ICSB Journal Final (July-September 2018)

Volume : XX

Issue : 3

July - September 2018

Responsiveness to Corporate Governance in Bangladesh

INSTITUTE OF CHARTERED SECRETARIES OF BANGLADESH (ICSB)

Institute of Chartered Secretaries of Bangladesh (ICSB) was 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 / Company Secretaries in Bangladesh.

The Institute was initially established under a license from the Ministry of Commerce in 1997 as the Institute of Chartered Secretaries and Managers of Bangladesh (ICSMB) and subsequently was converted to Institute of Chartered Secretaries of Bangladesh (ICSB).

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 President is the head of the Institute.

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 the Bangladesh Securities and Exchange Commission (BSEC), 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 2016-2019

Mohammad Sanaullah FCS Safiar Rahman FCS Md. Selim Reza FCS Nazmul Karim FCS Mohammad Asad Ullah FCS Itrat Husain FCS Md. Shahid Farooqui FCS Md. Azizur Rahman FCS A. K. M. Mushfiqur Rahman FCS Mohammad Bul Hassan FCS Gopal Chandra Debnath FCS Md. Anwar Hossain Chowdhury FCS Salim Ahmed FCS Pranesh Ranjan Sutradhar, Additional Secretary, GoB Mohammad Abu Faruque, Additional Secretary, GoB Nasreen Begum, Additional Secretary, GoB Khandaker Kamaluzzaman, Commissioner, BSEC Md. Jakir Hossain, Registrar, RJSC, GoB

EDITORIAL BOARD

Editor Prof. Dr. Feroz I. Faruque FCS Members Itrat Husain FCS Bazlur Rahman Sikder FCS Kazi Ashiqur Rahman FCS Subash Chandra Moulick FCS Mohammad Shahajahan FCS Md. Shiful Islam ACS

SUBSCRIPTION RATE

For Students Others

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: per copy Tk. 100; per year Tk. 350 : per copy Tk. 150; per year Tk. 560

President Senior Vice President Vice President Treasurer Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor

IN THIS ISSUE

Editorial

3

Message from the President

4

The Council 2016-2019

7

Institute News

8

ARTICLES

PUBLISHED BY Institute of Chartered Secretaries of Bangladesh (ICSB)

(Established under Chartered Secretaries Act 2010 (Act No. 25 of 2010)

The views and opinions expressed in the articles published in this Journal are those of the writers only.

ADMINISTRATIVE MINISTRY Ministry of Commerce Government of the People’s Republic of Bangladesh INSTITUTE OFFICE Padma Life Tower (8th Floor) 115 Kazi Nazrul Islam Avenue Bangla Motor, GPO Box No. 3100 Dhaka-1000, Bangladesh Phone : +88 02 933 9957, 933 4878, 933 6972, 4831 5338 +88 02 4934 9578, 933 6901 (Extn.-101-108) Fax : +88 02 933 9957 Mobile : 01708 030804 E-mail : secretary@icsb.edu.bd, icsb@icsb.edu.bd Web : www.icsb.edu.bd CAMPUS Padma Life Tower (7th Floor) 115 Kazi Nazrul Islam Avenue Bangla Motor, GPO Box No. 3100 Dhaka-1000, Bangladesh

Corporate Social Responsibility (CSR): An Act of Magnanimity?

- N. G. Chakraborty FCS

26

Nexus between Corporate Governance and Corporate Leadership - Prof. Dr. Feroz I.Faruque FCS

27

Corporate Leaders And Corporate Governance - Subash Chandra Moulick FCS

30

An Empirical Study on Responsiveness of the Selected Companies to Corporate Governance Guidelines in Bangladesh - Mohammad Shahajahan FCS

34

Views on Corporate Governance Issues- Bangladesh Perspective - Mir Shariful Bashar ACS

38

Notification

43

EDITORIAL

this issue...

GOOD GOVERNANCE – NO MORE A PREROGATIVE!

G

ood governance principles used to make up an informal normative framework of `how it should be, in order to be good’. It assumed that one follows the principles, but generally principles were not enforceable legally. Yet, they were subject to social control (Arjoon, 2006).

By linking (quasi)-legal instruments to the principles, principles have become legally enforceable (e.g. a regular code or charter). Legal security guarantees that processes follow fixed procedures and standards. This is a useful principle for all processes of equality before the law. For example when scrutinizing other actors, the auditors must apply this principle to prevent individual or political interests get priority on his objectivity and independence of integrity is related to the principles of objectivity, honesty and devotion. In a certain way it has also a connection with stewardship or serving the stakeholders interest.

Moreover, according to the corporate governance rules the independence of directors is a requirement in delivering good governance. Integrity is a component of the core principles ‘ethical conduct’ and ‘accountability’.

Stewardship or serving the public interest is another typical principle mentioned in government governance models.

Employees in the public sector are like ‘stewards of the public interest’ and have for that reason access to a lot of power and resources.

Handle those resources and power in an acceptable way, is only possible by acquiring a truthful, reliable, efficient, effective and transparent conduct. Not only in Private sector, Leadership is also an essential principle of government governance to provide implementation, evaluation and improvement of the strategies.

Government high officials now have to practice performance commitments every year and they are also being evaluated against those performance commitments and criteria to evaluate their performance. Leaders should promote and support the principles by practicing ‘leadership by examples’.

Prof. Dr. Feroz I. Faruque FCS Editor

July - September 2018 | 3

4 | July - September 2018

D

ear Professional Colleagues,

I take this opportunity to thank all the members of this institute and look forward to our teamwork in creating guidelines to achieve the best standard of corporate governance in Bangladesh. As we are in the era of competitions and challenges, we must come together to share ideas and resources so we can plan and create a better future for the next generation of corporate leader.

I would like to congratulate the thirty (30) Qualified Chartered Secretaries who were inducted as Associates and six (06) Associate Members who were elevated as Fellow Members during this quarter. I wish a glorious career for them and expect that they will contribute generously for the development of the institute.

Promoting Chartered Secretary education and attracting brilliant students to the profession is one of our challenges. A good number of students enrolled in July-December 2018 Session. The institute has taken initiative and drive to encourage brilliant students’ enrolment. In this connection, the institute is going to organize demonstrations in the leading universities of Bangladesh.

It is with great pleasure that the Institute of Chartered Secretaries of Bangladesh (ICSB) is going to organize National Convention and Convocation in November 2018. We are also going to organize 4h ICSB National Award for Corporate Governance Excellence Award.

Speaking of the upcoming events, we have a wonderful line up of arranging such great events. We not only strive for excellence in Chartered Secretaries profession in Bangladesh, also engaged in transformation of Governance exercise in the corporate sector of Bangladesh You will be happy to learn that ICSB National Convention 2018 will be held on November 10, 2018 at Ball Room of Radisson Blu Dhaka Water Garden. The ICSB National Convention is the premier conference for practicing Chartered Secretaries and Chartered Secretaries working in corporate sector. This will be attended by entrepreneurs, corporate leaders, professionals, practitioners. Here, professionals will gather together to share ideas, experiences and will have the opportunities to meet many individuals with a

multitude of experiences, challenges, points of view, approaches, leadership styles, and networking connections.

In recognition of the time and hard work our students commit to their studies, ICSB conducts Convocation once in every two year to award Certificate of Membership to newly qualified Chartered Secretaries.

Convocation day is an important milestone of qualified Chartered Secretaries and a day they will always remember. This is a special day for the newly qualified Chartered Secretaries. This convocation is a platform for us to welcome all newly qualified Chartered Secretaries into the folds of the profession. This year convocation will be held on November 10,2018 Every year ICSB has been organizing Corporate Governance Excellence Award same as previous. You may have noticed that 4h ICSB National Award for Corporate Governance Excellence Award will be given to those who are best compliant company in Bangladesh on November 10, 2018 Corporate Governance Awards recognizes top all-rounders and "companies with good corporate governance are more likely to continue to be able to attract investments, even in difficult times" I believe members are the back bone of ICSB and look forward to engaging with as many members as possible over the next three important events performance. We have to work hard to make the upcoming events successful which will help us to continue building our influence, our relationships and strong presence in the corporate sector of Bangladesh.

I look forward to meeting and working with all members to ensure the continued growth of ICSB. In conclusion I urge upon you to support and lend your helping hand with our activities so that we can go forward and create together a world class professional body.

May Allah help us to do all good things for our beloved Institute.

Mohammad Sanaullah FCS

PRESIDENT

July - September 2018 | 5

MESSAGE FROM THE PRESIDENT

CHALLENGES FOR CHARTERED SECRETARY PROFESSIONALS IN ADOPTING CORPORATE GOVERNANCE CODE

C.S.

ADMISSION NOTICE JANUARY-JUNE

IF 2018 SESSION YOU ARE WILLING TO PREPARE YOURSELF FOR A CHALLENGING AND REWARDING PROFESSION ‘CHARTERED SECRETARY’ (CS) IS THE RIGHT CHOICE FOR YOU. THE CHARTERED SECRETARY IS THE GLOBAL REQUISITE QUALIFICATION TO BECOME A COMPANY SECRETARY.

ADMISSION IN FOUNDATION LEVEL Application in prescribed forms are invited from Graduates other than business background and business graduates with less than 6 points for undertaking a Foundation Course for (Six) months for January-June, 2018 Session. After passing they will be automatically eligible for enrollment in Executive Level-I course in the subsequent semester.

ADMISSION IN CS EXECUTIVE LEVEL-I Applications in prescribed forms are invited from the business graduates or MBA/MBM/MBS/CA/ACCA/CMA who are interested to pursue the CS Course for enrollment in its Executive Level-I of January-June, 2018 Session.

DATE OF APPLICATION & ADMISSION TEST

MINIMUM ELIGIBILITY

Application form is available from - Nov. 20, 2018 to Dec. 20, 2018 Last date of submission of application - December 20, 2018 (Original Certificates must be shown at the form submission time) Admission Test (Friday) - December 28, 2018 University Graduate with 6 points (1st Div.=3, 2nd Div.=2, 3rd Div.=1) or equivalent CGPA. A-Level qualified with business graduate may also apply.

Tk. 20,650 Tk. 1,000 FEES FOR FOUNDATION LEVEL Tuition fees for Foundation Level Tk. 15,000 Application Form and Students’ Handbook Tk. 1,000 CLASS TIMINGS Day Shift: 8.30am to 5.00pm (Friday & Saturday) FOR EXECUTIVE LEVEL-I Evening: 6.30pm to 9.30pm (4 Days in a week) COURSE DURATION Total 5 Semesters (excluding Foundation Course) of 6 months each.

FEES FOR EXECUTIVE LEVEL-I

Tuition fees for Executive Level - I

Application Form and Students’ Handbook

For further information, please contact

INSTITUTE OF CHARTERED SECRETARIES OF BANGLADESH Padma Life Tower (8th Floor), 115, Kazi Nazrul Islam Avenue, Bangla Motor, Dhaka-1000 Tel: 880-2-933 6901, 4934 9578 /101 & 105 Mobile: 01708 030804, E-mail: dy.secy@icsb.edu.bd, education@icsb.edu.bd Please note that Admission Forms are also available at ICSB Website www. icsb.edu.bd

THE COUNCIL 2016-2019 July - September 2018 | 7

THE 3RD QUARTER (JULY – SEPTEMBER) OF THE YEAR 2018 WAS EVENTFUL FOR THE INSTITUTE

I

•

Seminar and Conference Sub Committee meeting on August 01, 2018;

Standing

•

Company Law Review Sub Committee meeting on August 11, 2018;

Following Council and Standing Committees meeting were held during the quarter:

•

Members’ Welfare and Recreation Sub Committee meeting on September 08, 2018.

NTERNAL MEETINGS Meetings of Committees

the

Council

&

•

The Council meetings September 22, 2018;

on July 14, July 25 and

•

The Corporate Governance Committee meeting on July 03 and July 19, 2018;

Meeting with the Chairman, Insurance Development & Regulatory Authority (IDRA)

•

The Examination Committee meeting on July 08, July 14, and September 22, 2018;

•

The Executive Committee meetings on July 11 and September 10, 2018;

•

The Education Committee meetings on August 29 and September 26, 2018;

•

The Membership & Registration meeting on September 18, 2018

A delegation of ICSB led by its Vice President and the Chairman, CS Regulations Sub Committee, Mr. Md. Selim Reza FCS called on Mr. Md. Shafiqur Rahman Patwary, Chairman, Insurance Development & Regulatory Authority (IDRA) at Sadharan Bima Corporation Tower, Dilkusha, Dhaka on July 15, 2018.

Vice President of the Institute highlighted various activities pursued by ICSB and requested Chairman, IDRA for inclusion of necessary provisions to appoint Chartered Secretary professionals as Company Secretary of the Insurance Companies for the betterment of the companies. He also requested for a relaxation of 15 years relevant work experience for CS professionals for hiring as CEO. Hon’ble Chairman, IDRA and Dr. M Mosharraf Hossain, Member, IDRA assured that ICSB’s proposals would be taken into consideration.

Committee

Meetings of Sub Committees Meetings of the following Sub Committees were also held during the quarter: •

Corporate Laws Review Sub Committee meeting on July 04, 2018;

•

CS Regulations Sub Committee meetings on July 10 and August 12, 2018;

•

Professional Development Sub Committee meetings on July 18, July 26, August 01, September 05 and September 24, 2018;

•

Project Development and Implementation Sub Committee meeting on July 22, 2018;

•

Committee for Professional Development for Women Sub Committee meeting on July 22, 2018;

•

Journal & Publication Sub Committee meetings on July 28, August 12, September 08 and September 24, 2018;

8 | July - September 2018

EXTERNAL MEETINGS

ICSB delegates with the Chairman, IDRA

Meeting with the Registrar, Joint Stock Companies and Firms (RJSC) A delegation of ICSB led by its Vice President, Mr. Md. Selim Reza FCS called on Mr. Md. Zakir Hossain, newly appointed Registrar, Joint Stock Companies and Firms on Sunday, July 22, 2018 at the office of the Registrar.

President of the Institute briefed the Registrar on recent activities of ICSB and stressed on updating the Companies Act in line with the suggestions provided

by ICSB. The Registrar thanked the delegates and provided his valuable suggestions on promoting professionalism and development of the Chartered Secretaries profession in Bangladesh.

The delegation also included Mr. Md. Selim Reza FCS, Vice President, Mr. S. Abdur Rashid FCS, Mr. Kazi Md. Shamsul Alam, Secretary of ICSB.

Mr. Md. Selim Reza FCS congratulated the Registrar on his assumption of the office. He then briefed the Registrar on recent activities of ICSB as a statutory body under the Ministry of Commerce and expected his guidance and cooperation in the coming days. He particularly emphasized on updating of the Companies Act and also requested to incorporate the suggestions of ICSB. The Registrar thanked the delegates and expressed his satisfaction at the activities of ICSB and appreciated its role in promoting professionalism and development of the Chartered Secretaries profession in Bangladesh.

ICSB delegates with the Registrar of Joint Stock Companies and Firms Meeting with the Minister, Ministry of Law, Justice and Parliamentary Affairs The President of ICSB Mr. Mohammad Sanaullah FCS along with Mr. Md. Selim Reza FCS, Vice President, Mr. Itrat Husain FCS, Past President & Council Member ICSB met Mr. Anisul Huq MP, Hon’ble Minister, Ministry of Law, Justice and Parliamentary Affairs, GoB at his office on Sunday, September 9, 2018. The President of ICSB briefed the Minister on various ongoing activities of the Institute and thanked him for his generous support and cooperation with Institute.

ICSB delegateswith the Registrar Joint Stock Companies and Firms The delegation also included Mr. Salim Ahmed FCS, Council Member, Mr. Kazi Md. Shamsul Alam, Secretary, ICSB. Meeting with the Registrar, Joint Stock Companies and Firms A delegation of ICSB led by its President, Mr. Mohammad Sanaullah FCS called on Mr. Md. Zakir Hossain, Registrar, Joint Stock Companies and Firms on Sunday, August 13, 2018 at the office of the Registrar.

Hon’ble Minister gave a patient hearing to the delegation and thanked them for the activities initiated by the Institute. He hoped that through these initiatives Good Corporate Governance will be established in corporate sector of Bangladesh.

The President, ICSB requested the honorable Minister to include the Chartered Secretary Profession to the Income Tax Ordinance 1984 as Income Tax Practitioners like Chartered Accountants and Cost & Management Accountants. The Honorable Minister took it very positively for the development of the profession. Mr. Kazi Md. Shamsul Alam, Secretary and Mr. Md. Shamibur Rahman ACS, Director (A & F) of the Institute were also present during the Meeting.

July - September 2018 | 9

INSTITUTE NEWS

Among others Mr. Md. Monirul Alam FCS, Past Vice President, Members and others of CS Regulations Sub Committee, Mr. Kh. Nasir Uddin Mahmud ACS, Mr. Md. Sharif Hasan ACS, Mr. Kazi Md. Shamsul Alam, Secretary, ICSB and Mr. Md. Shamibur Rahman ACS, Director (A & F) were also present.

CPD Seminar of ICSB on “Finance Act, 2018 vis-à-vis National Budget 2018-2019” ICSB organized a CPD Seminar on ‘Finance Act 2018 vis-à-vis National Budget 2018-2019’ on August 04, 2018 at Dhaka Cub, Dhaka.

ICSB delegates with the Minister, Ministry of Law, Justice and Parliamentary Affairs Meeting with the Chairman, Financial Reporting Council (FRC) The Vice President of ICSB Mr. Md. Selim Reza FCS along with Mr. Itrat Husain FCS, Past President & Council Member of ICSB called on Mr. C. Q. K. Mustaq Ahmed, Chairman, Financial Reporting Council (FRC) on Tuesday, September 18, 2018 at his office at Mohakhali DOHS, Dhaka. The Vice President of the Institute briefed the Chairman, FRC on various ongoing activities of the Institute and thanked him for his support and cooperation towards the Institute. Mr. Itrat Husain FCS, Chairman, Organizing Committee, ICSB briefed Mr. Ahmed about the forth coming 7th ICSB Convocation with invitation to grace the occasion as the Special Guest.

Chairman, FRC gave a patient hearing to the delegation and thanked them for the activities initiated by the Institute and for the invitation. He expressed his

ICSB delegates with the Chairman, FRC satisfaction over ICSB’s contribution to develop, promote and regulate the profession of Chartered Secretary in Bangladesh.

Kazi Md. Shamsul Alam Secretary and Md. Shamibur Rahman ACS, Director (A & F) of the Institute were also present during the Meeting.

10 | July - September 2018

Mr. Md. Mosharraf Hossain Bhuiyan NDC, Senior Secretary, Internal Resources Division & Chairman National Board of Revenue (NBR) graced the occasion as the Chief Guest while Mr. Kanon Kumar Roy, Member (Tax Policy), National Board of Revenue, graced the occasion as Special Guest. The Keynote Paper was presented by Mr. Sadhan Chandra Das FCS, Partner, Sadhan Das & Co. Chartered Accountants. Prof. Dr. Feroz Faruque FCS and Mr. Md. Azizur Rahman FCS were the official discussant.

CPD Seminar on “Finance Act, 2018 vis-à-vis National Budget 2018-2019” Mr. Mohammad Asad Ullah FCS, Immediate Past President and Chairman, Professional Development Sub- Committee, Council Member of ICSB Chaired the CPD. He referred to section 174 of the Income Tax Ordinance, 1984 and Rule 37 of the Income Tax Rules 1984 which provides the eligibility of Chartered Secretaries as Income Tax Practitioner (ITP). He sincerely expected that the Chairman and Members of National Board of Revenue will take necessary steps to include ICSB Members as ITP and Mushak Agent in the Income Tax Ordinance and VAT law by issuing necessary SRO(s). He also urged the NBR to reduce the highest ceiling of individual tax rate from 30% to 25% and exempt the surcharge on individual’s assets.

The Chief Guest said that domestic resource mobilization is highly important as some mega projects are now being implemented from the government’s own funds. Members of the Institute of Chartered Secretaries of Bangladesh (ICSB) have been playing important role in revenue collection by carrying out the responsibilities of important positions in different institutions in the corporate arena. About the demand of serving as Income Tax Practitioners of ICSB Members, the NBR Chairman assured that he will take

Mr. Sadhan Chandra Das, the Keynote paper presenter focused on Finance Act 2018 and Amendments in Income Tax Ordinance, 1984.

During question-answer session ICSB Members asked various questions and NBR Chairman and Member answered the questions.

discussion would be arranged at the Institute with the Commerce Ministry. ICSB is going to receive Corporate Governance Training Tool Kits which will help the Members to be more efficient and adaptive to face the upcoming corporate challenges.

During floor discussion, Members of the Institute and the Company Secretaries of different organizations participated and discussed on different points.

The ceremony started with recitation from the Holy Quran. After this, one-minute silence was observed in memory of the Father of the Nation Bangabandhu Sheikh Mujibur Rahman and his family members and a prayer was offered for eatenal peace of the departed souls.

ICSB holds its 8th AGM The 8th Annual General Meeting (AGM) of the Institute of Chartered Secretaries of Bangladesh (ICSB) was held at Hotel Purbani International, Dhaka, on Saturday, July 25, 2018 at 04:00 pm. Mr. Mohammad Sanaullah FCS, President of the institute presided over the meeting.

Treasurer of the Institute Mr. Nazmul Karim FCS, placed the Audited Financial Statements of ICSB for the year ended on December 31, 2017 and also presented the highlights of the Audited Financial Statements.

Participants of the 8th AGM Mr. Mohammad Bul Hassan FCS, Senior Vice President, Mr. Md. Selim Reza FCS Vice President, Mr. Mohammad Asad Ullah FCS, IPP & Council Member, Mr. Gopal Chandra Debnath FCS, Council Member, Mr. AKM Mushfiqur Rahman FCS, Council Member, Mr. Salim Ahmed FCS, Council Member and Mr. Md. Shahid Farooqui FCS, Council Member and Secretary of the Institute, Mr. Md. Kazi Shamsul Alam were also present at the meeting. A large number of members were present in the meeting and highly appreciated the performance of the Institute and congratulated the Council for working successfully. They also put their valuable suggestions towards the development of the Institute.

ICSB holds Workshop on new ‘Corporate Governance Code’ and ‘Financial Reporting and Disclosures’ notifications

Council Members at the 8th AGM The President in his speech highlighted the major activities and achievements of the Institute. Among them successfully holding of 4th Corporate Governance Award Programme, 20th anniversary, workshops and CPD programmes on New Companies Act, Finance Act etc. He also pointed out that BSEC recently imposed Corporate Governance Code which would help the profession. The President encouraged Senior Members to go for private practice.

The president of the Institute shared that new Companies Act is now being finalized. A round table

Institute of Chartered Secretaries of Bangladesh organized a workshop on July 28, 2018 at the Conference hall of the Institute on the new ‘Corporate Governance Code’ and ‘Financial Reporting and Disclosures’ notifications issued by Bangladesh Securities and Exchange Commission (BSEC). The workshop was Chaired and conducted by Mr. Mohammad Sanaullah FCS, President, Institute of Chartered Secretaries of Bangladesh.

In his presentation he focused on new provisions that are incorporated in Corporate Governance Code and Financial Reporting and Disclosures in comparison with earlier provisions. He also highlighted the relevant

July - September 2018 | 11

INSTITUTE NEWS

necessary steps to amend the Income Tax Ordinance in the next budget session.

provisions which are in practice in our neighboring countries. The President mentioned that family governance is more popular than Corporate Governance to the local entrepreneurs of our country.

In such business environment Chartered Secretaries have been working to establish Corporate Governance in the corporate sector of our country. BSEC has been working on these issues since its inception and has released new Corporate Governance Code and Financial Reporting and Disclosures matters.

Snapshot of the Workshop

Corporate Governance Code and Financial Reporting and Disclosures Programme During Question & Answer session, Members of the Institute discussed different aspects of recently notified Corporate Governance Code mainly the practical application of this and the difficulties in application of different provisions. The President ICSB answered the questions. A large number of the members of ICSB participated in the workshop.

Workshop on “How to Behave Professionally?”

ICSB organized a workshop for the Members of the Institute on “How to Behave Professionally” on Saturday, September 29, 2018 at the Institute at Padma Life Tower, 115 Kazi Nazrul Islam Avenue, Dhaka. Mr. Mohammad Sanaullah FCS, President of the Institute conducted the comprehensive presentation.

He highlighted on the different aspects of professional etiquette, such as- How to behave with colleagues and clients?

- How to say to ‘no’ to a customer?

- How to build professional network/relationship?

- How to improve listening?

- How to adopt PET? - How to maintain a clean and tidy environment to follow He also discussed on acceptable rules at the official attire and decorum of business meeting. Overall the workshop was very useful and productive for the professional Chartered Secretaries. Members highly appreciated for presenting such relevant topics for them.

12 | July - September 2018

Mr. Safiar Rahman FCS, Senior Vice President of the Institute mentioned that this workshop would help to raise consciousness among Members. A large number of Professionals, Qualified Chartered Secretaries and Corporate Executives from leading corporate houses also attended the programme.

ICSB Organized Orientation Programme for 42nd Batch to the trainees The Institute has organized an orientation programme for the students of 42nd Batch of Chartered Secretary Course at ICSB Campus, 115 Kazi Nazrul Islam Avenue, Bangla Motor, Dhaka on Saturday, August 11, 2018 at 4:00 pm. The programme began with the recitation from the Holy Quran. Mr. Mohammad Bul Hassan FCS, Senior Vice President of the ICSB welcomed the newly admitted students. He discussed the 20 years history of ICSB and highlighted the prospects of Chartered Secretary profession worldwide. He briefly discussed CS course curriculum, classes and examination system and advised students to attend classes regularly and follow the rules & regulations of the institute.

Mr. Mohammad Sanuallah FCS, President of the Institute inaugurated the programme by greeting students and urged the students to strive for academic excellence, personal values and social concern. He mentioned that Chartered Secretary profession is a challenging and rewarding profession in the corporate world and talked about the plethora of opportunities in corporate sector at home and abroad. He also emphasized the need of value addition, creativity and innovation in order to show excellence in professional field and to set a golden platform for the future generation. The President added that the Chartered Secretary is the only recognized profession to become a Company Secretary. Mr. Md. Selim Reza FCS, Vice President of the Institute discussed about the role of Chartered Secretaries in the corporate management

A good number of students were present in the program and participated spontaneously during the question and answer session. Students asked various relevant questions regarding CS course and profession. They also highly appreciated the Chartered Secretary profession. The President of ICSB responded to their question. Mr. Nazmul Karim FCS, Treasurer of the Institute gave vote of thanks on behalf of the Institute.

Litigation Management (Offence, Penalty, Trail) and Appeal, Alternative Dispute Resolution (ADR), Withholding VAT and VAT Agents & VAT Consultants as well as Customs Classification and Duty Structure & Procedures. Twenty Three participants attended the training programme. In the concluding session, Mr. Mohammad Sanaullah FCS, President of the Institute delivered his concluding speech to the participants and distributed certificates among them.

Tax Management: Four (04) days Professional Training Program on “Tax Management” was held from July 29 to August 01, 2018 at the Training Room of the Institute. Mr. Ranjan

ICSB office Bearer in the 42nd Batch Orientation Programme

Training Program: Following training courses were organized by ICSB as a part of the Management Development Programme: Customs & VAT Management

Participants of the Training with Facilitator Four (4) days Professional Training Program on “Customs & VAT Management” was held on from July 24 to July 28, 2018 at the Training Room of the Institute.

Some important topics were covered in the training session such as Finance Act 2018 (VAT Portion) and VAT Registration, Imposition of VAT, VAT Calculation, Collection & Return Preparation, VAT Accounting system, VAT Deduction at Source (VDS), VAT Audit and investigation, VAT Authority, Power and Litigation Management (Irregularities and Non-Compliance),

Tax Management Tranning Participants Kumar Bhowmik FCMA, Commissioner of Taxes, National Board of Revenue (NBR) inaugurated the program. Some important topics were covered in the training session such as Finance Act 2018 and its Impact, Salary Tax & Wealth Statement Analysis, Assessment Procedure, Corporate Tax Computation, Tax Deduction at Source & Payment of Advance Tax, Filling of Tax Return, Appeal & Revision Procedure and Corporate Tax Planning. Thirty three participants attended the training program. Mr. Sadhan Chandra Das FCS, Faculty Member of the Institute delivered his concluding speech to the participants and distributed certificates among them.

Digital Transformation: Paperless Board Meeting

Navigating

towards

ICSB and Infosapex, an IT solution provider company jointly organized a programme on “Digital transformation: Navigating towards Paperless Board Meeting”on Saturday, September 08, 2018 at the Institute of Diploma Engineers (IDEB) at Kakrail in the City.

Mr. Shyam Sunder Sikder, Secretary, Posts and Telecommunications Division was the Chief Guest. Mr. Mohammad Sanaullah FCS, President, ICSB was the

July - September 2018 | 13

INSTITUTE NEWS

and also corporate expectations from the new generation of management personnel.

session chair of the event. Mr. Md. Zakir Hossain, Registrar, the Registrar of Joint Stock Companies and Firms (RJSC), Mr. Hossain Sadat FCS. And Mr. Md. Sami Ahmed, Component Team Leader (IT/ITES), Leveraging ICT for Growth, Employment and Governance and Dr. Md. Mostofa Akbar, Head, Department of Computer Science and Engineering BUET also attended.

The programme included a keynote speech from the CEO of Infosapex Mr. Md. Imrul Hasan where he discussed about the drawbacks of using papers in the board meetings and how it can be developed by using a software driven solution which can navigate the board meetings to a completely paperless environment.

Snapshot of the QCS Internship Report Presentation Programme QCS Internship Guideline Programme Internship guideline programme of the January-June 2018 Session for the Qualified Chartered Secretaries (QCS) was held on Wednesday, September 26, 2018 at ICSB Campus, Dhaka.

Programme on “Digital Transformation: Navigating towards Paperless Board Meeting” QCS Internship Report Presentation Programme Qualified Chartered Secretaries (QCS) Internship Report Presentation Programme was held at ICSB Campus, 115 Kazi Nazrul Islam Avenue, Dhaka on Saturday, September 08, 2018.

Mr. Mohammad Sanaullah FCS, President of the Institute, Mr. Md. Selim Reza FCS, Vice President, Mr. Gopal Chandra Debnath FCS, Council Member, Mr. Salim Ahmed FCS, Council Member were present at the program to evaluate the reports. A total of twenty one QCS presented there reports. After passing the two and a half years Chartered Secretary (CS) course, a QCS has to undergo an internship programme in a listed company. This internship programme enables QCS to gain first-hand exposure of working in the real corporate world. It also allows QCS to harness the skill, knowledge, and theoretical practice they learned at ICSB. During the question and answer session the President and Council Members asked different relevant questions to the QCS. All QCS successfully completed their internship presentation. The President of the Institute congratulated the QCS for participating in the programme.

14 | July - September 2018

Mr. Mohammad Sanaullah FCS, President of the Institute, inaugurated the internship guideline programme by congratulating the Qualified Chartered Secretaries (QCS) for their accomplishment and urged them to undergo the internship with sincerity and highest level of dedication. He also highlighted the importance of internship program in their professional life and for future endeavor.

Participants raised various queries and sought advice.

The President of the Institute replied and provided suggestions accordingly. In this programme, newly elected Senior Vice President Mr. Safiar Rahman FCS exchanged his valuable experiences. Among others Mr. Md. Selim Reza FCS, Vice President, Mr. Salim Ahmed FCS, Council Member and Mr. Mohammad Bul Hasan FCS, Immediate Past Sr. Vice President and Council Member of the Institute participated in the discussion.

The President of ICSB is with Interns

INSTITUTE NEWS

New Asst. Director (PR&D)

Muhammadul Hye Didar

Assistant Director Publication, Research and Development

Mr. Muhammadul Hye Didar joined as Assistant Director, Publication, Research and Development on September 10, 2018. Mr. Didar has over seven (07) years of experience as Researcher in different reputed research organizations. Before joining ICSB he was the Deputy Manager in Community Empowerment Programme (CEP) of BRAC having exposures in qualitative and quantitative research, monitoring and evaluation (M&E), proposal writing and training. He was involved in design, analysis and reporting process of a number of studies in business development, education, agriculture, public health and women empowerment sectors.

He obtained his B.Ed (Hons.) in Science, Mathematics and Technology Education (SMTE) and M.Ed in Educational Evaluation and Research (EER) from the Institute of Education and Research (IER), University of Dhaka. He also completed Masters in Development Studies from the Institute of Governance and Development (BIGD), BRAC University.

July - September 2018 | 15

NEW COUNCIL MEMBERS Mr. Pranesh Ranjan Sutradhar is a civil servant holding the post of Additional Secretary with the responsibility of Import & Internal Trade (IIT) under the Ministry of Commerce. He was graduated from Bangladesh Agricultural University securing 1st position both at honors & masters. Along with faculty subjects he studied Statistics & Economics well.

Securing 3rd position in the Special BCS,1985 (6thBCS) examination he joined the post of Scientific Officer in 1987. After that, by competing 7thBCS, he joined in administration and owned the responsibilities of Assistant Commissioner, General Certificate Officer, Land Acquisition Officer, Charge Officer of Settlement directorate, UNO, ADC, CEO of Zila Parishad, Director of Jatiyo Mohila Sangstha and Secretary of HRWT. Earlier he served as Joint Secretary at Ministry of Commerce. He visited Singapore, Italy, China, Vietnam and Thailand for training Pranesh Ranjan Sutradhar purpose.

Additional Secretary, GoB Mr. Khondoker Kamaluzzaman joined in Bangladesh Securities and Exchange Commission (BSEC) as Commissioner on October 12, 2017. He was born in a respectable Muslim family at Itna of Lohagora Upazila of Narail District in 1956. He obtained his BA Honors in Law in 1979 and Masters (MLM) in 1980 from the University of Dhaka. After that he obtained the Membership of Bangladesh Bar Council in 1981 and became a legal practitioner.

Mr. Khondoker Kamaluzzaman joined Bangladesh Civil Service (BCS) Cadre as Judge (Munsef) on July 17, 1983. Afterwards he was promoted to Senior Assistant Judge, Joint District and Sessions Judge, Additional District and Sessions Judge. While he was working as Deputy Solicitor/ Deputy Secretary in Law, Justice and Parliament Affairs Ministry in 2002, he was promoted as District Judge and joined Tribunal for crimes affecting public safety in Dhaka. After that he worked as Divisional Special Judge, Special Judge and District and Sessions Judge in Gopalgonj, Naoga and Sylhet respectively. After retiring from Judicial Service he received certificate from Bangladesh Bar Council to practice law in High Court Division of Supreme Court of Bangladesh. In the meantime, he became a Senior Teacher in the Department of Law, Bangabandhu Sheikh Mujibur Rahman Science and Technology University. He joined Bangladesh Securities and Exchange Commission (BSEC) as Commissioner on October 12, 2017.

Khondoker Kamaluzzaman Commissioner, BSEC

During his service career he received training on judicial administration, foundation and others. He also participated in national and international seminars and conferences in home and abroad.

NEW SENIOR VICE PRESIDENT The Council of The Institute of Chartered Secretaries of Bangladesh (ICSB) elected Mr. Safiar Rahman FCS as its new Sr. Vice-President on September 22, 2018. Mr. Rahman is working as Deputy Managing Director (DMD) & Company Secretary of Eastern Bank Limited (EBL). Mr. Rahman started his career in the-then BOL, later on renamed to BOC (Bangladesh) Limited, a British MNC, thereafter joined ICI Group another British MNC which was renamed to ACI Group in Bangladesh as Chief Accountant, he then worked in few other Group of Companies including some NBFIs and the Conglomerate-Sunman Group as General Manager, Dhaka.

Safiar Rahman FCS Sr. Vice President of ICSB

16 | July - September 2018

He has over 35 years’ of experience in the field of Finance/Accounting and Corporate Affairs. He has been associated with EBL as Company Secretary since 2002. He is a Fellow Member (FCS), a Council Member and the present Chairman of Education Committee, ICSB. He attended a number of training/seminars and conferences both at Home and Abroad.

INSTITUTE NEWS

SUCCESS GREETINGS F-0096

Mohammed Sabir Ahmed FCS Mr. Mohammed Sabir Ahmed FCS a Fellow Member of the Institute joined Transcom Group on October 01, 2018 as General Manager (Finance). Prior to that, he was Chief Financial Officer of Reliance Insurance Limited.

Mr. Ahmed has wide experience of more than 18 years in the Corporate Sector. He obtained his Chartered Secretary Degree in 2003 and Chartered Accountant Degree in 2006.

A-0465

Syed Mahmud Hasan ACS Mr. Syed Mahmud Hasan is an Associate Member of this institute. He has been deputed as Chief Financial Officer (CFO) of Islami Bank Capital Management Limited (a subsidiary of Islami Bank Bangladesh Limited) on July 10, 2018. He also worked at Financial Administration Division (FAD) in Islami Bank Bangladesh Limited.

Mr. Hasan has wide experience of more than 09 years in the Corporate Sector.

Mr. Islam obtained his Bachelor Degree in 2004 and Masters in 2005 from Department of Management, Jagannath University.

A-0494

Md. Aminul Islam ACS Md. Aminul Islam ACS an Associate Member of the Institute joined Modhumoti Bank Limited on September 05, 2018 as First Assistant Vice President (FAVP). Prior to this, he was Executive Officer (EO) of Dutch-Bangla Bank Limited.

Mr. Ahmed has wide experience of more than 06 years in the Corporate Sector.

Mr. Islam obtained his BBA in 2007 and MBA in 2008 from the Department of Accounting & Information Systems, University of Dhaka.

July - September 2018 | 17

RESULT OF THE CHARTERED SECRETARY (CS) EXAMINATION JULY 2018

C.S. Professional Level- II (Qualified Chartered Secretary) Roll Numbers and Name

The Council of the Institute of Chartered Secretaries of Bangladesh (ICSB) in its meeting held on September 22, 2018 has announced the results of the Chartered Secretary examination July 2018.

01

P-053

Nasir Hawlader

02

P-056

Md. Shahinul Islam

03

P-057

Mir Ariful Islam

04

P-058

Kazi Zahirul Islam

Roll Nos. of the successful candidates are as follows:

05

P-059

Mohi Uddin

06

P-061

Ganapati Kumar Biswas

07

P-062

Razia Sultana

08

P-063

Santosh Kanti Biswas

09

P-064

Md. Mominur Rahman

10

P-069

Md. Salahuddin

11

P-071

Md. Abdur Rob

12

P-073

Md. Oliur Rahman

13

P-079

Md. Humayun Kabir

14

P-084

Md. Asaduzzaman

15

P-085

Rashed Alam Raihan

16

P-087

Mohammad Hasan

17

P-088

Muhammad Nazrul Islam

18

P-089

Sheikh Azizul Haque

19

P-095

Manik Kumar Sarker

20

P-096

Sujan Kumar Nath

21

P-097

M. Umair Karim

22

P-098

Julas Biswas

23

P-100

Mohammad Abul Khair

24

P-101

Subrata Kumar Roy

25

P-103

Md. Ahasan Habib

C.S. Executive Level-I Roll No.: 001, 002, 003, 010, 012, 014, 017, 018, 019, 026, 027, 028, 030, 031, 035, 036, 041, 046, 048, 055, 058, 061, 063, 064, 069, 071, 072, 076, 077, 079, 081, 085, 088, 090, 092, 093, 097, 099, 102, 105, 111 and 112 Total – 42 (Forty Two) only C.S. Executive Level- II Roll No. : 117, 120, 123, 124, 128, 130, 134, 135, 136, 140, 141, 142, 143, 145, 146, 147, 148, 149, 152, 153, 155, 156, 157, 158, 159, 160, 162, 167, 168, 170, 171 and 173.

Total – 32 (Thirty Two) only C.S. Executive Level-III Roll No.: 177, 178, 180, 181, 182, 185, 186, 190, 193, 199, 202, 207, 210, 212, 215, 222, 226, 234, 236 and 245 Total – 20 (Twenty) only C.S. Professional Level-I Roll No.: 001, 002, 003, 004, 006, 007, 009, 012, 014, 015, 017, 018, 020, 023, 024, 026, 028, 029, 030, 032, 037, 038 and 043 Total – 23 (Twenty Three) only

18 | July - September 2018

New Associate Members

During the 3rd Quarter of 2018, the Council has elevated During the 3rd Quarter of 2018 the following 30 6 Associate Members to Fellow Members. The Newly Chartered Secretaries were admitted as Associate Elevated Fellow Members are: Members of the Institute: F-0207

A-0487

Masuda Sultana FCS Head of Finance & Company Secretary EBL Investments Limited

Mohammad Zaman ACS Executive OfďŹ cer Board Secretariat Department MIDAS Financing Limited

F-0208

A-0488

Sayed Amimul Ihsan LL.B, FCS Manager - Corporate Affairs The IBN Sina Pharmaceutical Industry Limited

Md. Alauddin Shibly ACS Company Secretary Energypac Power Generation Limited

F-0209

A-0489

Md. Rafiqul Islam Khan FCS Board Secretary Meghna Bank Limited

S.M. Shariful Islam ACS Junior Assistant Vice President Financial Administration Division Shahjalal Islami Bank Limited

F-0210

A-0490

Md. Abu Sayeem FCS Senior Manager-Business Administration Siemens Bangladesh Limited

Mohammad Nurul Alam ACS Chief Corporate Affairs & Financial OfďŹ cer Imam Network Limited

F-0211

A-0491

Syed Mohammad Nasim FCS Assistant Professor Department of Management Shaikh Borhanuddin College

Md. Anwar Hossain ACS Executive Director (Audit) Popular Life Insurance Company Limited

F-0212

A-0492

Khondakar Nasir Uddin Mahmud FCS Manager Contract & Partner Management Finance Division Robi Axiata Limited

Md. Sahinur Kabir ACS Head of Group Accounts & Finance and Company Secretary Saiham Group

July - September 2018 | 19

INSTITUTE NEWS

Newly Elevated Fellow Members

New Associate Members A-0493

A-0499

Md. Raziur Rahman ACS Senior Assistant General Manager (F & A) Spectra Hexa Feeds Limited

Md. Arif Uddin ACS Finance & Admin Manager Advancing Universal Health Coverage (AUHC)

A-0494

A-0500

Md. Aminul Islam ACS First Assistant Vice President (FAVP) Agent Banking Division Modhumoti Bank Limited

Md. Firog Ahmed ACS First Assistant Vice President Mercantile Bank Limited

A-0495

A-0501

Benoy Paul ACS Deputy General Manager (Share) Monno Ceramic Industries Limited

Sajal Kumar Bala ACS Manager (A & F) Credit Rating Information & Service Limited

A-0496

A-0502

Mohammad Salah Uddin ACS First Assistant Vice President (FAVP) and Head of RMD Risk Management Division Union Bank Limited

Mohammad Salah Uddin ACS First Vice President & Head of Investment Risk Management Islamic Finance & Investment Limited

A-0497

A-0503

Mohammad Ariful Islam ACS First Assistant Vice President EXIM Islami Investment Limited

Kazi Mazbah Uddin ACS Sr. Assistant Vice President & Manager Malibagh Chowdhury Para Branch Mutual Trust Bank Limited

A-0498

A-0504

Md. Kamrul Hasan Chowdhury ACS General Manager Accounts, Finance & Audit Majumder Group

Md. Shahzahan Kabir ACS Principal OfďŹ cer Panthapath Branch Islami Bank Bangladesh Limited

20 | July - September 2018

INSTITUTE NEWS

New Associate Members A-0505

A-0511

Md. Noor-ul-Alam ACS Deputy Manager (Board & Share) Meghna Insurance Company Limited

Muhammad Ruhul Amin ACS Principal Officer Human Resources Division Janata Bank Limited

A-0506

A-0512

Mohammad Jasim Uddin ACS Senior Principal Officer Uttara Bank Limited

Md. Shamim Hossain ACS Assistant General Manager (Accounts) Meghna Group of Industries Limited

A-0507

A-0513

Hubert Boidya ACS Senior Executive - Group Compliance Rahimafrooz Bangladesh Limited

Mohammad Tanvirul Islam Bhuyan ACS Sub-Divisional Engineer Dhaka Electric Supply Company Limited

A-0508

A-0514

Md. Nazmul Hasan ACS Company Secretary BBS Cables Limited

Md. Abdul Majid ACS Senior Manager (F & A) Biopharma Limited

A-0509

A-0515

Md. Sazzad Hossain Talukder ACS Company Secretary IFAD Autos Limited

Sukomal Chakraborty ACS Head, Regulatory Compliance Standard Chartered Bank Limited

A-0510

A-0516

Md. Mozahidul Islam ACS Officer (Accounts & Finance) Essential Drugs Company Limited

Mohammad Rasel ACS Executive Officer (Financial Analyst) Janata Bank Limited

July - September 2018 | 21

C.S. Final Qualified

During the 3rd Quarter of 2018 the Following Students were Qualified as Chartered Secretaries

CS-1618 Md. Oliur Rahman

CS-1987 Rashed Alam Raihan

CS-2006 Md. Asaduzzaman

CS-2126 Santosh Kanti Biswas

CS-2259 Md. Ahasan Habib

CS-2437 Muhammad Nazrul Islam

CS-2454 Mohammad Abul Khair

CS-2716 Manik Kumar Sarker

CS-2722 Nasir Hawlader

CS-2856 Mohammad Hasan

CS-2929 Md. Mominur Rahman

CS-3224 Sheikh Azizul Haque

CS-3323 Razia Sultana

CS-3428 Julas Biswas

CS-3498 Subrata Kumar Roy

CS-3597 Md. Humayun Kabir

CS-3687 Ganapati Kumar Biswas

CS-3695 Md. Shahinul Islam

CS-3755 Kazi Zahirul Islam

CS-3793 Sujan Kumar Nath

22 | July - September 2018

CS-3818 Md. Abdur Rob

CS-3842 Mohi Uddin

CS-3844 Md. Salahuddin

CS-3852 M.Umair Karim

CS-3878 Mir Ariful Islam

July - September 2018 | 23

INSTITUTE NEWS

C.S. Final Qualified

During the 3rd Quarter of 2018 the Following Students were Qualified as Chartered Secretaries

Training Programmes SL No.

Name of Training

Duration

1

Company Secretarial Practice

1 Week programme

2

Labour Management

1 Week programme

3

Domestic Enquiry

3 Days programme

4

Corporate Governance Practice

1 Week programme

5

All Round Leadership

1 Week programme

6

Fund Management

3 Days programme

7

Finance for Non-Finance Executives

1 Week programme

8

Effective Audit Committee

3 Days programme

9

Compliance for Banking Companies

3 Days programme

10

Budget Preparation

3 Days programme

11

English Language Course

3 Days programme

For further details, please contact with the following official: Mr. Md. Kamrul Islam Khan Assistant Director – HR & General Admin, ICSB Cell: 01716 846574, Email: hr@icsb.edu.bd

24 | July - September 2018

www.icsb.edu.bd

for the Year 2018

Articles

July - September 2018

CORPORATE SOCIAL RESPONSIBILITY (CSR): AN ACT OF MAGNANIMITY? N. G. Chakraborty FCS

T

hroughout the last seventy thousand years since the agricultural revolution being the greatest fraud in human history began people created a complex network of stories known in academia as fiction or social constructs which are in fact imagined realities. We now live in the world of two kinds of realities – objective reality and imagined reality.

With the passage of time imagined reality is growing stronger compared to the objective reality. The existence of objective reality like the river Padma now depends on the recognition of the USA and google both being imagined reality. A company also exists not in real term but only in imagination. The society now is so accustomed with a company’s imaginary existence as if it really exists as an objective reality. If you don’t believe, ask any employee or supplier of a company, they all would reply that the company really exists, and it is not even a question worth to be asked. Thus the society in which a company ‘operates’ is the one and only authority unconsciously recognizes the very existence of the company. Therefore, a company owes enormously to the society, and thus it has got responsibility towards the society. Society consists of people. Economically, some of them are poor, ultra poor, rich, very rich, ultra rich etc. and some of them are in between rich and poor. A company’s existence depends on the imagination of not only the poor or rich but on the collective imagination of the society as a whole. Accordingly, company’s responsibility lies to the whole society not only to a particular economic section.

As are asked, the poor subjects stand in queue with a small pouch containing coins in as ‘rent’ on the stretched palm so that the landlord (Zamindar) can pick up the bag using his thumb and forefinger without getting his ‘honor’ belittled. The ultra-poor who could not pay the due rent, would have to swallow what the landlord spat out into the mouth of the ‘fortunate’ subject. Had there been annual report of the landlord as it is today, the published ‘rent seeking’ photograph could turn in to today’s CSR not to speak about the act of the landlord made his subjects fortunate.

26 | July - September 2018

CSR is commonly understood to be an honest act of giving alms to the poor. Modern corporate governance guideline/code asks the corporate bodies to contribute to the society by means of fulfilling the basic needs of humankind and/or to the betterment of environment.

The corporations translate it as donation of some amount of money to poor people for their betterment.

Accordingly the honest companies publish as much loudly as they can with photograph as if the Zamindar is giving arms to the beggars and the guidelines are happy with that.

The society which a legal person lives in does not consist of only the poor people. The employees, workers, suppliers, creditors, govt., lenders etc. all are part of the society including the people as a whole. It is true that needs of poor people are much more basic than solvent ones. Giving some amount of money to the poor people is an act of benevolence. A company should first meet its obligations to its employees in the form of proper wages, leave pay, gratuity, provident fund, group insurance, sharing profit with its workers, other due service benefits. Both secured and unsecured creditors be paid in time with due debt service amount, govt be paid timely its’ all due taxes and duties, all contractual obligations be met in due time. If all those are fully paid-off, I think the company’s obligation to the society is thus met. Shareholders are the owners of a company and therefore, they must wait for getting their dividend with the amount left after satisfying all the other stakeholders.

In reality, the picture more often than not is opposite. In annual reports, companies speak loudly about the amount donated out of its CSR fund keeping mum about its duties to the stakeholders.

Ref: Yuval Noah Hariri: Sapiens – A Brief History of Humankind.

» About the Author Fellow and Founding Member of the Institute

ARTICLE

NEXUS BETWEEN CORPORATE GOVERNANCE AND CORPORATE LEADERSHIP Prof. Dr. Feroz I.Faruque FCS

O

ne feature of the modern corporation is the separation of ownership from management.

The separation was facilitated by the advent of scientific management in the early 20th Century. Given the disconnect between ownership and management and the fact that owners of the business are insulated from day-to-day operations of the company, it is important that an appropriate framework be put in place that would guarantee transparency, accountability and fairness in the management of the enterprise. Bringing together existing knowledge on the principles and promotion of corporate governance while stating the ideas in practical and useable form, the paper identified the need for sound corporate governance policies and practices as they assure investors that their hard earned monies would be prudently applied. The paper concludes that organizations wishing to attract funds to support their operations therefore need to embrace the basic tenets of good corporate governance such as transparency, probity and accountability.

customers, the regulatory authorities, and the host community. In the opinion of these analysts, corporate governance refers to the rules and practices that govern the relationship between the managers of a company, on the one hand, and its stakeholders, on the other. This perspective is significant because it shows that even though the primary obligation of a company might be to look after the interests of shareholders, it does not mean the interests of other stakeholders are not important and can therefore be ignored. Rather, it is by taking into account the needs of other stakeholders that the interests of shareholders are effectively looked after. For example, if the interests of employees are adequately taken care of, the workforce would be happier and more productive, which would ordinarily impact the profitability of the business. In effect, therefore, good corporate governance assists the enterprise to:

Corporate governance is about ensuring that a mechanism is in place to guarantee that the goals pursued by managers do not diverge from those of the owners. It deals with the ways in which suppliers of funds to corporations assure themselves of getting a fair return on their investment (Shleifer and Vishny, 1997). Corporate governance “consists of the set of processes, customs, policies, laws and institutions affecting the way people direct, administer or control a corporation" (Wikipedia, 2007). According to Berglof and Thadden (1999), the case for corporate governance is further strengthened where there is a group of small, dispersed shareholders co-existing with holders of large blocks of shares. In this context, the corporate governance problem is how to reconcile the conflict among managers, minority shareholders, and majority shareholders. Under this scenario, Lopez de-Silanes (1999) characterizes the corporate governance problem as how to avoid the “expropriation by managers and controlling investors of minority investors money". Others like Oyediran (2003) have argued further that the responsibility of the company is not limited to its shareholders or creditors alone but also extends to other stakeholders such as employees,

•

Fulfill owners’ long-term strategic goals.

•

Consider and care for the interests of employees.

•

Maintain excellent associates.

•

Maintain proper requirements.

•

Take into account the needs of the environment.

relations

with

business

compliance

with

statutory

The subject of corporate governance has received considerable attention worldwide in recent times. One reason for this is the realization that the quality of corporate governance in place affects the performance of individual institutions and, ultimately, that of the economy as a whole. Poor disclosure and ineffective audit procedure therefore only helps to exacerbate an already bad situation by preventing the system of early warning signals from functioning effectively. In the context of developing countries like Bangladesh, the case for good corporate governance is further strengthened by the desire to attract investments to support rapid economic growth.

The point here is that sound governance policies and practices constitute a real source of comfort for investors, both local and international. It is, therefore,

July - September 2018 | 27

crucial for countries wishing to attract and retain long-term capital to put in place credible structures that would guarantee sound corporate governance practices. There is a strong link between the quality of governance practices and corporate performance.

This paper examines the leadership role of the Board in ensuring sound corporate governance. Corporate governance is about ensuring that a mechanism is in place to guarantee that the goals pursued by managers do not diverge from those of the owners, disclosure and transparency, and the responsibilities of the Board of Directors.

Under this scenario, a good corporate governance framework is one that guarantees that the interests of all stakeholders are treated equitably. The concern here is particularly to ensure that the interests of minority and foreign shareholders are adequately protected. One principal way to do this is to install a system that prevents insiders, including managers and directors, from taking advantage of their positions through such practices as insider trading.

Furthermore, they should be made to disclose any material interests they might have in transactions and should not be involved in decision-making relating to those transactions. There should be timely and accurate disclosure of information on all material matters relating to the company. These include its financial position, performance, ownership structure, the Board of Directors and their remuneration.

Additional requirements include the appointment of external auditors to audit the company annually in accordance with high quality standards.

The stakeholders include employees, customers, the host community and regulatory agencies. The corporate governance framework should, therefore, ensure that the rights of these stakeholders are duly respected. Where such rights are violated for one reason or the other, the party concerned should have opportunities and avenues to seek redress.

The emphasis here has to do with the need for the Board to discharge its functions creditably. These duties and responsibilities can be summarized as follows: Appointing and supervising management, Rewarding management based on performance. Ensuring that the company complies with existing policies, rules and regulations as well as reporting/accounting and ethical standards.

Kwakwa and Nzekwu (2003) have provided the details of these duties and responsibilities as follows: Reviewing and guiding corporate strategy, major plans of action, risk policy, annual budgets and business

28 | July - September 2018

plans; setting performance objective; monitoring implementation and corporate performance; and overseeing major capital expenditures, acquisitions and divestitures. Selecting, compensating, monitoring and, when necessary, replacing key executives.

Determining executive remuneration and ensuring a formal and transparent board nomination process.

Monitoring and managing potential conflicts of interest of management, board members and shareholders, including misuse of corporate assets and abuse in related party transactions. Ensuring the integrity of the company's accounting and financial reporting systems and that appropriate systems of control are in place, in particular, systems for monitoring risk, financial control, and compliance with the law.

Monitoring the effectiveness of the governance practices under which it operates and making changes as needed.

Overseeing the process of disclosure and communication. The board should meet regularly, retain full and effective control over the company and monitor executive management. There should be a clearly accepted division of responsibilities at the head of a company, which will ensure a balance of power and authority, such that no one individual has unfettered powers of decision. The board should include Non-executive Directors of sufficient caliber and number for their Views to carry significant weight in the board's decisions. The pay of executive management should be subject to the recommendations of a remuneration committee.

From the foregoing, it is clear that there are three groups that play distinct and crucial roles as far as corporate governance is concerned. These groups are the board of directors, shareholders and managers of the company. A company is, therefore, bound to fail if the board of directors is not alive to its duties and responsibilities. That is, if the board fails to uphold and promote the basic tenets or pillars of corporate governance, the company in question would be short-lived. Corporate directors look or should look for three things in the C-suite level executives they hire, assess and occasionally have to fire: competencies, commitment and character.

Competency is what a person is capable of doing; Commitment is critical. It reflects the extent to which individuals aspire to the hard work of leadership, how engaged they are in the role, and how prepared they are to make the sacrifices necessary to succeed. But above all, character counts. It determines how leaders perceive and analyze the contexts in which they operate. Character determines how they use the competencies they have. It shapes the decisions they make, and how these decisions are implemented and evaluated.

ARTICLE I have focused on leadership character because it’s the least understood of these three criteria and the most difficult to talk about. Character is foundational for effective decision-making. It influences what information executives seek out and consider, how they interpret it, how they report the information, how they implement board directives, and many other facets of governance.

Within a board, directors require open, robust, and critical but respectful discussions with other directors who have integrity, as well as a willingness to collaborate and the courage to dissent. They must also take the long view while focusing on the shorter-range results, and exercise excellent judgment. All of these behaviors hinge on character. I have identified issues with character in both leadership and governance.

Among those are: •

Over confidence bordering on arrogance that led to reckless or excessive risk-taking behaviors

•

Lack of transparency and in some cases lack of integrity

•

Sheer inattention to critical issues

•

Lack of accountability for the huge risks associated with astronomical individual rewards

•

Intemperate and injudicious decision-making

•

A lack of respect for individuals that actually got in the way of effective team functioning

•

Hyper-competitiveness among leaders of major financial institutions in particular

•

Irresponsibility toward shareholders and the societies within which the organizations operate.

» About the Author Fellow Member of the Institute and Former Senior Vice President

July - September 2018 | 29

CORPORATE LEADERS AND CORPORATE GOVERNANCE Subash Chandra Moulick FCS

T

he success or failure of any organization rests on its leadership. In 21st Century, Corporate Governance is becoming a matter of enormous public attention and concern. With regard to policy and regulatory changes that have taken place in the business sector, more emphasis has been put on the need to improve Corporate Governance and strategic leadership practice within the organization. Corporate Governance refers to the processes and structure by which the business and affairs of the Company are directed and managed. In order to enhance long term shareholder’s value through enhancing corporate performance and accountability, whilst taking into account the interests of other stakeholders. On the other hand, leadership means the ability to lead, including inspiring others in a shared vision. Leaders have clear visions and they communicate these visions to their employees. They foster an environment within their companies that encourages risk taking, recognition and rewards, and empowerment allowing other leaders to emerge.

Leadership speaks about responsible business conduct. However, there is a clear division of responsibilities between various levels of leadership, i.e; Board of Directors, Chairman, CEO and Management. Corporate Leaders and Corporate Governance are the two sides of a coin. Good leaders can implements good governance within the organization. For implementation of Good Governance system, good leasers are essential.

Corporate Governance and Leadership Corporate Governance essentially involves, balancing and interests of many stakeholders in a Companythese includes its Shareholders, Management, Customers, Suppliers, Financiers, Government and the Community. In Bangladesh, the New Corporate Governance Code has been launched in June, 2018 by Bangladesh Securities and Exchange Commission (BSEC) and is now widely accepted as the leading Corporate Governance framework. So far, the new Corporate Governance Code contains international best practice, principles and standards on Corporate

30 | July - September 2018

Governance and provides guidelines on responsible business conduce.

Role of the Board of Directors In order to deploy better leadership to improve governance outcomes, it is necessary to briefly dwell on where the power structures reside in a typical organization. The Board is the conduit that gives the practical application to Corporate Governance, and it controls the direction of the entity. The role of control in the Boardroom applies to the supervision and direction over key level Management activities in order that the owners’ interest is duly protected. The Board’s direction of Corporate Governance provides the means whereby organizations achieve accountability to policies, to laws and to the norms. The Board of Directors is the primary source of governance leadership. There are a number of other conduits within a typical organization. One of the key modes the Board has in discharging its governance responsibilities is to constitute an Audit and Risk Management Committee in the Organization.

The role of the Board and Directors of any enterprise is the link between Shareholders and the Company. An effective Board should lead and control the Company in partnership with its Managing Director/CEO and the Senior Management team. Building an effective and high performance Board is not an easy task, but it is highly possible and desirable. An effective Board must develop a methodology to ensure that the Board has the correct structure, composition, size, culture, gender balance and skills set as well as ensuring that the Board is not only effective, but also consistent in its performance and sustainability in terms of succession planning. A dysfunctional Board is one which chooses to ignore these important elements of good governance. For instance, Non-executive Board members are required to be trained on Corporate Governance best practices, director excellence, to act in good faith, to exercise their duties in terms of business judgment rule and must not have material personal interest.

ARTICLE Role of the Chairman The Chairman, once perceived as a ceremonial head, is responsible for the leadership of the Board and is pivotal in creation of conditions necessary for overall Board and individual Director effectiveness, both inside and outside of the Boardroom. It is also the Chairman’s role to ensure effective communication with stakeholders and to chair General Meetings. The Chairman must be skilled and is expected to be independent not only on appointment, but is expected to remain independent throughout his tenure. The Chair must promote and oversee the highest standards of ethics within the Board and the Company, to lead the Board and in particular discussions on all proposals put forward by the executive team. To set an agenda for the Board which is focused on strategic matters to be forward looking to oversee current business, to maintain a proper process to ensure compliance with Board policy on matters reserved to the Board for consideration, to ensure that Board members receive accurate, timely and clear information to enable them to monitor performance, to make sound decisions and give appropriate advice to promote the success of the Company. The Chair must manage Board meetings so that sufficient time is allowed for the discussion of complex or contentious issues. He must create the conditions for overall Board and individual Director effectiveness including among other things, regular CEO and Board evaluation.

The Chairman also needs to create the conditions for overall Board and individual director effectiveness including promotion of an appropriate induction programme for new Directors, creating the opportunity for maintenance of the relevant skills and knowledge required to fulfil the director role on the Board and its committees and ensuring the Board undertakes an annual evaluation of its own performance, that of its committees and that of individual directors, including the Chairman. The Chairman should be able to take the lead in identifying and meeting the development needs of individual directors and to address the development needs of the Board as a whole with a view to enhancing its overall effectiveness as a team.

Role of Chief Executive Officer (CEO) of the Organization The Chief Executive Officer has full power to lead and manage the business of an organization. He is responsible for day to day Management of the business in line with the strategy and long term objective approved by the Board of Directors and

proposes, implements and reports on the strategic direction of the organization as well as particular divisional and business strategies and initiatives. The Chief Executive Officer annually brings Annual Operating Plans to the Board of Directors. Once adopted, they are responsible for their implementation and delivery and reports on progress at frequent and regular intervals.

All members of Executive Management report, either directly or indirectly to the Chief Executive Officer. They are responsible for appraising the performance of each member of the team, encouraging their development and further training, where necessary replacing them, recruiting replacements whether internally or externally and formulating remuneration proposals for Remuneration Committee decision making.

The Chief Executive Officer, as does the Chairman, represents the Company with all external audiences.

The CEO takes lead responsibility for maintenance and development of reputation and relationships with the media, regulators, governments, Local Communities, Supplier, Customer, Trade Bodies and other Stakeholders.

The Chief Executive Officer reports to the Chairman and must prepare regular informative and accurate updates for Board members in order to facilitate decision making. He is responsible for all executive management matters affective the organization.

Undoubtedly, the success of an Organization greatly depends on the drive, leadership, integrity, experience and effectiveness of the Chief Executive Officer and his team Company Secretary and Corporate Governance issue Bangladesh Securities and Exchange Commission per Notification No. BSEC/CMRRCD/2006-158/207/Admin/80, dated 3-June-2018 issued certain conditions for the Listed Companies which have been imposed on ‘Comply’ basis. The Companies listed with any Stock Exchange in Bangladesh shall comply with the conditions. The main objectives for complying with these conditions by the Listed Companies is to protect the interest of its stakeholders as well as to make more contributions by the corporation towards development of the Country as a whole. As per Guidelines, every listed Company shall appoint a Company Secretary, CFO and Head Of Internal Audit and the Board of Directors of respective Companies should clearly define the role, responsibilities and duties of them where Compliance

July - September 2018 | 31

with the Corporate Governance Code is also considered to constitute a core duty. In practice, these duties are closely related to the Company Secretary’s other duties as the Compliance Officer of the Company.

As an Officer of the Company and at the center of the decision making process, the Company Secretary is in a powerful position of influence. The Company Secretary should assist and guide the Directors in their pursuit of profit and growth but should act with integrity and independence to protect the interests of the Company, its shareholders and its employees.

Company Secretary should play a pro-active and central role in the governance of the Company. This requires excellent communication skills, a thorough knowledge of the Company’s business and applicable regulations, strength of character and above all a professional approach.

Company Secretary having leadership quality in employment as responsible Officer of the Company need to involve in Accounts, Income Tax, Audit etc. related matters along with secretarial works so that the value to the employment, Company, profession and to country will enhance. Involvement of Company Secretary in employment in Income Tax/Audit etc. paves the way for strategic thinking for the business development so that the Company Secretary will become connected with all segments right from strategy, marketing, compliances, administration and so on. With this the elevation in employment and significance in Company and governance in the board level, investors’ level, stakeholder level and at regulatory level will be achieved in satisfactory level.

It is not uncommon for Listed Companies to be reluctant to go beyond the minimum regulatory requirements and to ‘do the right thing’ – the pursuit of profit and business growth are often the prime concerns. Having the key responsibility to promote good Corporate Governance, Company Secretaries should encourage the Board of Directors to invest in and adopt the best practices beyond regulatory compliance – this will benefit the Company’s performance, managing risk effectively and protect the interests of different stakeholders in the long run.

Company Secretaries are responsible for maintaining statutory records and registers and preparing the Corporate Governance Reports of Listed Companies on promoting Corporate Governance. In cases of regulatory non-compliance or misconduct, especially when Senior Managers are involved, Company Secretaries face an ethical dilemma. They have a clear

32 | July - September 2018

professional and fiduciary duty to take appropriate action against such cases. The Company Secretary should not choose to stay silent about the malpractice rather than speaking out against it. In no way even in extreme cases, he should not beguile into joining the scams of corruption, fraud or other malpractices and to compromise their ethical standards for their own personal gain.

Role of Chief Financial Officer (CFO) As per Corporate Governance Code, the CFO along with the Managing Director/CEO is required to certify the Board that they have reviewed Financial statements. Ail statements for the year and that to the best of their knowledge and belief that the financial statement do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading. The Financial Statements together present an true and fair view of the company’s affairs and are in compliance with existing accounting standard and applicable laws.

The Managing Director and Chief Financial Officer shall also certify that there are, to the best of knowledge and belief, no transaction entered into by the Company during the year which are fraudulent, illegal or in violation of the Code of Conduct for the Company’s Board or its members.

In the above context, a strong accountancy profession is essential for good governance as well as for economic development and also economic confidence, both in the public and the private sectors.

A sound financial system, supported by high quality accounting and auditing standards and backed by a solid regulatory governance and ethical framework is a prerequisite for growth of the organization as well as economic development of the Country. Accountants need to work with a wide range of standards and regulations. The use of international standards rather than national can add credibility to financial reports and statements, especially when it comes to international standards in financial reporting and auditing consistent, global standards can make for sustainable business and growth. The world we want to experience is where everyone leads with integrity and embraces Corporate Governance for the common good.

Role of Head of Internal Auditor Internal Auditor plays a vital role to ensure proper compliance of Corporate Governance Code within the Organization. As per Notification No.

ARTICLE BSEC/CMRRCD/2006-158/207/Admin/80, dated 3-June-2018 issued by Bangladesh Securities and Exchange Commission (BSEC), appointment of Internal Auditor in all listed Companies is mandatory.

The purpose of Internal Audit is to ensure inhouse compliance of Standard Operating Procedure, Prevention if any deviation of the rules and regulations detection in any omission, error or irregularities in the organization. Overseeing the activities of various departments viz. Operations, Accounts, Monitoring and Treasury Departments. The Internal Auditor has to ensure both internal and external regulatory requirements for smooth operations of the organization.

There may be some violation of the instructions laid down in the Act and Circulars and/or any of the Books of Account may not have been properly maintained.

Such irregularity should be brought to the notice of the Head of Account for immediate regularization and also for his comments. In case of failure of the Head of the Department to rectify such irregularities or to offer reasonable comments, the auditor would report the same to the competent Authority of the organization.

It is a very important part of the duties of the Internal Auditor to act as a sympathetic adviser to the staff of the department he is auditing. Faults must, of course, be brought to light but report should be written with the recognition of difficulties and efforts of the staff as well as its shortcomings. However, in no case, he should allow himself to be diverted from the strict course of duty. He should at all times exercise the requisite tact and issue periodic Compliance Report directly to the Chairman of Board/Head of Audit Committee with a copy to the Managing Director/ Supervisor of Internal Auditor which incorporates activities of all functional areas of the Company. It will mention deviations/ lapses (along-with comments if any) in each activity of each functional department. It will also contain state of post-facto compliance of deviations/lapses of previous period.

Conclusion Leadership and Corporate Governance go hand in hand and neither exists in a vacuum. Corporate governance questions the role of leadership in creating fairness and transparency in the use and management of resources, impact of business

operations to the environment and corporate social responsibility. It tests the integrity of those who are entrusted to be the custodians or agents of national and Company resources. In short, leadership means good stewardship of shareholder’s assets and the earth’s natural resources to ensure that today’s business operations are sustainable beyond the current generation. Leadership is the key to achieving a ‘strong and sustained commitment by management’ in order to implement a robust risk management framework. For establishing good governance it needs the top management to display leadership in committing to a culture of stamping out organizational bribery, fraud and corruption. Good leadership qualities are necessary to inspire employees to embrace a culture of good governance. Corporate Governance is the way in which power is exercised over the organizations. It covers the activities of the Board and its relationship with shareholders, and with those managing the enterprise, as well as other stakeholders. In this way, governance can be seen as a system of processes, mechanisms, rights distributions and relationships through which an organization is controlled and directed.

Reference 1.

Bangladesh Securities and Exchange Commission Notification No. BSEC/CMRRCD/ 2006-158/207/Admin/80, dated 3-June-2018

2.

The role of Corporate Governance in Leader ship-Eva Gadzikwa, published by the Independent in Business.

3.

The role of accountancy in economic development –By Ian WeIch

4.

Beyond Compliance-The Guardian Role of Company Secretaries in Ethics and Governance -The Hong Kong Business Ethics Development Centre.

5.

Best Practice Guide- Duties of a Company Secretary - Montego Data Limited (1997-2016).

» About the Author Fellow Member of the Institute

July - September 2018 | 33

AN EMPIRICAL STUDY ON THE RESPONSIVENESS OF THE SELECTED COMPANIES TO CORPORATE GOVERNANCE GUIDELINES IN BANGLADESH Mohammad Shahajahan FCS

Sound corporate governance is dependent on external marketplace commitment and legislation, along with a healthy board culture which safeguards policies and processes. A well governed institution is expected to use its resources optimally and, thus, perform more efficiently and contribute positively to the economic development of a country. Bangladesh Securities & Exchange Commission issued the Corporate Governance Guidelines (CGG), 2006, the CGG, 2012, the CGG (Amendment), 2013 and finally, the Corporate Governance Code (CGC), 2018 to impose the conditions or code of the CGC to comply by the companies listed in stock exchanges in Bangladesh to enhance corporate governance in the interest of investors and the capital market. But million dollars question is- how the listed companies in Bangladesh are responding to these conditions or code of the CGG? In this empirical study it is found that average compliance rate of CG conditions in the sample companies is only 55%; among 15 sample companies, no company is complied with the CG conditions by 90% or more; but 50% companies has compliance rate of CG conditions by less than 50% which is just alarming.

Therefore, the study’s recommendation is that every company should follow the Corporate Governance Code, 2018 rigorously to establish good corporate governance within the company which ultimately protect the interest of the stakeholders, investors and the capital markets.

I

ntroduction

The necessity of Corporate Governance (CG) arises from the potential conflicts of interest among the stakeholders in the corporate structure. A well governed institution is expected to use its resources optimally and thus, perform more efficiently and can contribute positively to the economic development of a country. Hence the regulatory body often issues corporate governance guidelines to ensure compliance of those guidelines by the companies beside operating their business within the country. In Bangladesh, Bangladesh Securities & Exchange Commission (BSEC) has issued Corporate Governance Guidelines (CGG), (2006& 2012), CGG (amendment), 2013 and Corporate Governance Code (CGC),(2018) to streamline the corporate governance within the companies and corporate structures. The study aims to find out the degree of responsiveness of the companies listed in stock exchanges in Bangladesh to CGG issued by the BSEC. Literature Review Relevant articles and corporate governance code or guidelines have been consulted in this study to understand the following aspects: Corporate Governance Corporate Governance (CG) refers to having the appropriate people, processes and structures to direct and manage the business and affairs of the company to enhance long-term shareholders value, whilst taking into account the interests of other stakeholders. CG is

34 | July - September 2018

several mechanisms to ensure that companies/ firms run effectively and maximize shareholder and/or stakeholder value (Aguilera, 2005). CG is very much concerned with the functioning of Board of Directors- its structure, styles, process, their relationships and roles, activities etc., and therefore, it is considered as a crucial part of the CG (Jan & Sangmi, 2016). The thrust of CG is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem.

Sound corporate governance is dependent on external marketplace commitment and legislation, along with a healthy board culture which safeguards policies and processes. It is about commitment to values, about ethical business conduct and about making a distinction between personal and corporate funds in the management of a company.

Responsiveness Responsiveness is that organization and its processes are designed to serve the best interests of stakeholders within a reasonable time frame. It’s an effective two way communication.

Good governance demands responsiveness and it is one of the eight attributes of good governance.

Corporate Governance Guidelines in Bangladesh BSEC has first issued the CGG, 2006 as the ‘comply or explain’ basis through a notification no.SEC/CMRRCD/2006-158/Admin/02-08 dated: 20 February 2006. This is the starting of the separate regulation on CG in Bangladesh for listed companies.

The CGG, 2006 was replaced by a new notification

ARTICLE no.SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012 to be complied with by 31 December 2012. The CGG, 2012was issued on 'comply' basis, in order to enhance corporate governance in the interest of investors and the capital market. The CGG, 2012 was once amended by another notification no.

SEC/CMRRCD/2006-158/147/Admin/48 dated 21 July 2013 to impose one restriction on engaging external/ statutory auditors to perform audit/certification services on compliance of corporate governance.

Thereafter, the compliance of Corporate Governance Guidelines was made compulsory in case of rights issue from 18 August, 2013 and for initial public offering (IPO) from 28 December, 2015(S. Bala, 2018).

No of Criteria

Mark

1.Board Independence & Governance

10

15

2.Board Systems & Procedures

10

15

3.Board Committees &Risk Analysis

8

10

4.Transparency & Disclosures Compliances

10

10

5.Internal Control and Internal Audit

5

10

6.Shareholders Information & Value Enhancement

10

10

7.Stakeholders Value Enhancement

5

10

8.Corporate Social Responsibility

6

5

9.Corporate Objectives, Governance Initiatives and Recognitions 10.Timeliness in issuing Financial Statements and holding of AGM

5

10

3

5

Total

72

100

Area of Corporate Governance

The aim of the issuance of the CGG in February 2006 was to elevate corporate governance scenario in Bangladesh. The CGG, 2006 (“comply or explain” basis) which contained 37 conditions under five heads: Board of Directors; Chief Financial Officer, Head of Internal Audit and Company Secretary; Audit Committee; External/Statutory Auditors; and Reporting and Compliance of Corporate Governance. The CGG, 2012 had a further progress in the corporate governance regulation with “comply” basis rather than “comply or explain” basis and it included additional two new heads: Subsidiary Company; and Chief Executive Officer and Chief Financial Officer.

Therefore, the CGG, 2012 contained 95 conditions under seven heads and one annexure.

(MD) or Chief Executive Officer (CEO), Chief Financial Officer (CFO), Head of Internal Audit and Compliance(HIAC) and Company Secretary (CS); Board of Directors’ Committee; Audit Committee; Nomination and Remuneration Committee; External or Statutory Auditors; Maintaining a website by the Company; and Reporting and Compliance of Corporate Governance. All these conditions or code under nine heads are largely described and imposed on the listed companies on ‘comply’ basis.

Corporate Governance Code in Bangladesh

Methodology

With the notification no. BSEC/CMRRCD/2006-158/ 207/Admin/80 dated: 03/06/2018, the BSEC issued a new set of corporate governance directives known as 'Corporate Governance Code. 2018'in order to enhance corporate governance in the interest of investors and the capital market, and make it mandatory to comply by the companies listed in any stock exchanges in Bangladesh. The CGC, 2018 has been issued as “Code” in place of “Guidelines” with a title: “Corporate Governance Code”.

In this study secondary data like annual reports of 16 companies belonging to same industry sector and their websites’ information has been taken into consideration to analyse the compliance status of CG. Total 72 evaluation criteria have been used in 10 areas of corporate governance of the companies to give marks within 100. The evaluation model is as follows:

In the CGC, 2018, two previous heads were combined and three new heads have been added. Hence, the CGC, 2018 contains 166 conditions under nine heads and three annexures. In terms of number of conditions, CGC, 2018 has been enhanced by around 75%.

Although in the CGC, 2018, fully new conditions are 62 in number and 4 conditions of the CGG, 2012 have been split up into 13 conditions in the CGC, 2018 and thereby 9 conditions have been increased.

Nine heads of CGC, 2018 are: Board of Directors; Governance of Board of Directors of Subsidiary Company; appointment, attendance in board meeting and roles and responsibilities of Managing Director

All the annual reports of the selected companies and their websites have been consulted and given marks by following the above criteria and then tabular analysis has been done to find out the compliance status of individual company as well as the average compliance status of the industry as a whole.

Responsiveness to Corporate Governance Guidelines in Bangladesh- An Empirical Study In this empirical study, total 16 (sixteen) companies’ (in same industry sector) annual reports and websites have been examined and they were marked using the 72 criteria explained in methodology part. By analysing the performance or compliance of the selected companies in ten (10) areas, the study found that an industry average rate of compliance of CG in those

July - September 2018 | 35

TABLE-1: AN EVALUATION OF CORPORATE GOVERNANCE COMPLIANCE STATUS OF 16 COMPANIES Total Marks

Average Marks

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

P

Average %

7

9

9

7

7.5

11.5

9

9

7.5

11

7.5

8.5

6

13.5

6

6

134.5

8.41

56%

2

6.5

7.5

6.5

3

8

4.5

4.5

4.5

4.5

7

5.5

6.5

12

5.5

5

93

5.81

39%

6

6

7.5

5

6

7.5

6

4

7

5

2

6.5

5.5

8

5

4.5

91.5

5.72

57%

6.5

8

5.5

7.5

3

5

6

6

7.5

4

6

6

8

8

8

8.5

103.5

6.47

64%

5

6

6

9

10

10

8

0

7

4

0

8

7

10

9

9.5

108.5

6.78

68%

7

5.5

8

7

4

8

6

4

6

5

4

9

5

10

5

4

97.5

6.09

61%

3

5

6

5.5

0

8

6

4

4

2

6

6

5

10

2.5

5

78

4.88

49%

2.5

3

3.5

1

3.5

4.5

1

8

2

1

2

4.5

3

5

1

2.5

48

3

60%

1

5

8

2

2

9

0

8

0

6

4

10

7

10

2

1

75

4.69

47%

3

3

3

3

3

3

3

3

3

3

3

3

3

3

3

3

48

3

60%

43

57

64

53.5

42

74.5

49.5

51

48.5

45

42

67

56

89.5

47

49

877.5 Total No.

54.8

55%

Companies Evaluation Criteria (Marks) 1.Board Independence & Governance (15) 2.Board Systems & Procedures (15) 3.Board Committees &Risk Analysis (10) 4.Transparency & Disclosures Compliances (10) 5.Internal Control and Internal Audit (10) 6.Shareholders Information & Value Enhancement(10) 7.Stakeholders Value Enhancement(10) 8.Corporate Social Responsibility (5) 9.Corporate Objectives, Governance Initiatives and Recognitions(10) 10.Timeliness in issuing Financial Statements and holding of AGM(5) Total Marks (100) More than 90 Marks

-

-

-

-

-

80 to 90 Marks

-

-

-

-

-

-

-

-

-

-

-

70 to 80 Marks

-

-

-

-

-

74.5

-

-

-

-

-

60 to 70 Marks

-

-

64

-

-

-

-

-

-

-

-

50 to 60 Marks

-

57

-

53.5

-

-

-

51

-

-

43

-

-

-

42

-

49.5

-

48.5

45

Less than 50 Marks

-

-

-

-

-

%

-

-

-

-

0

0%

-

-

89.5

-

-

1

6.3%

-

-

-

-

-

1

6.2%

67

-

-

-

-

2

12.5%

-

-

56

-

-

-

4

25%

42

-

-

-

47

49

8

50%

-

-

Source: Analysing the Annual Reports of FY 2017 and Websites of the 16 Companies have taken as sample.

Note: Companies names and industry they belonged has taken as anonymous to make the research as impartial and non-harmful to the companies.

36 | July - September 2018

ARTICLE companies is 55%. Individual company compliance rate of CG varied from 42% to 89.5% and no company out of 16 companies has compliance rate of CG at 90% or more. 50% of these companies has compliance rate of CG less than 50%, 25% of these companies has compliance rate of CG more that 50% but less than 60%, 13% companies has compliance rate of CG more than 60% but less than 70% and only 12% companies has compliance rate of CG more than 70% but less than 90%.

Analysing evaluation of area wise criteria, the study found that industry average compliance rate of CG of these companies in Board Independence & Governance is 56%; industry average compliance rate of CG of these companies in Board Systems & Procedures is 39%; industry average compliance rate of CG of these companies in Board Committees &Risk Analysis is 57%; industry average compliance rate of CG of these companies in Transparency & Disclosures Compliances is 64%; industry average compliance rate of CG of these companies in Internal Control and Internal Audit is 68%; industry average compliance rate of CG of these companies in Shareholders Information & Value Enhancement is 61%; industry average compliance rate of CG of these companies in Stakeholders Value Enhancement is 49%; industry average compliance rate of CG of these companies in Corporate Social Responsibility is 60%; industry average compliance rate of CG of these companies in Corporate Objectives, Governance Initiatives and Recognitions is 47%; and industry average compliance rate of CG of these companies in Timeliness in issuing Financial Statements and holding of AGM 60%.

Ref: Table-1 Limitations From this study, it is found there are some conditions which is really difficult to comply in time; like, to produce the Annual Report and holding AGM within 3 (three) months, judging the effectiveness of Board of Directors, induction of new director, follow the secretarial standards without strict directives in the CGG, 2012, etc. But some limitations already been solved in the new Corporate Governance Code, 2018 and its implementation in future will enhance the CG within the companies. This study, itself, has also some limitations like it covered only one industry sector companies of Bangladesh. So the result of this study cannot be claimed as an absolute.

Conclusion and Recommendation A well governed institution is expected to use its resources optimally and, thus, perform more efficiently

and contribute positively to the economic development of a country. Hence, Bangladesh Securities & Exchange Commission issued the CGG, 2006, the CGG, 2012, the CGG (Amendment), 2013 and finally, the CGC, 2018 to impose the conditions or code of the CGC to comply mandatorily by the listed companies in Bangladesh to enhance corporate governance in the interest of investors and the capital market. This empirical study found that industry average compliance rate of CG conditions in the sample companies is only 55%; no company could comply with the CG conditions at 90% or more; but 50% companies has compliance rate of CG conditions less than 50% which is just alarming. This situation can be compared with the recent banking crisis in Bangladesh that is the result of weak corporate governance in banking industry as critics say. The study also found some limitations to comply with the conditions of CG and hence the result of the study cannot be claimed as absolute.

Therefore, the study’s recommendation is that every company should follow the Corporate Governance Code, 2018 rigorously to establish good corporate governance within the company which ultimately protect the interest of the stakeholders, investors and the capital markets. For our economic sustainability, the study also recommended that similar study on the companies of all sectors should be undertaken by the Universities and professional bodies to find out the reasons for non-compliance of CG code or conditions.

Bibliography 1.

Annual Reports of 16 selected companies

2.

The Corporate Governance Guidelines, 2006, 2012 and 2013 (amendment)

3.

The Corporate Governance Code, 2018

4.

S. Bala, 2018: Corporate Governance Code 2018 in Bangladesh: Reforms and Revisions, Dhaka Stock Exchange Limited

5.

Aguilera, 2005: Corporate Director Accountability: Comparative Perspective

6.

Jan & Sangmi, 2016: The Role of Board of Directors in Corporate Governance

7.

Websites of the 16 selected companies

Governance and An Institutional

» About the Author Fellow Member of the Institute July - September 2018 | 37

VIEWS ON CORPORATE GOVERNANCE ISSUES- BANGLADESH PERSPECTIVE Mir Shariful Bashar ACS

A

s Bangladesh makes significant progress in reducing poverty, achieving economic stability, and advancing the quality of people’s lives, Corporate Governance is gaining it’s recognition as a key force in driving the sustainable growth of the country. Corporate Governance can be taken as a catalyst for desired changes, for higher economic growth, for a more efficient use of resources, for a vibrant private sector that is accountable to the investors and society, for a reduce in corruption, and for a healthy inflow of funds from domestic and foreign investors.

We all know the world has faced a financial disaster and a number of high profile corporate collapse in the recent past years, which fingered to a number of issues in Corporate Governance practices globally. As time goes by governing the corporate entities is becoming a tough job with the lack in managerial capability - which claims an immediate review to regain confidence.

Besides all Business Planning, Strategies, Budgeting, Project Management, Information & Knowledge Management, Performance Management, Talent Management etc - there should be a sound & responsive Corporate Governance System followed by its self defined set of standards globally and a country specific Corporate Governance Model for Bangladesh.

The expertise of the boards of directors, effectiveness of different management Committees, Auditing Systems, role of Independent Directors etc. are gaining importance in order to establish accountability, fairness and transparency in the Business Sector as well as to build up confidence of its stakeholders.

To maximize impact, aspiring and current board members must possess an in-depth understanding of how corporate boards work and what it takes to lead with transparency, accountability and efficiency. By examining today's Corporate Governance challenges particularly for Bangladesh, there should be mechanisms to position seasoned chairs, effective committees, individual directors & skilled Executives to positively influence a company’s practice about good Corporate Governance and also ways open to learn from the practices of successful boards of the world.

38 | July - September 2018

Compensation Committees should be more active on Executive compensation issues which will cover the interest of the Board Members, Institutional Investors, Regulators, Shareholders etc. As political and economic uncertainty increases, oversight requirements are rising, and risk management issues become more critical, with that connection audit committees should be empowered more to handle the business dashboard to create a smooth drive environment for the board. Corporate Governance should be taken as an approach to ensure accountability and responsibility guided by a set of principles, which should be incorporated widely in the business arena of the country. Here I would like to limit the focus of this particular write-up within the band of board management & regulation issues in line with the gradual improvement of the corporate sector of the country.

Since the early 1990s, CG has been getting attention from regulatory bodies and practitioners worldwide.

Bangladesh - having an open trade policy and liberal views towards Foreign Direct Investment (FDI) is dealing with a corporate sector which is still in its infant stage. Anyway, when compared to the maturity of India, Sri Lanka, Pakistan, Thailand and Malaysia; Corporate Governance in practice and philosophy is so far remained relatively under-developed in Bangladesh.

The corporate legal framework in Bangladesh is generally consists of certain Acts and Ordinances, numerous subordinate legislative instruments such as: Orders, Notifications, Rules, Regulations and Circulars, which are issued by the Government, the Bangladesh Bank, the Bangladesh Securities and Exchange Commission (BSEC), the National Board of Revenue (NBR) and other governmental agencies. Moreover through their policy advocacy & periodical recommendations - the Stock Exchanges, Chambers of Commerce and other self-regulatory agencies in the private sector also form a part of the legal and regulatory framework for corporate governance in Bangladesh. To administer the corporate environment in Bangladesh, following legal measures are in practice:

ARTICLE •

Securities and Exchange Ordinance 1969

•

Bangladesh Bank Order 1972

•

Bank Companies Act 1991

•

Financial Institutions Act 1993

•

Securities and Exchange Commission Act 1993

•

Companies Act 1994 (Reform are in Progress)

•

Bankruptcy Act 1997

•

Codes of Corporate Governance - June 2018 (by BSEC)

Most of the documents above are quiet backdated – which requires an immediate update.

To institutionalize the practice of CG in Bangladesh, very first initiative was undertaken by the Bangladesh Securities and Exchange Commission (BSEC). BSEC issued a notification on Corporate Governance Guidelines (CG Guidelines, August 2012) for the Publicly Listed Companies of Bangladesh under the power vested on the Commission by Section 2CC of the Securities and Exchange Ordinance, 1969. The CG Guidelines were issued on a ‘comply or explain’ basis, providing some breathing space for the companies to implement on the basis of their capabilities, which put directions on the board composition, committee formation, inclusion of Independent Director, appointment of CEOs and external auditors etc .

Recently The Bangladesh Securities and Exchange Commission (BSEC) issued a new set of directives known as 'Codes of Corporate Governance' in June 2018, and asked the listed companies to comply with those by December 31, 2018, (i.e. within the next six months). The Codes of Corporate Governance touched upon the provisions for overall Roles & Responsibilities of the CEOs & high-end committees, issues on Management Discussion and Board Report, Separation of Positioning of the Top Executives, a comprehensive Compliance CHECK-LIST, Contents in the Annual Report and a prescribed time frame. This new Codes of Corporate Governance issued by the Bangladesh Securities and Exchange Commission (BSEC) is definitely a good instance of progress. The most significant addition here is the requirement of Nomination and Remuneration Committee (NRC) for the companies. It has also advised that the Certificate of Compliance to be issued by the professionals, which has bridged up a critical gap in this question. It can be said that the regulatory regime should not be such decisive that it snatches up considerable management time and attention, when the focus is to be boost-up the company's business performance and social commitments. Much care should also be

taken so that the regime may not cause potential investors to get a wrong message to worry & frighten away from the capital market which pose difficulties of another track for the existing ones. The push from the BSEC with their 'Codes of Corporate Governance' should be kind of flexible rather than being a ‘breakthrough’ - which will help the corporate sector to be habituated gradually.

Now, the main tool in our hand to ensure good governance in the sectors concerned is the Companies Act (Companies Act-1994) which is literally a shadow document of the English Companies Act-1908 with some trivial updates made in the Act of 1913. It is more than one & half decades old - and YES, it is critically old-fashioned to govern a modern business environment living in a global village of open market economy in the year 2018. Lately Reform of Companies Act’ 1994 has caught attention of everybody - which is really a long pending issue and concern Ministries (Ministry of Commerce & Ministry of Law, Justice and Parliamentary Affairs) are working on it with a high priority to get it in a right shape. In this while, the Banking Company Act, 1991 has got a retouch upon its three provisions & amended finally on May’2017– which is trying to cater the time’s demand of the Banking sector. On behalf of the Institute of Chartered Secretaries of Bangladesh (ICSB), there are a number of recommendations on its way to be covered in the upcoming reform of the Companies Act-1994: •

There should be mandatory provisions for appointing Company Secretary in a company having capital more than Tk 50 million.

•

Provisions should be there for Secretarial Audit to ensure compliance by the companies with the regulatory directives and governance issues.

•

Government companies should be treated at par with other companies and be subject to similar compliance standards.

•

Regular filing system should be made easy, efficient and cost-effective. Non-filling of documents or incorrect disclosures should be dealt seriously. Delays in filing should be penalized through non-discretionary late fee relating to the period of default. There should be a system of random scrutiny of filing to be carried out by the registration authorities.

•

A company law tribunal should be established consisting of four members.

•

Aligning Central Depository System (CDS) with traditional system and covering various reports

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and returns for Registrar of Joint Stock Companies & Firms (RJSC) •

The Companies Act should, as much as possible, be allowed maximum flexibility to use relevant technology.

In the case of Bangladesh - private sector is mostly characterized by family-owned enterprises, with the families having significant control and influence over their enterprises’ operations. On top of that the business sector is controlled by a very limited number of families. So, the general investors & shareholders are not getting the right amount of weightage they deserve in terms of reflecting their opinion. Besides with an under-developed capital markets and a weak legal and regulatory framework for investor protection corporate sector of Bangladesh is suffering from a number of downsides.

Looking into the Corporate Governance Scenario of Bangladesh, it is quite clear that we are lagging behind the global economy and even the neighbors.

There are relevant Laws, Acts and measures but implementation may be poor, there are high powered regulators but may be still struggling to be effective in full-swing, shareholders are not also that active in terms of their participation. It seems the current system in Bangladesh cannot provide sufficient legal, institutional and economic motivation for stakeholders to encourage and enforce Corporate Governance practices. And so we have to witness lots of failure in recent time in Bangladesh (especially in Banking & Finance sector) which causes an obstacle to the national development. Now trust building among the entrepreneur & the investors is a big challenge for the corporate sector of the country. Now the key question is: Having all the Acts, Codes in place - are they active enough to build a responsive Corporate Governance System for the country. It is the sole responsibility of the Corporate Leadership of the community to ensure a responsive Corporate Governance System in the economy where in the regulator & the government could be the power player with their appropriate tools like: CG Guidelines, Corporate Management Protocols and Corporate Governance Audit & reporting framework etc.

In light of the above discussion, it can be wrap up here by saying that we expect a continuously improving balanced and responsive Corporate Governance System established in the country which will confirm a powerful legal environment in terms of law enforcement to protect the investor’s right, control

40 | July - September 2018

corruption, building trusts among investors and foster good Corporate Governance Practices in one hand and attract more global investments by other hand to ensure higher economic growth of the country. We must have a long term master plan like Mega Program – to be implemented bit by bit through different schemes of progress. The approach should be “incremental” improvement over time so that the corporate sector will have a breathing space to get ready for an adaptive and long race. Having a document like 'Codes of Corporate Governance' can be considered as a short-term drive. In the mid-term, we may have Policy Interventions and fine tune the legal and regulatory framework to provide blanket coverage to the shareholder’s rights (specially the minority shareholders) - meanwhile efforts should be in place to improve the capacity of the Board of Directors & Managing Agents. In the long-term, we should consider institutionalizing the Corporate Governance Practices with in a comprehensive National/ International Framework which will cover the Implementation reinforcement, Monitoring & Evaluation, Achievements or Result Review, Quality issues, Arbitration methods, Public - Private Partnership mechanism to recognize the Corporate Governance Practices etc. - concurrently the government’s legal & regulatory scheme will maintain its improvement towards a world standard & satisfactory maturity level. A befitting result oriented approach will ensure a responsive Corporate Governance System for the Country.

References 1.

Afzalur Rashid; Anura De Zoysa; and Kathy Rudkin (May, 2018) ; Corporate Governance in Bangladesh : an Overview;

2.

A K A Muqtadir ,BSEC Codes of Corporate Governance - a critique;

3.

Shabuz Mahmud;and Jesmin Ara; Corporate Governance Practice In Bangladesh: An Overview of its Present Scenario; International Journal of Economics, Commerce and Management, Vol. III, Issue 12, December 2015, United Kingdom;

4.

News Link: https://thefinancialexpress.com.bd/ views/reforming-companies-act-1994.

» About the Author Associate Member of the Institute

ADMISSION NOTICE

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The Founding Members

F-0001

Muzaffar Ahmed FCMA, FCS

F-0005

Md. Zahangir Alam FCS

F-0009

Itrat Husain FCMA, FCS

F-0002

F-0003

Late M. S. Alam Mia FCS

A K A Muqtadir FCS

F-0006

F-0007

Md. Siddiqur Rahman FCS

F-0010

Sultan-ul-Abedine Molla FCS

Md. Saiduzzaman FCA, FCS

F-0011

Muhammed Abul Hashem LLM, FCA, FCS

F-0013

N. G. Chakraborty FCA, FCS

F-0004

Mohammad Sanaullah FIPM, FCS

F-0008

Md. Yeamin Hossain FCIS, FCS

F-0012

Late Anwarul Afzal FCS