on which he has signed the Minutes. THE CHARTERED SECRETARY APRIL - JUNE 2012

ICSB BSS-2 iv. Minutes, once entered in the Minutes Book, shall not be altered. However, minor errors may be corrected and initialed by the Chairman even after the Minutes have been signed. v. Minutes shall not be pasted or attached to the Minutes Book. vi. Minutes, if maintained in loose-leaf form, shall be bound at reasonable intervals. 16. Recording in the Minutes i.

The name of the Chairman of the Meeting and the names of Directors including the Chairman of the Audit Committee, if any, present at the General Meeting shall be recorded.

ii.

The number of Members required to form the Quorum and the fact that the required Quorum was present shall be recorded.

iii. The number of Members present in person and through representatives and Proxies shall be recorded. iv. The presence, at the Annual General Meeting, of the Auditor and the Practicing Chartered Secretary who has given the Compliance Certificate, shall be recorded. v. If the Chairman was interested in an item of business at the Meeting, the fact that he vacated the Chair and requested the Vice-Chairman, if any, or some other Director or Member to Chair the Meeting to transact such business, shall be recorded. 17. Preservation of General Meeting Minutes and other Records i.

Minutes Book shall be kept separately from those books used to record Minutes of any other meetings to record the Minutes of Meetings and shall be kept at the Registered Office of the company.

ii.

The Minutes of all Meetings shall be preserved permanently. Minutes can be inspected by any Member.

iii. The Statutory Auditors or Cost Auditors of the company or Chartered Secretary in Practice appointed by the company can also inspect the Minutes Book in the course of their audit or certification. iv. A company if has been merged or amalgamated with any other company, under a scheme of amalgamation, the Minutes of all Meetings of the transferor company shall be preserved permanently by the transferee company, notwithstanding the fact that the identity of the transferor company may not survive such arrangement. v. Office copies of Notices and supporting papers relating to the Notice shall be preserved in orderly manner for as long as they remain current or for twelve years, whichever is later, and may be destroyed thereafter, on the authority of the Board. 18. Disclosure The Annual Report of a company shall disclose particulars of all Meetings held during the last three years.

EFFECTIVE DATE This Standard shall come into effect from the date approved by the Council.

Annexure â&#x20AC;&#x2DC;Aâ&#x20AC;? FORM OF PROXY

THE CHARTERED SECRETARY APRIL - JUNE 2012

Notifications

THE CHARTERED SECRETARY APRIL - JUNE 2012

Notifications

THE CHARTERED SECRETARY APRIL - JUNE 2012

Notifications

THE CHARTERED SECRETARY APRIL - JUNE 2012

Notifications

THE CHARTERED SECRETARY APRIL - JUNE 2012

Notifications

THE CHARTERED SECRETARY APRIL - JUNE 2012

Notifications

THE CHARTERED SECRETARY APRIL - JUNE 2012

Notifications

THE CHARTERED SECRETARY APRIL - JUNE 2012

Notifications

THE CHARTERED SECRETARY APRIL - JUNE 2012

Notifications

THE CHARTERED SECRETARY APRIL - JUNE 2012

Notifications

THE CHARTERED SECRETARY APRIL - JUNE 2012

Notifications

THE CHARTERED SECRETARY APRIL - JUNE 2012

Notifications

THE CHARTERED SECRETARY APRIL - JUNE 2012