Volume : XIV
Issue : 1
January - March 2012
LAW REFORM
Institute of Chartered Secretaries of Bangladesh A Statutory Body Under an Act of Parliament
CONTENTS Institute of Chartered Secretaries of Bangladesh (ICSB) Institute of Chartered Secretaries of Bangladesh (ICSB), established under an Act of Parliament i.e. Chartered Secretaries Act 2010, is the only recognized professional body in Bangladesh to develop, promote and regulate the profession of Chartered Secretary in Bangladesh. The affairs of the Institute of Chartered Secretaries of Bangladesh (ICSB) are managed by a Council consisting of thirteen elected members and five nominees of the Government. The major contribution of a Chartered Secretary is in the corporate sector. Chartered Secretary is a requisite qualification to become a Company Secretary. Company Secretary is an important professional, aiding the efficient management of the corporate sector. Company Secretary is a statutory officer under the Companies Act 1994. According to Securities and Exchange Commission (SEC) all the listed companies should have a Company Secretary. Company Secretary is the compliance officer of the company, who has to interact, coordinate, integrate and cooperate with various other functional heads in a company.
THE COUNCIL : 2010-2013 Mohammad Sanaullah FCS
: President
Md. Shahid Farooqui FCS
: Senior Vice President
M. Naseemul Hye FCS
: Vice President
Md. Monirul Alam FCS
: Treasurer
Mohammad Asad Ullah FCS Itrat Husain FCS N.G.Chakraborty FCS Md Abdus Salam FCS Safiar Rahman FCS Md. Selim Reza FCS
: Councilor : Councilor : Councilor : Councilor
THE COUNCIL 2010-2013
5
EDITORIAL
7
FROM THE PRESIDENT
10
INSTITUTE NEWS
ARTICLES 20
Reform of Companies Act 1994 Mohammad Sanaullah FCS
23
Agenda for Change Itrat Husain FCMA, FCS
25
The Legality of the Directorship Not Being Reelected N. G. Chakraborty FCA, FCS
28
ADR in Corporate Wrangling : A Vehicle for Easy Access to Justice Barr. Ishtiaque Ahmed MCIArb, LL.B (London), LL.M
35
Commodity Exchange Market -A New Initiative for Bangladesh Md. Selim Reza FCA, FCS
38
SME Banking in Bangladesh: An OverviewControl Act, 2012 Dr. Toufic A. Choudhury * Lutfun Nahar Begum **
: Councilor : Councilor
A.K.M Mushfiqur Rahman FCS : S. Abdur Rashid FCS : Gopal Chandra Debnath FCS : Md. Shawkat Ali Waresi Joint Secretary, GoB : Md. Ekhlasur Rahman Joint Secretary, GoB : Nasreen Begum Joint Secretary, GoB : Prof. Md. Helal Uddin Nizami Member, SEC : Ahmedur Rahim Registrar, RJSC, GoB :
Councilor Councilor Councilor
48
Councilor Councilor Councilor Councilor Councilor
EDITORIAL BOARD Editor Itrat Husain FCS
3
Councilor
Members Mohammad Sanaullah FCS M. Naseemul Hye FCS Kazi Ashiqur Rahman FCS Hossain Sadat FCS
Design & Production
(A Concern of Tradex BD)
Who Owns Your ERP Implementation Project? Rubaiyat Jamil
52
Knowledge Bank Compiled by Itrat Husain FCMA, FCS
53
Corporate Declarations 2011
55
Notifications
The views and opinions expressed in the articles published in this Journal are those of the writers only Published by the Institute of Chartered Secretaries of Bangladesh (ICSB) 107 Kakrail, 1st Floor G.P.O. Box : 3100, Dhaka-1000, Bangladesh Phone : 880 2 934 9578 & 933 6901 Fax : 880 2 933 9957 E-mail : secretary@icsb.edu.bd icsb@icsb.edu.bd Web : http://www.icsb.edu.bd
Subscription Rate For Students : per copy Tk. 100; per year Tk. 350 Others : per copy Tk. 150; per year Tk. 560
The Council
THE COUNCIL : 2010-2013
President Mohammad Sanaullah FCS
Senior Vice President Md. Shahid Farooqui FCS
Vice President M. Naseemul Hye
Immediate Past President & Councilor Past President & Councilor Mohammad Asad Ullah FCS Itrat Husain FCS
Councilor Safiar Rahman FCS
Councilor Md. Shawkat Ali Waresi Joint Secretary, GoB
Councilor Md. Selim Reza FCS
Treasurer Md. Monirul Alam
FCS
Councilor N.G. Chakraborty FCS
FCS
Councilor Md Abdus Salam FCS
Councillor A. K. M. Mushfiqur Rahman FCS
Councilor S. Abdur Rashid FCS
Councilor Gopal Chandra Debnath FCS
Councilor Md. Ekhlasur Rahman
Councilor Nasreen Begum
Councilor Prof. Md. Helal Uddin Nizami
Joint Secretary, GoB
Additional Secretary, GoB
Member, SEC
Councilor Ahmedur Rahim Registrar, RJSC, GoB
Secretary to the Council
Dr. A. K. M. Delwar Hossain
THE CHARTERED SECRETARY JANUARY - MARCH 2012
03
EDITORIAL LAW REFORM Law is a body of rules and principles governing the affairs of a community and enforced by a political authority by an Act of Parliament. Many laws combined together forms the legal or judicial system of a country and these laws are enforceable by the courts. Law reform is the process of examining existing laws and advocating and implementing changes in a legal system with an objective to enhance justice and efficiency. Law reform bodies are set up by governments, although they are usually independent from government control, providing intellectual independence to accurately reflect and report on how the law should progress. There are four main methods in reforming laws. These are Repeal, Creation of new Laws, Consolidation (change existing laws) and Codification. History of law goes back to 3,000 years B.C. Over the years different legal systems have evolved and new laws have been enacted. This shows that laws should be amended and improved from time to time. India has embarked on a significant programme for legal system reform for the first time in 60 years. In Bangladesh too there are many laws, some of which are outdated and go back a few centuries. Legal reforms should therefore be initiated for all such outdated laws. Review is necessary for amendment of Civil, Criminal, Banking, Insurance, Land, Maritine, Financial Services, Sale of Goods, Carriage of Goods, Education, Medical Services, Engineering, Transpotation, Intellectual Property, Human Rights, Corporate and many other laws. The Law Commission established under the Law Commission Act 1996 can play an important role, as described in section 6 of
the Act, in amending and updating the existing laws. The recommendations of the Commission can then be made into Acts of Parliament. In the interest of the National Economy, new laws can be enacted to formalize the informal economy by empowering the entrepreneurs to carry on their businesses. Some discussions and meetings have been held in this respect but no concrete decisions have been taken as yet. India on the other hand has done some work in this area to adopt a mechanism for gradual transition from informal to formal sector. ICSB can also play a vital role in development and reform of laws and the legal system of the country, especially in the reform of those laws affecting the Corporate sector, e.g. Companies Act, Labour Laws, etc. ICSB has been involved in various discussion meetings and seminars for amendment of the Companies Act 1982. The Companies Act 1913 was replaced by Companies Act 1982. But in the present context of globalization and significant changes in trade, commerce, telecommunications, etc. a major revision or a new Act is well overdue. Various initiatives were taken from 2006 onwards; but no major development has taken so far. The issue is being addressed seriously again and one can only hope that some positive results will be seen within the next twelve months resulting in a new Companies Act which will cater to the needs of the country for the next twenty years. Legal reforms are imperative for ensuring improvement in Governance and also the overall Development of the country.
Itrat Husain FCMA, FCS Editor THE CHARTERED SECRETARY JANUARY - MARCH 2012
05
FROM THE PRESIDENT Dear Professional Colleagues, At the very outset I wish you a very happy and prosperous Bangla New Year 1419. During the first quarter of 2012 the Institute was involved with a lot of activities. The most important issues were : -
Established Secretarial Standards Board Applied for CSIA Membership Held CPD program on two current topics Organized Joint workshop with IFC Recommendation placed to SEC on Corporate Governance Guideline and Research Analyst - Organizing Committee formed for holding National Convention 2012 and 4th Convocation - Capacity Building Project approved by the Government. Secretarial Standard Board I am pleased to inform you that the Council formed a Secretarial Standard Board in formulating the Secretarial Standards of various types, relevant in corporate management and general governance. It will be my endeavor to bring out at least two Secretarial Standards and Guidance Notes in 2012. Review of Corporate Governance Guideline Good Corporate Governance Practice in Corporate Management is the prima facie requirement for the changing business sustainability. Recently Securities and Exchange Commission (SEC) has taken an initiative to update the Corporate Governance Guideline. As a professional body ICSB submitted a comprehensive recommendation to the SEC for their consideration. We are hopeful the SEC will take note of it.
29th Batch Admission – January –June 2012 Session Highest number of students were enrolled in this session; 35.78% increase compared to last session i.e. 28th batch. The enrollment was processed through a competitive examination. The demand of this profession is growing tremendously but unfortunately it is becoming difficult to accommodate the increasing number of students. To overcome the problem the Institute is seriously searching for a new campus. For the time being rented coaching facilities from BIM have been taken. The orientation of the new students took place on January 31, 2010 at the BIAM Auditorium. CPD Program held The Council is striving to update the knowledge and skills of its members by organizing Professional Development Program. With this objective in mind the Institute organized a Workshop on two topics viz. “Emerging Issues in Corporate Governance” and “Capital Market and its Prospects in Bangladesh” on February 10, 2012 at the Auditorium of Faculty of Business Studies, University of Dhaka. Dr. A.B. Mirza Md. Azizul Islam, former adviser to the Caretaker Government of Bangladesh,was the Chief Guest and Prof. Md. Helal Uddin Nizami, Member of the Securities and Exchange Commission (SEC) was the Special Guest . Keynote paper on “Emerging Issues in Corporate Governance” was presented by Ms. Anne Molyneux, Consultant, IFC. Mr. Wali-ul-Maroof Matin, former CEO, Chittagong Stock Exchange Ltd. presented another keynote paper on “Capital Market and its Prospects in Bangladesh. The chief guest lauded the initiatives of the Institute in holding on the CPD program. He THE CHARTERED SECRETARY JANUARY - MARCH 2012
07
From The President
reminded that Company Secretaries are responsible to induct good governance practice in the Board. The Special Guest in his address also asked the Company Secretaries to come forward more strongly to implement Corporate Governance guidelines in all listed companies. A large number of Members attended and expressed their satisfaction over the program. Workshop on Corporate Board Leadership
Governance
The Institute in collaboration with the International Finance Corporation (IFC) organized a day long workshop on Corporate Governance Board Leadership for Chartered Secretaries who are working in listed companies as Directors and Company Secretaries in the Country on February 11, 2012 at Hotel Ruposhi Bangla, Dhaka. It was attended by 30 Members of ICSB. Ms. Anne Molyneux, International Consultant, IFC was the trainer at the Workshop. She discussed various contemporary issues relating to Corporate Governance, Board Practices and Procedures, Governance of Strategy and Risk, Corporate Responsibility and the Control Environment with special reference to Bangladesh in the global perspective. As part of its endeavor to improve standards of corporate governance and to achieve corporate excellence, the Institute has taken a number of initiatives.
contribute towards the development of the Institute and wish each and everyone a glorious career. National Convention 2012 I am pleased to inform you that your Institute is going to hold its National Convention 2012 and Convocation on September 14-15, 2012. An Organizing Committee has also been formed to conduct the National Convention & Convocation 2012 in a befitting manner. The Theme of the Convention is “Modernization of the Companies Act – Enhancing Good Governance”. I invite you all to make the program success. Capacity Building Project approved the Government. I am also pleased to inform you that the Government of Bangladesh approved our “Capacity Building Project”. Under this project the Institute activities would be automated by IT, Curriculum development, Modernization of Library and development of Reading Materials. Conclusion In conclusion, I would like to invite you all to contribute to the development of the Institute by getting involved with its activities. Let us build a world class Professional Institute of the Country. May ALLAH bless us in our way.
Examination Result I am delighted to inform you that last July-December 2011 session examination result was very encouraging. 15 students qualified out of 29. Congratulations to all the qualified students and I welcome them to
08
THE CHARTERED SECRETARY JANUARY - MARCH 2012
Mohammad Sanaullah FCS President
Institute News
INSTITUTE ACTIVITIES January - March 2012 The first quarter of 2012 has been full of events, including both internal and external meetings, Continuing Professional Development Programme, Workshop, Training Programmes, the Annual Picnic etc. These were as follows: MEETINGS INTERNAL Council Meeting During this period the 11th Meeting of the Council of the Institute of Chartered Secretaries of Bangladesh was held on Tuesday, March 20, 2012. Under the Chairmanship of Mohammad Sanaullah FCS, President of the Institute. Some major decisions of the Council Meeting were as follows: • The Examination Result of Session, 2011 was approved.
Summer
• The Secretarial Standard Board of ICSB for establishing Secretarial Standards (CS) was formed under the Chairmanship of Mohammad Sanaullah FCS. • The Council decided to draft guidelines for good Council Practices. The Council also requested all distinguished members of the ICSB to put forward their valuable opinion immediately. • Members subscription status of the Institute was reviewed and all members were requested to clear their annual membership subscription in due time as prescribed by the Chartered Secretaries Act. 2010. • It was decided to hold National convention – 2012 during September, 2012 and the theme of the National Convention was chosen to be “Modernization of the Companies Act – Enhancing Good Governance”. • To organize the National Convention the Council constituted an Organizing Committee and other Committees.
10
THE CHARTERED SECRETARY JANUARY - MARCH 2012
Meeting of the Executive Committee During this period third and fourth meetings of the Executive Committee of the Institute were held on Saturday, January 14, 2012 and Tuesday, January 31, 2012 respectively chaired by the President of the Institute. Among others the following decisions were taken: • Activities of different Sub Committee under Executive Committee were reviewed and the meeting expressed their satisfaction on the performance of the Sub Committees. • A Trustee Board for management of provident fund of the employees of Institute was formed under the chairmanship of Mohammad Sanaullah FCS. • Employees’ composition package in line with the proposed Organogram of the Institute was approved. The Education Committee held second, third and fourth meetings on January 08, 2012, February 04, 2012 and March 27, 2012 respectively under the chairmanship of Shahid Farooqui FCS, Senior Vice President of the Institute. The key decisions taken were as follows: • Decision was taken regarding the admission test of 29th batch held on January 13, 2012. • Plan for orientation of 29th batch to be held on January 06, 2012 at BIAM Auditorium was chalked out. • The activities of different Sub Committees under Education Committee were reviewed and the Education Committee expressed deep satisfaction over their performance. • The performance of the existing faculty members was reviewed. • The class routine and the list of faculty member for January – June, 2012 session was finalized.
Institute News
Disciplinary Committee The Disciplinary Committee held its first meeting on Saturday, January 14, 2012 under the Chairmanship of Safiar Rahman FCS. • The Disciplinary Committee reviewed the existing Code of Professional Conduct and decided to draft a new Code of Professional Conduct of ICSB in line with the Chartered Secretaries Act, 2010 and Chartered Secretaries Regulation 2011 and in consultation with the Code of Conduct of other similar type of organizations. Journal & Publication Sub-Committee • The second meeting of the Journal & Publication Sub Committee was held on Tuesday, April 17, 2012 under the Chairmanship of Itrat Husain FCS. The Committee reviewed the progress of the next issue of the Journal, 2012 and decided to publish the journal soon. Secretarial Practice Sub Committee
Donation Program” at the Institute’s premises to memorize the sacrifice and express the gratitude with the nation to our national ‘MARTYRS’ and the ‘BORGONA’s and also celebrate the 40th Independence day anniversary. Dhaka Regional Chapter (DRC) has been arranged the Blood Donation program. This is the first CSR program of the Institute organized by Dhaka Regional Chapter (DRC). DRC is an important operational wing of ICSB which is engaged to take such type of CSR activities to uphold the images of the ICSB. Besides this DRC also engage to develop as well as coordinate with the bodies/authorities/universities/Institutions to organize promotional activities such as seminar, workshop, counselling, debate program, rewarding ceremony, reception of the distinguished fellows etc. on behalf of ICSB. DRC also going to disclose an activities calendar circulating such type of initiatives we are going to take for round the year especially observing the national and international days comprising with the students and members of the Institute.
• The Secretarial Practice Sub Committee in their second meeting held on Thursday, April 19, 2012 under the Chairmanship of Mohammad Asad Ullah FCS reviewed the status of the drafting of “Secretarial Standards on Meetings of Board of Directors” and “Secretarial Standard on General Meetings” and stressed upon its finalization immediately. Dhaka Regional Sub Committee
Students and Members donating blood at the programme
• The Dhaka Regional Sub Committee under the leadership of Khandoker Saad Ullah FCS, Chairman, DRC organized a Blood Donation Programme with Quantum Foundation on our historical Independence Day, March 26, 2012 at the office of the Institute. Blood Donation program Institute of Chartered Secretaries Bangladesh (ICSB) has organized “Blood
of
Result of the Chartered Secretary (CS) Examination The Council of the Institute of Chartered Secretaries of Bangladesh (ICSB) in its 11th meeting of the Council (held on March 20, 2012), approved and announced the results of the Chartered Secretary Summer Session-2011 examination held in January, 2012.
THE CHARTERED SECRETARY JANUARY - MARCH 2012
11
Institute News
Roll Nos. of the successful candidates are as follows:
F-49
Wahida Prodhan
F-50
Swapan Kumar Chakraborty
C.S. Inter. Level-I: Roll No.
F-52
Shantanu Debnath
F-53
Mohammad Monirul Islam Khan
F-56
Rajib Chakraborty
003, 007, 010, 017, 019, 024, 030, 031, 043, 044, 045, 048, 062, 063, 064, 065, 066, 067, 070, 071, 072, 073, 075, 076, 077, 078, 079, 082, 084, 085, 086, 087, 088, 089, 090, 091, 092, 093, 095, 096, 099, 100, 104, 105, 111, 113, 114, 117, 118, 119, 121, 122, 123, 126, 128, 129, 130, 135, 140, 142, 153, 155, 159 and 161 Total-64 (Sixty Four) Only C.S. Inter. Level-II: Roll No. 163, 167, 169, 170, 171, 172, 175, 184, 185, 186, 193, 198, 205, 209, 211, 212, 214, 215, 216, 217, 218, 219, 222, 225, 226, 227, 233, 237, 240, 245, 247 and 248 Total - 32 (Thirty Two) Only C.S.Inter. Qualified:Roll No. 253, 255, 257, 258, 259, 260, 261, 262, 263, 264, 265, 266, 267, 268, 269, 270, 272, 275, 276, 277, 278, 279, 280, 281, 286, 287, 289, 291and 292 Total - 29 (Twenty Nine) Only
Total – 15 (Fifteen) Only Training Programmes The Institute arranges training programmes and workshops regularly for the corporate professionals throughout the year on different professional issues to develop professionalism through updating their knowledge base. During the period under review two Training Programmes were arranged. These trainings and workshops have produced encouraging impact in the corporate arena and participants were also greatly benefited through up dating their knowledge, skills and ability to work successfully.
C.S. Final Group I: Roll No. F- 01, F-02, F-03, F-04, F-05, F-06, F-07, F-08, F-09, F-10, F-13, F-14, F-15, F-17, F-19, F-20, F-21, F-22, F-23, F-26, F-27, F-28 and F- 29 Total - 23 (Twenty Three) Only C.S. Final Qualified: Roll No. & Name:
12
Roll No
Name of the Students
F-30
Md. Rabiul Alam
F-32
Tauhidul Islam
F-33
Md. Shahidul Islam
F-35
Md. Zillur Rahman
F-36
Mohammad Showket Akber
F-38
Sabbirul Haque Chowdhury
F-39
Md. Zakir Hossain
F-42
Md. Abul Mansur
F-45
Mohammad Abdul Mannaf
F-46
Syed Mohammad Nasim
THE CHARTERED SECRETARY JANUARY - MARCH 2012
President Mohammad Sanaullah FCS accompanied by the group of trainees
The first programme was on Internal Audit Control Environment from January 07, 2012 to January 10, 2012 at the training room of the institute with 17 participants. The course was designed and coordinated by Mohammad Sanaullah FCS, President of the Institute.
Senior Vice President Md. Shahid Farooqui FCS accompanied by the group of trainees
Institute News
The second Programme was on Standardization of Annual Report from February 18, 2012 to February 22, 2012 with participants from different corporate bodies. Orientation of 29th batch of students The Institute organized the Orientation Programme on January 06, 2012 to welcome the 29th batch of students of the Chartered Secretaries course at the BIAM auditorium, New Eskaton, Dhaka. Mohammad Sanaullah FCS President of the Institute inaugurated the programme and welcomed the newly enrolled students. Two Hundred and Five students from various professions got admission in the two-and-half-year course during the winter session (January-June, 2012).
ICSB members & Secretary at the Inaugural Session for the 29th Batch of students at the BIAM Auditorium
Md. Shahid Farooqui FCS, Sr. Vice President, M. Naseemul Hye FCS, Vice- President of the Institute, Monirul Alam FCS, Treasurer of the Institute and Dr. A.K.M Delwar Hossain Secretary of the Institute were present on the occasion. In his welcome speech the President mentioned that Chartered Secretary profession is now a challenging and rewarding profession in Corporate Management and there is a wide range of professional scope both at home and abroad and he also suggested the freshers to build a prosperous society in Corporate Bangladesh as well as in line with global practice. The President mentioned about the mission and vision of the Institute and also advised the students to pursue their studies seriously and follow the code of conduct of the Institute to build up their career as a Chartered Secretary.
Students at the Inauguration of the 29th Batch
Mohammad Sanaullah, FCS, displayed a multimedia presentation on Chartered Secretary course and the profession and provided a guideline for the students. Among others, Md. Shahid Farooqui FCS, Sr. Vice President, M. Naseemul Hye FCS, Vice President and Dr. A. K. M. Delwar Hossain, Secretary of Institute spoke on the occasion. All in all, there was an open session for discussions; with a question and answer session wherin the queries of newly enrolled students on the course and professional matters were answered by the President himself. Continuing Professional Development (CPD) The Institute of Chartered Secretaries of Bangladesh (ICSB) organized a workshop on two topics namely Emerging Issues in Corporate Governance and Capital Market and its Prospects in Bangladesh under its continuing Professional Development (CPD) Programme on February 10, 2012 at the Auditorium of Faculty of Business Studies, University of Dhaka. It was attended by a large number of Members including Directors and Company Secretaries of the Country.
Keynote Presenters along with the President of ICSB, are seen at the CPD Programme with the Chief Guest
THE CHARTERED SECRETARY JANUARY - MARCH 2012
13
Institute News
Dr. A.B. Mirza Md. Azizul Islam, Former Adviser to the Caretaker Government of Bangladesh, Ministry of Finance, Planning, Post, & Telecommunications was the Chief Guest and Prof. Md. Helal Uddin Nizami, Member of the Securities and Exchange Commission (SEC) was the Special Guest, while the keynote paper on Emerging Issues in Corporate Governance was presented by Ms. Anne Molyneux, Consultant, IFC. Wali-ul-Maroof Matin, Former CEO, Chittagong Stock Exchange Ltd. presented another keynote paper on Capital Market and its Prospects in Bangladesh. The session chairman was Mohammad Sanaullah FCS, Corporate Affairs Directorof Singer Bangladesh Ltd. and President ICSB while official discussants were Zakiullah Sayeed Munshi, Project Manager-Corporate Governance, IFC, Sarwar Azam Khan FCS, Finance Director and Company Secretary GlaxoSmithKline Bangladesh Ltd., Mohammad Asad Ullah FCS, Executive Director and Group Company Secretary, BEXIMCO Group and N.G. Chakraborty FCS, Principal, N. Chakraborty Co. Chartered Accountants.
Crest being presented to Ms. Anne Molyneux by the Chief Guest
Members of ICSB at the CPD Programme
Special Guest Prof. Md. Helal Uddin Nizami in his address highlighted the initiative taken by the Securities and Exchange Commission (SEC) like updating corporate guideline, demutualization of stock exchanges and overviewing the Financial Reporting issues. Day Long Workshop organized jointly by ICSB & IFC on Corporate Governance Board Leadership for Chartered Secretaries: The Institute of Chartered Secretaries of Bangladesh (ICSB) in collaboration with the International Finance Corporation (IFC) organized a day long workshop on Corporate Governance Board Leadership for Chartered Secretaries on February 11, 2012 at Hotel Ruposhi Bangla, Dhaka. It was attended by three Members of ICSB who are working in reputed listed companies as Directors and Company Secretaries in the Country. The Workshop was inaugurated by Mohammad Sanaullah FCS, President of the Institute. Zakiullah Sayeed Munshi, Project Manager, Corporate Governance Advisory Services in South Asia was also present and spoke at the inaugural session.
The chief guest lauded the initiatives of the Institute in holding on the CPD Programme. He also made remarks on the importance of Corporate Governance in all sectors; and emphasized the importance of Financial Reporting Act for ensuring transparency and accountability in Financial Reporting and Company Secretaries are responsible to induct the Directors in good governance practice. President Mohammad Sanaullah speaking at the Day-Long Workshop, organized by ICSB in collaboration with the IFC
14
THE CHARTERED SECRETARY JANUARY - MARCH 2012
Institute News
city life is becoming difficult day by day. We are sick and tired with traffic jam, load shedding, price hike, corporate anxiety, social insecurity, etc. All of these were washed away on that day. We just had fun and fun.
Anne Molyneux seen with the President & Members of ICSB at the Day-Long Workshop
Ms. Anne Molyneux, International Consultant, IFC was the trainer at the Workshop. She discussed various contemporary issues relating to Corporate Governance, Board Practices and Procedures, Governance of Strategy and Risk, Corporate Responsibility and the Control Environment with special reference to Bangladesh in the global perspective.
Like every year, our beloved Institute organized an annual picnic for its members, employees, their family members and guests to strengthen the bondage and create professional interactions and understanding among the members from different surroundings.
SUCCESS GREETINGS A-0135 Md. Mozharul Islam ACS has been appointed as the Company Secretary of M.I Cement Factory Limited (Crown Cement). Prior to that he has served in the senior management positions in various companies / institutions, of which two were public limited listed companies, namely - AB Bank Ltd. and United Insurance Co. Ltd.
????????? Mrs. Fardose Jahan has joined as a Company Secretary in a non banking financial Institution named FAS Finance & Investment Limited on September 29, 2011 and currently working in the aforementioned organization.
Annual Picnic 2012 Close your eyes! Now think of an oasis after in a long desert; think of a rainy day after a long drought; think about a sound sleep at night after a couple of sleepless nights; and think of a glass of water for a daylong thirsty thought. How sweet the feelings are! Yes, we had the taste such sweet feelings on February 03, 2012. That colorful day came to ICSB family with a bucket of fun and joy. The
Women Participating in a game at the Picnic
It was about 45 minutes traffic free drive from massive crowded Dhaka City and all the participants were impressed to see the natural surroundings at the place. It was hard to believe that such a beautiful place is situated at shore of mega city. The venue of the picnic was a combination of natural and artificial beauty at Ashulia. It was a blend of bright but mild sunny day. It was a lively winter morning. The journey to the picnic spot started at 8 am by bus from the Institute with cheers and whistles of the delighted ICSB family members who were looking forward to enjoying a day with professional mates and family members. When participants reached the picnic spot around 10 a.m., they became excited. The kids ran out and started to play whatever they liked. Their innocent fun and colorful joy was one of the main glamour of the day. The Institute Members along with their spouses, qualified Chartered Secretaries and employees enjoyed the day-long programme which included different games for men, women and children followed by cultural events. THE CHARTERED SECRETARY JANUARY - MARCH 2012
15
Institute News The menu of the food was extremely good. Huge quantity of different types of our native cakes were the main attraction in the breakfast while delicious rich food at lunch satisfied all the hungry stomachs. Ghee from Bogra, Coconut from Noakhali, and so so were the secret of such tasty food.
Prize-giving Ceremony at the Picnic
The Picnic Committee arranged different compositions and games for the children and members. The members and the children took part in the games before lunch with great enthusiasm and enjoyed the colorful cultural event with fully loaded stomach after the lunch. The last event was Raffle Draw & Prize Giving Ceremony. Hon’ble council Members
along with their better half handed over the hundreds of prizes and gifts to the winners. Hon’ble Council Members in their short speech thanked the picnic committee for such a wonderful event. Among them Mrs. Nasreen, Council Member and Joint Secretary of Ministry of Law, shared her feelings in her speech. She mentioned that she had some set back in the recent past; this picnic brought some changes and freshness in her days. She liked the association of ICSB and was proud to be a part of ICSB family. We, the ICSB family, are truly thankful to the President and other Council Members and the organisers for selecting and arranging delicious food. Chairman, Picnic Committee and his team deserve special thanks for such a successful event. Special thanks to Mr. Rakib and Mr. Shareef for their smart presentation of the games and cultural events. Wikipedia defines Picnic as a simply pleasure excursion at which a meal is eaten outdoors. Do you agree with this? Not at all, our experience on February 3, 2012 defined Picnic as a word of thousands colors.
Training Calendar (April – July 2012) Sl. No.
Name of the Course
1.
Management of Initial Public Offering (IPO)
April 01 - 05, 2012
5 Days Program
2.
Board Management
May 05 - 09, 2012
5 Days Program
3.
Management of PF, Gratuity, & WPPF
June 9 - 11, 2012
3 Days P rogram
4.
Effective Audit Committee
June 9, 2012
Day long Program
June 16 - 20, 2012
5 Days Program
June 23 - 27, 2012
5 Days Program
June 30 - July 4, 2012
5 Days Program
July 7 - 11, 2012
5 Days Program
5. 6. 7.
8.
16
Human Resource Management in Practice Company Secretarial Practice Finance for Non -Finance Executives Compliance for Banking Companies & Non -Banking Financial Institutions (Leasing)
THE CHARTERED SECRETARY JANUARY - MARCH 2012
Tentative Date
Duration
Institute News
Guidelines for Good Council Practices
1. Thirteen Council Members of the Institute are directly elected by the members and there are four nominees of the Government who are also Council Members. The term of the Council is three years.
ideas to face emerging challenges, etc. The Vice-Presidents should be groomed to take over the reins of the Institute and should attend Leadership Development Programmes organised by reputable institute/organisation.
2. ICSB has stakeholders from various section of the public, including the members of the Institute. Therefore the actions of the Council Members will be under constant scrutiny. It is therefore expected that the Council Members will keep this in mind in discharging their duties effectively.
8. Objectives should be set at the beginning of the term of the Council and the achievements should be evaluated regularly so that corrective actions can be taken on time.
3. The President, as the leader of the Council, should ensure a democratic environment and inspire confidence of all the Council Members by allowing active discussions and participation, especially on contentious and key issues, so that the quality of the decisions taken is good and acceptable. 4. The Council Members are expected to participate actively in the debates in the meetings without any personal biases or other prejudices with the conviction and belief that the outcome of every debate would be beneficial for the profession and ICSB. 5. Any major proposal should always be taken up for discussion ONLY when most of the Council Members are present. The members are also expected to attend such meetings till the conclusion. 6. The Standing Committees shall at all times function under the control, direction and supervision of the Council. The Office-Bearers, should strive to function within the major guidelines and parameters laid down by the Council from time to time. 7. ICSB should conduct a Training Program for Council members at the beginning of each Council term with emphasis on the role of the Council Members, leadership development, generating new innovative
9. The Council members should, at all times, refrain from influencing the actions of the Directorate and Staff of ICSB by expressing their personal choices and desires to avoid conflicting situations. 10. The Council members should voluntarily refuse themselves from any Committee or forum of ICSB whenever they are sure and certain of any conflict of interest real or perceived. 12. The Council shall at all times adhere to the Secretarial Standards formulated by the Institute both in letter and spirit. 13. The views of the Secretary to the Council should be made part of the deliberations on any matter taken up by the Council. The Secretary should be encouraged to participate in the deliberations in a free and fair manner and he should also express his free and frank views on each matter taken up by the Council. Since the Secretary is responsible to the Council for implementation of its decisions, he should ensure that the decisions of the Council are implemented in the right spirit. 14. The Secretary should be primarily responsible for strict adherence and objective implementation of the Guidelines.
THE CHARTERED SECRETARY JANUARY - MARCH 2012
17
Institute News
Secretarial Standard Board Chairman Members
: President, ICSB : Immediate Past President, ICSB : Member, SEC : Registrar of Joint Stock Companies & Firms : Rep. (Joint Secretary), Ministry of Commerce : Rep. (Joint Secretary), Ministry of Law : Senior Vice President, ICSB : Vice President, ICSB : Secretary of the Institute
Secretary
Foundation of Organizing Committee for the 4th National Convention 2012 & 4th Convocation ORGANIZING COMMITTEE
2. Fund Raising & Convocation Committee
Chairman Co-Chairman Members
Chairman Co-Chairman Members
: Mohammad Sanaullah FCS : Md. Asad Ullah FCS : Itrat Husain FCS : Md. Shahid Farooqui FCS : M Naseemul Hye FCS : Md. Monirul Alam FCS : Shawakat Ali Waresi, JS, : Prof. Helal Uddin Nizami Member, SEC : Nasreen Begum JS, : Ahmedur Rahim Registrar, RJSC Member Secretary : Dr. A K M Delwar Hossain FUNCTIONAL COMMITTEES 1. Delegate Committee Chairman Co-Chairman Members
: Mohammad Sanaullah FCS : N G Chakraborty FCS : Muzaffar Ahmed FCS : A K A Muqtadir FCS : Sarwar Azam Khan FCS : Shaikh Mohammadullah FCS : Md. Nazrul Islam FCS : Md. Abdus Salam Khan FCS : Sharmi Noor Nahar ACS : Mohammad Bul Hassan FCS : Abu Hanif Bari ACS : Abdullah AL- Mamun ACS Member Secretary : Dr. A K M Delwar Hossain
18
THE CHARTERED SECRETARY JANUARY - MARCH 2012
: Md. Asadullah FCS : Md. Shahid Farooqui FCS : Mohammad Sanaullah FCS : Safiur Rahman FCS : Mushfiqur Rahman FCS : Md. Azizur Rahman FCS : M. Nurul Alam ACS : Hossain Sadat FCS : A K M Kamrul Islam ACS : Md. Kawsar Alam ACS : Iqbal Chowdhury ACS : Khandaker Habibuzzaman ACS : J Q M Habibullah ACS : Mizanur Rahman ACS : Sorwar Alam ACS : Hossain Ahmed Bhuiyan ACS Member Secretary : Gopal Chandra Debnath ACS 3. Event Management and Cultural Committee Chairman Co-Chairman Members
: Itrat Husain FCS : Md. Selim Reza FCS : Sadhan Chandra Das FCS : Md. Sabir Ahmed FCS : Md. Atiqur Rahman Talukder ACS : Nur-e-Alam ACS : ATM Tahmiduzzaman ACS : Md. Ruhan Miah ACS : Shahidul Islam ACS : Hasanur Rahman Rakib ACS : Israt Jahan Rimi ACS Member Secretary : Myeen Uddin Mazumder ACS
Institute News
4. Reception & Registration Committee
7. Convocation, Gift & Presentation Committee
Chairman Co-Chairman Members
: Md. Monirul Alam FCS : Shamsudduha A. Rashid ACS : Md. Bazlur Rahman Sikder FCS : Mohammed Mohashin FCS : Aviram Bhowmik ACS : Imrul Ahmed ACS : Md. Ataur Rouf ACS : Mohammad Zubair Uddin Bhuiyan ACS : Sarwar Jahan Tarafder ACS : Syed Amimul Ihsan ACS : Md. Arif Hossain ACS Member Secretary : Salim Ahmed FCS
Chairman Co-Chairman Members
5. Public Relations Committee
Chairman Co-Chairman Members
Chairman Co- Chairman Members
: Md. Shahid Farooqui FCS : Md. Abdus Salam FCS : Md. Enamul Hye FCS : Mohd. Abdur Rahman FCS : Md. Hasan Kabir ACS : Raja Mahmudul Haque ACS : Md. Mazharul Islam ACS : Jashim Uddin ACS : Lorens Shamol MollickACS : Mokammel Hossain ACS : Mohammad Asadur Rahman ACS : Md. Hurmot Shah ACS Member Secretary : Mizanur Rahman ACS
: M Naseemul Hye FCS : Safiar Rahman FCS : Mohammad Sanaullah FCS : Nazmul Karim FCS : Tauhidul Ashraf FCS : Kh. Saadullah FCS : Md. Mahbubur Rahman ACS : Md. Munirul Hoque ACS : Nazmun Nahar QCS Member Secretary : Md. Ruhan Miah ACS 8. Souvenir Committee : Itrat Husain FCS : M Naseemul Hye FCS : Mohammad Sanaullah FCS : N G Chakraborty FCS : Akhter Matin Chowdhury FCS : Hossain Sadat FCS : Md. Bul Hassan ACS : Md. Hasan Imam ACS Member Secretary : Kazi Ashiqur Rahman FCS
THE CHARTERED SECRETARY JANUARY - MARCH 2012
19
Article
REFORM OF COMPANIES ACT 1994 Mohammad Sanaullah FCS
Background
• Government Companies should be treated at par with other companies;
Legal framework for corporate entities is essential to enable sustainable economic growth. Such framework has to be tuned with emerging economic scenario, encourage good corporate governance and enable protection of the interests of the stakeholders, including investors. Globalization is one of the big challenges for the corporate management. In the context of globalization policy, Companies Act needs to be updated to meet the present need.
• The Act should provide for a more elaborate regime of corporate governance along with disclosures;
It is appropriate that comprehensive reviews of the Companies Act 1994 and to draft New Company Law through a consultative process initiated by Ministry of Commerce, Govt. of Bangladesh with the help of the Bangladesh Investment Climate Fund. Such review would enable working out an appropriate legislative proposal to meet the requirements of country’s growing economy and should form an integral part of the Company law making exercise. Approach towards the New Companies Act New Company Law should comprise of the basic principles guiding the operation and governance; Company law should be compact, enable self regulation but impose greater accountability through disclosures; The new Company Law should enable harmonious operation of all Government and regulatory agencies; Proposal to consider the following issues to incorporate in New Companies Act: 1. Registration of Companies • Small and Private Companies should be provided greater flexibility and freedom: Law should recognize One Person Company (OPC). Such companies should be provided with a simpler legal regime through exemptions;
20
THE CHARTERED SECRETARY JANUARY - MARCH 2012
• All registration process and statutory filings should be made compatible to the electronic medium. • Provision should be made in new Act to take serious action against companies that vanished with the investors’ funds. • Regular filing should be made easy efficient and cost effective • Law should require transparency in functioning of charitable and licensed companies • Statutory compliance should be made simpler and declaration based. 2. Corporate Management Law should provide an appropriate framework of governance that should be complied with by all companies. There should be an obligation on the part of a company to maintain an effective Board of Directors. • Every company should have at least one director citizen as well as resident in Bangladesh. • The qualification of Share of a Director need to spelt out at a reasonable level say TK 25,000 worth of Share. • Presence of at least one-third of independent director on the boards of companies having significant public interest. • Nominated Director appointed by any institution or in any agreement or appointed by the Government to represent its shareholding should not be treated to be an independent director. • Independent Directors tenure should not be more than two consecutive terms. One term may be up to five consecutive years.
Article
• Certain committees to be constituted with participation of independent directors in a public limited company like Audit Committee, Remuneration Committee and Nomination Committee. • Executive Directors not to be entitled to draw Directors Attendance Fee; • Independence director’s remuneration may be fixed based on the business turnover/profitability. • Chairman and Managing Director or CEO must be separate natural person. • One person should not be a Director for more than ten companies at a time. • Basic duties of directors should be specified in the Act in an inclusive manner. • Managing Director / Executive Director (ED) should be in the whole-time employment of only one company at a time. 3. Company Secretary • Every Public Company should have a full time qualified Company Secretary. Chartered Secretary would be the requisite qualification for the appointment of Company Secretary. • The Company Secretary shall be a resident in Bangladesh; whose appointment and removal shall be by the Board of Directors. • The Company Secretary shall hold responsibilities for ensuring compliance of all statutes; • As the company secretary is the witness to the Board affairs so, his certification to the indoor management has to be recognized; 4. Company Meetings • Board meetings to be held every three months with a minimum of four meetings to be held in a year. The gap between two meetings not to exceed four months. Meetings by electronic means to be allowed. • AGM should be held at the City where the registered office of the company is situated.
• Provision of Resolution by Circulation should be incorporated in the Companies Act; 5. Authentication of Annual Returns Annual Return should be signed by: • A Director and the Company Secretary or where there is no Company Secretary, by a Chartered Secretary in whole-time practice. • A Chartered Secretary Practice in respect of :
in
whole-time
(i) A company having paid up capital of Tk. 50 Lacs and above. (ii) A company whose shares are listed on a recognized stock exchange. The Practicing Chartered Secretary has to certify that the annual return states the facts correctly and adequately and that the Company has complied with all the provisions of the Act. . • A one person or Small Company, the annual return is required to be signed by the Company Secretary or where there is no Company Secretary, by one director of the Company. 6. Accounts and Statutory Audit • IFRS /Accounting Standards should be included in the Companies Act • Books of accounts should be preserved by a company for a period of 7 years instead of 12 years. • Small Companies should be given exemptions /relaxations in respect of disclosures relating to financial statements. • Companies should be allowed to use electronic means for circulation of financial statements. • Statutory Auditors to be prohibited from performing certain non-audit functions/services to be specified in Law like book keeping and accounting functions, Secretarial audit, Valuations or any other consultancy works.
THE CHARTERED SECRETARY JANUARY - MARCH 2012
21
Article
7. Secretarial Standards Secretarial Standard should be introduced in new Companies Act: • Every Company shall maintain Secretarial Standards with respect of Board Meeting and General Meetings specified by the Institute of Chartered Secretaries of Bangladesh constituted under section of the Chartered Secretaries Act 2010. • It would be the duty of the Company Secretary to ensure that the Company complies with the applicable Secretarial Standard. 8. Secretarial Audit • Provision for secretarial audit to ensure compliance by the companies to the regulatory directives and governance issues to be inserted; 9. Payment of Dividend • Company shall pay dividend only from free reserves. Company should not pay any dividend without adjusting past losses. • Company should not pay interim dividend from past profits without holding general meeting. • Once dividend declared must be paid within 30 days of declaration. • After 5 years of declaration the unclaimed dividends to be transferred to the separate Government’s specified account. 10. Formation of Company Law Tribunal • A Company Law Tribunal may be established consisting of 4 (four) members
22
THE CHARTERED SECRETARY JANUARY - MARCH 2012
for relieving High Court’s burden; •
Any person aggrieved by the decision or order of the RJSC (Company Law Authority) may file an appeal to the Company Law Tribunal;
• The Member of the Tribunal should have at least for fifteen years experience as: - a judicial officer - an advocate of the High Court Division - a chartered secretary/company secretary of a reputed Company - a chartered accountant / cost and management accountant 11. General New Companies Act needs to have the following aspects: • Formation of new Company within shorter period / twenty four hours. • Aligning Central Depository System with Traditional System and covering various reports and returns for RJSC. • Investor’s protection needs to be strengthening by including new provision to protect the investors’ interest. • Issuance of certified copies of various forms be simplified e.g. certified copies of the Particulars of Directors (Form XII), Annual Returns etc. may be issued under the signature of a Secretary in Practice.
The writer is the President of ICSB and Corporate Affairs Director & Company Secretary, Singer Bangladesh Limited
Article
AGENDA FOR CHANGE Itrat Husain FCMA, FCS
Legal and regulatory institutions have played
an important role in influencing the economic activity in a country, with good governance. Hence there is interest in reforms of legal and national codes for continued development of the country. This is however an uphill task which will require a lot of determination and deregulation as well. There are some transitions from informal trade to formal economic activity in our country; but this is minimal and the pace is also very slow. In recognition of the urgent need to increase the level of formal economic activities to achieve higher growth level, necessary regulations should be in place. We can study the real life success stories all over the world and adapt it to fit our requirements. An integrated approach can be taken to the economic activity by recognizing the informal and formal activities as one. Legal empowerment of informal business should be prioritized as a governance issue. Legal frameworks have to be available for economic and property rights. Women have to be empowered so that they can play their due role in the economic development of the country. The financial institutions can base their lending on the history of recovery. Without funds the poor cannot carry on their activities. So these issues have to be addressed and improvements made in the existing legal framework. In the rural areas the vast majority lack access to funds due to lack of collateral security. Reforms can be considered in this area to ensure participation of the masses in the nation building process. Some sort of Insurance coverage can be instituted to protect the loan disbursed by the financial institutions for those borrowers who are unable to provide collateral security. The changes in technology must also be taken into account and appropriate laws enacted e.g. “Cyber Laws”. With the growth of information
and communication technology (ICT) there is need to introduce/update the Cyber Laws. The laws relating to banking and other financial Institutions should be modified fairly regularly. Bankruptcy/Insolvency laws should be reviewed and amended to bring them in line with the present day needs. The personal insolvency should be separated from Corporate failures. This will ensure that sick companies are excluded from operations. The Labour Laws which go back centuries and are amended partially from time to time should be completely revised in the context of the needs of the present day due to globalization and governance and compliance issues. Uniform wages for both men and women have to be ensured. In the long run employers, employees and the country will be benefitted as a consequence of harmony and higher production in the work place. Laws relating to health and sanitation also need to be reviewed. This is essential for creating a healthy environment at work and outside. Traffic situation has never been worse. One of the reasons is lack of sufficient roads and the other is lack of respect for the existing laws and also lack of enforcement. Thousands of working hours are lost daily due to traffic jam. Laws are required for building new roads and enforcement of stricter penalties for breaking these laws. It is hoped that the much talked about new “Companies Act” will see the light of day within the next twelve months. One fails to understand why it is taking so long to replace the existing outdated Companies Act 1994! some other areas which also need review are Post Office Act, Courier Services, Money Transfers, Multilateral Marketing, Police Act etc. While reviewing all the existing laws some consideration should be given to the “legal
THE CHARTERED SECRETARY JANUARY - MARCH 2012
23
Article
language�. It is desirable to simplify the language, which can be understood by ordinary citizens rather than be dependent on lawyers even to understand the context. In conclusion it must be mentioned that the list of laws which need review is long. Only a few examples have been given here. Anyone can draw up a list of all the laws (civil, criminal and corporate) which need revision and the list may run into several pages. No nation can prosper without effective laws which are respected by the citizens. More strict laws should be enacted and there should be enforcement of the laws so that nobody is above the law, not only in words but also in practice. Stricter laws should be made to punish anti social elements who create havoc in the society. The law breakers should be
24
THE CHARTERED SECRETARY JANUARY - MARCH 2012
punished for their crimes by way of fines or imprisonment, depending on the nature of the crime. Some of the fines imposed at present are so low that there is no deterrent to committing these crimes. Crimes cannot be controlled without effective deterrent. If necessary capital punishment should be considered for serious crimes, such as adulteration of food items. Law reform is a very time consuming process; yet it must be done. The time to initiate Law reforms is now- not tomorrow.
The writer is a Past President of the Institute and a Council member of ICSB
Article
THE LEGALITY OF THE DIRECTORSHIP NOT BEING REELECTED N. G. Chakraborty FCA, FCS
Retirement is determined by contract either
at the attainment of certain age or at the maturity of contract. Continuation of service of an individual after retirement is a violation of contract and therefore illegal. As far as the directors of a public limited company are concerned, they are subject to retirement by rotation. The relevant sections and the clauses of schedule 1 of the Companies Act, 1994 are as follows.
which a director retires in manner aforesaid may fill in the vacated office by electing a person thereto. 83.
If at any meeting at which an election of directors ought to take place, the offices of the vacating directors are not filled in, the meeting shall stand adjourned till the same day in the next week and shall be held at the same time and place and if at the adjourned meeting the offices of the vacating directors are not filled in, the vacating director or such of them as have not had their office filled in shall be deemed to have been re-elected at the adjourned meeting.
84.
Subject to the provisions of sections 90 and 91 of the Companies Act, 1994, the company may from time to time in general meeting increase or reduce the number of directors and may also determined in what rotation the increased or reduced number is to go out of office.
Companies Act, 1994 Section 91(2): Not withstanding anything in the articles of a company other than a private company not less than one third of the whole number of directors shall be persons whose period of office is liable to determination at any time by retirement of directors rotation. Schedule 1 79.
At the first ordinary meeting of the company, the whole of the directors shall retire from the office and at the ordinary meeting in every subsequent year, one third of the directors for the time being or if their number is not three or multiple of three, then the number nearest to one-third shall retire from office.
85.
Any casual vacancy occurring in the Board of Directors may be filled in by the directors but the person so chosen shall be subject to retirement at the same time as if he had become a director on the day on which the in whose place he is appointed was last elected a director. A director so chosen shall be known as an alternative director.
80.
The directors to retire in every year shall be those who have been longest in office since their last election, but as between person as who became directors on the same day those to retire shall, unless they other-wise agreed among themselves, be determined by lot.
86.
The directors shall have power at any time, and after the expiry of a specified period to appoint a person as an additional director who shall retire from office at the next following ordinary general meeting but shall be eligible for election by the company at that meeting as an additional director.
81.
A retiring director shall be eligible for re-election.
87.
82.
The Company at the general meeting at
The company may, by extraordinary resolution, remove any director before the expiration of his period of office, and may by, an ordinary resolution, appoint THE CHARTERED SECRETARY JANUARY - MARCH 2012
25
Article
another person in his stead; the person so appointed shall be subject to retirement at the same time as if he had become a director on the day on which the director in whose place he is appointed was last elected a director. Of the above, clause 79, 80, 81and 82 are compulsory and the rests are optional. However, the optional clauses or clauses similar thereto are found in the articles of association of most of the public companies. It is evident from the prescribed procedure that the directors are subject to retirement in the annual general meeting(s).Now the question is, if the annual general meetings are not held in any year(s) what will happen to the directors who are supposed to retire? In a real life situation a good number of listed companies don’t hold annual general meeting even year after year, not to speak of the unlisted companies. Therefore, the question on the legality of the directors who are continuing their posts having retired without being reelected since the annual general meeting remain pending. A director who is to retire by rotation at annual general meeting(s) cannot continue in office after the last day on which the annual general meeting in each year should have been held. The reason for this is that, as the calling of the general meeting is a duty and responsibility of the directors, by omitting to summon the annual general meeting, are not to take advantage of their own default and, by that means, extend their own continuance in office for any period as they please and as long as the holding of the next annual general meeting does not take place. This position has been well established by the rulings of the courts both in England and India. In re, Consolidated Nickel Mines Ltd.,(1914)1 Ch 883;kanssen v Rialto, (1945) 15 Com Cases 23:(1944) 1 All ER 751 (CA ) and Morris v. Kanssen 1946) 16 Com Cases 186 :(1946) 1 All ER 586 (HL). The principles laid down in this cases have been followed by the High Courts in India in following cases, Anantalakshmi Ammal v. Indian Trades and Investment Ltd ., (1952) 22 Com Cases 324: AIR 1953 Mad 467; B.N.Viswanathan v. Tiffin’s Barytes Asbestos
26
THE CHARTERED SECRETARY JANUARY - MARCH 2012
& Paints Ltd .(1953) 23 Com Cases 29: AIR 1953 Mad 520; Hindustan Co-operative Insurance Limited , In re, (1961) 31 Com Cases 193(Cal) : Krisnaprasad Jwaladutyt Pilani v. Colaba Land & Mill Co Ltd., AIR (1960) BOM 312 :(1959) 29 Com Cases 273 : Ramakrisna Prasad v. State of Madras (1963) 33 Com Cases 548 (mad) and Lalchand Mengraj v. Shreeram Mills Ltd., (1968) 38 Com Cases 606 (Bom); V.P. Singh V. Chairman Metropolitan Council of Delhi, AIR 1969 Del 295; B.R Kundra v. Motion Pictures Association, (19760 46 Com Cases 339 (Delhi). The rule laid down In re, Consolidated Nickel Mines Ltd ., has also been approved and quoted in all well known Treatises on Company Law, viz., BUCKLEY’S COMPANIES ACTS 14th Edn., Page 1014; GORTE BROWNE ON COMPANIES 44th Edn ., 1986 Para 25-16 and PALMER’S PRECEDENTS (17th Edn., Page 598). It is clear from these authorities that the rule as regards the retirement of directors is that, where an annual general meeting is not held, the tenure of office those who are to retire by rotation at the meeting who could hold their office only up to the date of that meeting cannot be extended by not calling the meeting at which the are bound to retire or cease to hold their office. They will be treated as having vacated their office on the last day on which the meeting should been held. Where under the articles of a company all the directors are to retire and are to be reappointed at the annual general meeting every year, the provisions of these sections will equally apply, as in the case of one- third of directors retiring. Since directors have to retire whether a meeting is held or not, a situation can arise that no director remains in office. In such cases, general meeting of shareholders would get the power to make fresh appointments Alexander Ward & Co. Ltd. v. Samyang Navigation Co. Ltd., (1973) SL T (Notes) 80 (Scottish). This aspect was also approved on appeal by House of Lords, (1975) 1 WLR 673. Consolidated Nicket Mines Ltd., (1914) 1 Ch 883 and Re, Zinotty Properties Ltd., (1984) 1 WLR1249, 1259-1260 and B.N. Viswanathan
Article
v. Tiffin’s Barytes Asbestos & Paints Ltd., (1953) 23 Com Cases 29: AIR 1953 Mad 520. If the existing trend is allowed to continue, the directors could brave the consequences of not holding the annual general meeting within the prescribed time and continue in office indefinitely. The risk of not having the reappointment done in proper time at the annual meeting in case of rotational directors is the main sanction of the referred cases for
ensuring regularity of the annual general meeting. In the upcoming amendment of the Companies Act,1994 there should be clear provision with regard to the legality of the directorship of the persons who were supposed to retire at the annual general meeting (s) that remain pending. The writer is Council Member of ICSB and Principal, N. Chakraborty & Co. Chartered Accountants
INSTITUTE OF CHARTERED SECRETARIES OF BANGLADESH (ICSB) A Statutory Body Under an Act of Parliament
ADMISSION JULY-DECEMBER-2012 SESSION If you are willing to prepare yourself for a Challenging and Rewarding Profession ‘Chartered Secretary’ is the Right Course for YOU. The Chartered Secretary Certificate is the global requisite qualification to become a Company Secretary. Applications in the prescribed form are invited from the individuals interested to study CS Course for enrolment in its Level-I of July-December, 2012 session DATE OF APPLICATION & ADMISSION TEST
Application form is available till Last date of submission of application Written Test (Friday)
MINIMUM ELIGIBILITY
University Graduate with 6 points (1st Div.=3, 2nd Div.=2, 3rd Div.=1) or equivalent CGPA A-Level qualified may also apply.
FEES FOR LEVEL-I
Tuition fees for Level - I Tk.13,600.00 Application Form and Prospectus Tk. 750.00
EXEMPTIONS
Exemptions on reciprocal arrangement as per CS Act and CS Regulations.
CLASS SCHEDULE
Day Shift: Friday (8.30am-5.00pm) & Saturday (8.30am-5.00pm) Evening : 6.30pm to 9.30pm (4 Days in a week)
COURSE DURATION
Intermediate & Final total 5 Semesters of 6 months each
June 20, 2012 June 25, 2012 June 29, 2012
For further information, please contact: ICSB,107, Kakrail, Dhaka-1000 Tel: 934 9578, 933 6901 E-mail: icsbsecretary@gmail.com www. icsb.edu.bd
THE CHARTERED SECRETARY JANUARY - MARCH 2012
27
Article
ADR IN CORPORATE WRANGLING : A VEHICLE FOR EASY ACCESS TO JUSTICE Barr. Ishtiaque Ahmed MCIArb, LL.B (London), LL.M
Introduction Historically, several methods have been used to settle disputes outside the traditional courts. The legal needs of the people and businesses and other organizations and demand for justice have changed over time. Business communities all around the world are now well aware that it is more advantageous to reach practical and private agreements than to fight for years and spend huge amount of money in courtroom battles. Due to the vast amount of time, money and energy involved in court room litigation, international business communities have increasingly turned to the legal alternatives that are more prompt, private and economical than the traditional litigation conducted directly through the state courts of the country. Alternative Dispute Resolution (ADR) refers to the wide spectrum of legal avenues that are used to settle disputes outside courts. The main ADR alternatives to civil litigation are negotiation, arbitration, conciliation and mediation. Other, more particular ADR processes available are early neutral evaluation, mini-trial, summary jury trial, and the judicial settlement conference. Parties in disputes use these ADR methods because they are prompt, private, and generally much less expensive than a trial. For example a business organization is able to solve their product liabilities dispute with the consumers confidentially maintaining their reputation before the public. Mediation is a concept that is often mistakenly confused with conciliation. Although the two methods have similar aspects, they are fundamentally different. To appreciate the differences between arbitration, mediation, and conciliation, it is helpful to explain them separately.
28
THE CHARTERED SECRETARY JANUARY - MARCH 2012
Arbitration Arbitration is an ADR method where the disputing parties refer their disagreement to one or more arbitrators or a panel of private, independent and qualified third party, “Arbitrators.” The arbitrators determine the outcome of the case after an adversarial hearing and on the merit. The procedures are less formalized and the procedural rules and the substantives law are set by the parties. Private arbitrations as opposed to court annexed arbitrations can be managed by a private organization or it can be ad-hoc where the arbitrations can be managed by the parties themselves. According to the Bangladesh Code of Civil Procedure (C.P.C.) parties in conflict may choose neutral arbitrators to decide and settle a dispute between them at any stage of the proceeding, as long as those disputes are not already of the type designated only to be handled within the court system. Arbitrators are generally lawyers, retired judges or law professors, and are chosen by disputing parties in respect to their experience and competence in specific areas of law. When a disputed matter is to be given to a panel of arbitrators, each party selects their own arbitrator, and together, both arbitrators appoint a third one as the president of the panel. If they are able to agree on a common choice, the parties may instead appoint and utilize one sole arbitrator to solve the dispute. Typically, to use arbitration, there must be an “arbitration clause” already written into the contract that exists between the two parties. This refers to submission clause. The procedures that the arbitrator or the panel must follow during arbitration are inserted along with these contractual arbitration clauses. Without this contractual arbitration clause, parties may agree once a dispute arises, to allow arbitrators to hear and resolve their disputes.
Article
Generally, the procedural rules regarding arbitration are formal but not as strict as the ordinary procedural rules that govern litigation. Technically, the process of arbitration concludes with a decision called an “award”. Ultimately, the power of an arbitrator or panel of arbitrators is granted directly by the parties. By including contractual arbitration clauses, parties are agreeing to the resolution of their disputes through a process that consists of very simple proceedings, which are similar, but not equal to the traditional route of litigated settlements. The arbitral award that concludes a dispute has the same value as an ordinary judicial judgment by virtue of the Arbitration Act 2001, on the condition that parties will proceed with the next formal step of registering this private decision with the regular court. An arbitration agreement is usually a bar to the litigation on to the same matter. Mediation Mediation is an ADR method where a neutral and impartial third party, the mediator, facilitates dialogue in a structured multi-stage process to help parties reach a conclusive and mutually satisfactory agreement. A mediator assists the parties in identifying and articulating their own interests, priorities, needs and wishes to each other. Unlike a judge in the court or an arbitrator in arbitration, a mediator does not impose any decision upon the disputants. Arbitration and mediation both promote the same ideals, such as access to justice, a prompt hearing, fair outcomes and reduced congestion in the courts. Mediation, however, is a voluntary and non-binding process - it is a creative alternative to the court system. Mediation provides parties with the opportunity to develop a mutually satisfying outcome by creating solutions that are uniquely tailored to meet the needs of the particular parties. A mediator is a neutral and impartial person; mediators do not decide or judge, but instead become an active driver during the negotiation between the parties. A mediator through a structured process with a number of procedural stages uses specialized communication techniques and negotiation techniques to assist the parties in reaching optimal solutions. The aim of mediation is to
find a mutually satisfactory agreement that all parties believe is beneficial. There are some particular advantages that exist in choosing an alternative method of dispute resolution (ADR) such as mediation or arbitration, as opposed to pursuing ordinary judicial proceedings. The first advantage concerns the all-important consideration of economics and the daunting costs of resolving disputes; arbitration and mediation proceedings are by far cheaper in monetary expense than ordinary judicial proceedings. Mediation fees vary in accordance with the hourly rate of the mediator and the length of the mediation session, and are usually shared equally by the parties participating in the mediation. Another important advantage of ADR proceedings is in the decreased time these proceedings customarily take as opposed to the traditionally litigated dispute. Mediation is regarded to be more time-efficient than even arbitration, since proceedings have the potential to come to a productive close in under 3 hours. Mediation is not as formal as arbitration, and there are a variety of mediation techniques available and employed depending on the mediator’s personality, the parties’ personalities, and the complexity of the dispute; mediation is an incredibly flexible yet functional process. What substantially sets mediation apart from traditional judicial proceedings and even arbitration is that the parties strive personally to find common ground, and they work to develop mutually agreeable solutions directly with each other and without any exterior imposition of a decision by a judge or arbitrator. The efficiency of the mediation process is evident in that it aims to avoid further complication of the dispute and animosity between the parties- a mediator actively uses specialized communication and negotiation techniques to guide the parties to the realization of a mutually beneficial agreement. Another advantage of mediation, specifically, is that is seeks to generate an agreement that is realistic, which takes into consideration the financial condition of the parties as well as all other relevant circumstances and factors. Again, mediation is a voluntary process and often it produces such desirable results because it permits parties to THE CHARTERED SECRETARY JANUARY - MARCH 2012
29
Article
express their own interests and anxieties directly, while helping them to create a suitable solution. Generally, choosing arbitration or mediation is attractive to parties because they get to participate in these proceeding more directly than they would in a courtroom or in a litigated dispute proceeding. However in arbitration, the arbitrator still makes the final determinations of fault and compensation, and the parties must accept those decisions as though they were made by a judge. Also, an arbitration proceeding is governed by formal rules and the role of legal representative of the parties which is still central to the representation of their interests. With a mediator’s help, the parties are increasingly empowered to participate directly in the process and determine the outcome of their own dispute, thus regulating and protecting their own interests. Another important difference between arbitration and mediation exists in regards to choosing the neutral party. In choosing an arbitrator, the parties seek to select an individual that possesses particular legal skills, knowledge and competence. With the exception of non-binding arbitration in Italy, the arbitrator determines that outcome of the dispute according to traditional legal principles, so the arbitrator must be highly knowledgeable in the relevant areas of law. In mediation, the selection of a mediator can be made among individuals with a variety of degrees and particular experience or specialized training in the mediation of disputes. Mediators are often described as experts in the process of mediation, although it is generally helpful to designate a mediator with some degree of subject matter knowledge as well. Ultimately, mediation is a collaborative effort by all involved, and to arrive at a satisfactory outcome, it includes the willing cooperation and respect of all parties. The mediation process is both informal and confidential. In contrast to arbitration and its relatively formal rules of evidence and procedure, mediation is flexible in terms of evidence, procedure, and formality. Both
30
THE CHARTERED SECRETARY JANUARY - MARCH 2012
procedures are confidential as the parties allow a neutral third party to discuss or decide the dispute without the exposing the parties’ dealings to public scrutiny or judgment. Specifically, the statements of a party during mediation are confidential and may not be disclosed without written consent. One unique feature of mediation is that any party, unilaterally, can decide to stop the mediation at anytime if they believe the process is not productive, as opposed to an arbitration proceeding, which needs a common approval to discontinue. Conciliation Conciliation is another dispute resolution process that involves building a positive relationship between the parties of dispute. However, it is different than mediation and arbitration in several respects. The term, conciliation is often used interchangeably with mediation. This usually denotes a process where a neutral third party takes a less active role than a process of mediation and meets with the parties separately. The “conciliator” is an impartial person that assists the parties by driving their negotiations and directing them towards a satisfactory agreement. Conciliation tries to individualize the optimal solution and direct parties towards a satisfactory common agreement. Although this sounds strikingly similar to mediation, there are important differences between the two methods of dispute resolution. In conciliation, the conciliator plays a relatively direct role in the actual resolution of a dispute and even advises the parties on certain solutions by making proposals for settlement. In conciliation, unlike mediation the conciliator is not only a neutral third party but also an authority figure, usually responsible to figure out and suggest the best solution for the parties. The conciliator, not the parties often develops and proposes the terms of settlement. The parties come to the conciliator seeking guidance and they make decisions about proposals made by conciliators. In this regard, the role of a conciliator is distinct from the role of a mediator. The conciliator cannot impose a
Article
decision or an award on the parties to the dispute but he/she serves a sounding board and wise counsel to both. Further the conciliator offers a non binding recommendation unless requested by both the parties to refrain. The end result is intended and becomes a non binding and confidential recommendation that is accepted by both parties to the dispute and which is subsequently executed by the parties. The mediator at all times maintains his or her neutrality and impartiality. A mediator does not focus only on traditional notions of fault and a mediator does not assume sole responsibility for generating solutions. Instead, a mediator works together with the parties as a partner to assist them in finding the best solution to further their interests. A mediator’s priority is to facilitate the party’s own discussion and representation of their own interests, and guide them to their own suitable solution- a good common solution that is fair, durable, and workable. The parties play an active role in mediation, identifying interests, suggesting possible solutions, and making decisions concerning proposals made by other parties. The parties come to mediator seeking help in finding their own best solution. Like conciliator, the mediator can not impose a decision on the disputing parties. He or she only acts as a facilitator merely helping them to reach an agreement. However unlike conciliator the mediator will not issue a recommendation. Conciliation and mediation both look to maintain an existing business relationship and to rekindle a lost balance of power between two parties. Each of the ADR processes addressed herein arbitration, mediation, and conciliation, provides important benefits to parties and may be seen as complementary to the judicial process. According to Western trends, ADR is emerging as an effective and often preferred method for private commercial companies and government agencies to fulfill their organizational objectives by privately and promptly resolving disputes in a manner that saves time, money, and business relationships. In jurisdiction around the world that are undertaking legal and judicial reform, interest in developing ADR for commercial
disputes is growing. ADR procedures can reduce court back logs, encourage people to settle their disputes before trial, reducing the time and cost for litigation and offer confidentiality and flexibility not available in litigation. Mediation as an ADR mechanism is increasingly getting acceptance in commercial and business matters. It is particularly suitable in disputes involving employer-employees, landlord-tenant, business continuation-dissolution, contracts between suppliers and customers, consultants and clients, and product liability issues etc. Problems are solved efficiently, economically and confidentially, and possibly save the working relationship. A conflict with a key executive can devastate a well-established company. The task of handling the dispute can distract and unnerve an otherwise strong and efficient management team. This situation warrants a strategy that eliminates the possibility of disruption and distraction, and the financial and emotional cost to business. Companies often embark on litigation in resolving employment disputes because management does not properly understand the consequence of such litigation and the psychological effect it may have on the business at hand. Once begun, it is difficult if not impossible to stop. Each step of the litigation process leads to the next. Companies often find themselves resolving cases at the court house door after economic, political and emotional costs have all been spent. Employment law is one of the fastest developing areas of conflict. During the past 25 years, the courts have advanced principles of equal opportunity and fair employment. The delay, costs and disruption resulting from employment litigation have dramatically diminished the utility of employment litigation for resolving these disputes. On the employer's side, many times a termination arises out of a situation that is not illegal in itself, but badly handled. Often these potential unethical issues form the basis of THE CHARTERED SECRETARY JANUARY - MARCH 2012
31
Article
the plaintiff's grievance. Employment disputes are often unique because the perceptions of men and women, or employer and employee often differ. A woman may perceive more behaviors as offensive than men do. Since the perception of what is appropriate conduct may differ, employment disputes based on gender perceptions are often more difficult to resolve. Generally, choosing arbitration or mediation is attractive to parties because they get to participate in these proceeding more directly than they would in a court room or in a litigated dispute proceeding. An arbitration proceeding is governed by formal rules and the role of parties’ lawyers is still central to the representation of their interests. With a mediator’s help, the parties are increasingly empowered to participate directly in the process and determine the outcome of their own dispute, thus regulating and protecting their own interests. The need and demand commercial disputes
for
ADR
in
Whatever the reasons the economic growth, opening up of Bangladeshi economy to the international market or increasing litigiousness, the number of commercial disputes that results in law suit have steadily increased over the last few decades. As pointed out in the Bangladesh Supreme Court Report in 2007 and 2008 the total pending cases in different courts of the countries were 18,26,682 and this number is still increasing every year. The statistics show that in every ten years the pending cases throughout the country are growing roughly triple the figure. The Honourable Chief Justice of the Supreme Court of Bangladesh, Mr. Justice Md. Muzammel Hossain, on 18 May 2012 in an inauguration ceremony has expressed his great concern about the unresolved pending cases before the different state courts in Bangladesh. As on January 2012 the total figure has exceeded 2 millions in number. The credibility of our judiciary is now at stake due to three principal factors. Mounting areas of pending cases in commercial and other matters, unbearable delays in dispensation of justice and high cost in obtaining justice. The back log and delay problem has reached such
32
THE CHARTERED SECRETARY JANUARY - MARCH 2012
a proportion that it effectively denies the rights of the citizens to redress their grievances. The delay in disposal of cases in the court of law for whatever reasons has really defeated the purpose for which the people approach the court for redress. It is said that justice delayed is justice denied. It has now become a demand for justice. A solution to this serious problem must be found and that can only be done by introducing ADR in all sectors of the commercial disputes as many other developing countries, including our neighboring countries, such as Indian and Pakistan have successfully done so. Current state of ADR for commercial disputes Alternative to litigation exists in Bangladesh. Mediation and arbitration are in use today, although it is difficult to quantify how widespread their use is. Clearly the primary legal stakeholders such as judges, lawyers and judicial officers all agree that ADR is in its early stage of development and it’s scope should be broadened. In our country mediation and commercial arbitration have been perceived as being quite different. Mediation is commonly seen in our country as more appropriate for smaller and local business disputes and in non commercial disputes. In contrast, commercial arbitration is seen as a prestigious process involved with complex legal issues with the assistance of the top and senior lawyers and more appropriate to the large business disputes. In the developed countries, arbitration has been proved as a successful method of solving smaller business disputes and with involvement of arbitrators who are not even legal professionals. In the UK for instance arbitrators in many cases are professionals from specific industries or fields like an Engineer, Accountant, etc. In the USA mediation has been proven as extremely effective in multimillion dollar claims. Use of conciliation and mediation Because of a very informal nature it is difficult to monitor and find out how often parties to the disputes refer their dispute to mediation. Most mediation is on an ad-hoc basis, outside
Article
of any formal rule and framework. In Bangladesh today very few institutions provide commercial mediation services. Arbitration centre has been set up with the auspicious of International Chamber of Commerce that is now operational; but very few arbitration have yet taken place and rules are being just formulated. In Bangladesh, no formal training opportunities and facilities have yet been developed either to create the arbitration or mediation skill among the lawyers, judges and other stake holders. The Chartered Institute of Arbitrators in London which is seen as the champion of dispute resolution by all over the world and the business communities, has more than 150 branches with over 12,000 members world-wide promoting dispute resolution services and providing training and certifications for ADR professionals around the world . This institution has established active branches even in our neighboring countries like India, Sri Lanka and Pakistan but unfortunately has no activity in Bangladesh. There has been lack of institutional support, lack of procedures and guidelines set by the existing ADR laws. The Government should take initiatives to harmonize the law on ADR to fulfill the demand of the time and the needs of the international business communities. This will in fact assure the foreign investors to have confidence in their business dealing with the local business entities. Support from the government and non government agencies and other stakeholders are necessary to have access to justice through ADR. Substantial and urgent reforms are necessary with regard to the current laws on private arbitration, mediation, enforcement of awards of international arbitration and other court annexed ADR process. Reforms are also necessary with respect to the challenge of the decision of the arbitrators in order to take the benefit of these speedy dispute resolution mechanisms and to avoid this innovative idea getting frustrated by permitting frequent appeal to the judicial state courts over and again. Very few lawyers and judges are trained in ADR methods in Bangladesh currently and among the legal professionals many wrongfully consider the introduction of the alternative dispute resolution system as taking
away the business from their hands. Law should make provisions for the Government to recognize both public and private sector dispute resolution centers that should maintain the list of accredited mediators and arbitrators recognized by the professional bodies and facilitate all forms of ADR including online arbitrations and mediations at both domestic and international level. That would in turn allow the business communities to get their professional services regulated by professional bodies, effective and positive result of speedy access to justice in the business arena. Online Dispute Resolution (ODR) As to the urgent move towards the better solution against the backlog of cases, the Hon’ble Chief Justice of Bangladesh has rightly mentioned that information technology can play a vital role to solve this long standing problem faced by the country and it can also cause a dynamic revolution in the justice dispensation system in Bangladesh if applied appropriately and in a skilled manner. Within the ADR scheme, ODR (Online Dispute Resolution) can play an effective role in solving cross border business disputes and disputes relating to Electronic commerce. E-commerce and the Internet offer unprecedented opportunities. The explosive expansion of the use of the internet makes it possible for businesses to expand their markets and render services to large groups of e-consumers. Where off-line transactions can lead to problems and disputes, the same is true for online transactions. In other words, e-commerce transactions will sometimes result in e-disputes. To ensure the safety of financial dealing and to ensure that all parties feel comfortable in participating safely in e-commerce transactions it is imperative that e-disputes are resolved adequately, because uncertainty over the legal framework may inhibit both consumers from purchasing products or services over the internet and companies from entering into the electronic market place. The problems will be even more complex when the e-dispute is cross-border. At this particular moment in time there is not yet much empirical evidence on cross border
THE CHARTERED SECRETARY JANUARY - MARCH 2012
33
Article
consumer e-disputes, but it seems likely in the Western economy and that will soon avail itself in developing countries like ours as the e commerce is growing in the region. The number of cross-border e-commerce transactions between Europe, US and Asia are increasing daily, potentially increasing the number of e-disputes with it. It has been recognized that ADR will be a helpful means of solving the growing number of e-disputes. ADR will in many cases be far more efficient than regular dispute resolution methods, which will often involve lengthy and expensive legal procedures. This issue has been addressed both internationally and nationally. ]The European Commission has set forth a detailed proposal for online dispute resolution (ODR) of consumer disputes to provide better remedies in support of cross-border e-commerce. The ODR proposal is paired with a proposed Directive on Alternative Dispute Resolution for consumer disputes. Many ADR entities permit consumers to submit complaints online, but very few currently allow the entire resolution process to be handled online. Establishing ODR systems will encourage consumers to shop online across borders and permit sellers to reach broader markets. The proposal is to establish an EU-wide ODR platform accessible in all EU official languages that provides a single website for those seeking to resolve cross-border e-commerce disputes. A network of ODR facilitators will be established to provide support for the ODR platform. When a complaint is submitted, the consent of the other party will be sought and the dispute transmitted to an existing national ADR entity that will attempt to resolve the dispute within 30 days, possibly using ODR. The ADR entities will apply their own procedures and rules on cost. Confidentiality applies to the ODR process, and the ODR procedures will not deprive either consumers or sellers of their right to pursue matters in court. The timeline proposed shows adoption of the ODR Regulation and ADR Directive late in 2012, with development of the ODR platform to be completed by 2015. There are a number of companies and organizations already offering online dispute resolution services. Services
34
THE CHARTERED SECRETARY JANUARY - MARCH 2012
offered range from negotiating the amount of a settlement to full mediation or arbitration. Currently most ODR systems are available for consumer disputes. Following North American initiatives there are now several European projects which operate nationally or internationally. Two well established international projects are www.ecodir.org and www.e-arbitration-t.com . All major arbitration institutions encourage the use of IT in arbitration. Most prominently ICC (International Chamber of Commerce) and AAA( American Arbitration Association). Both of them have moved to electronic submission and exchange of documents. There is significant scope for Government and non government entities and the researchers to work on these areas of law to further contribute towards the development of ODR scheme and the digital commerce in Bangladesh. To quote eminent academic, E Katsh in ‘Law in a digital world’ “The data highway of health, or commerce or education can be the source of as much litigation as the paved highways of the physical world.” Hence the recommendation should be to allow time for the business and legal communities to familiarize themselves with ADR. They will be the first to use and receive all the benefits. The business community, the Bangladesh legislature, and public and private organizations are starting to use ADR more often in ordinary life now and the National Parliament is due to draft a comprehensive ADR law in harmony with the Western countries, European Union and our neighboring countries . It will be crucial for information to be available about mediation through presentations to business groups, associations, law firms, seminars for consumer groups, and formal mediation training programs for future mediators. In time, the benefits of ADR for business organizations, consumers, lawyers, judges and all other stakeholders will soon become clear. The writer is a Lecturer, School of Business, North South University
Article
COMMODITY EXCHANGE MARKET -A NEW INITIATIVE FOR BANGLADESH Md. Selim Reza FCA, FCS
At last we have started a new market for the
investors for investing their money in the alternative marketplace named Commodity Exchange. When the investor are puzzled with their investment in the shares market, the new initiative for establishing an electronic commodity market will play a vital role to serve all the marker players.
As agriculture based country of South Asia, Bangladesh has its own market driven factors. As being the market place Commodity Exchange has to keep keen sight on these factors, to establish a benchmark, fair and transparent price discovery. Commodity Exchange: A commodities exchange is an exchange where various commodities and derivatives products are traded. Most commodity markets across the world trade in agricultural products and other raw materials like wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, oil, metals, etc. and contracts based on them. These contracts can include spot prices, forwards, futures and options on futures. Other sophisticated products may include interest rates, environmental instruments, swaps, or ocean freight contracts. Commodities exchanges usually trade futures contracts on commodities, such as trading contracts to receive something, say corn, in a certain month. A farmer raising corn can sell a future contract on his corn, which will not be harvested for several months, and guarantee the price he will be paid when he delivers; a breakfast cereal producer buys the contract now and guarantees the price will not go up when it is delivered. Speculators and investors also buy and sell the futures contracts in attempt to make a profit and provide liquidity to the system. However, due to the leverage provided by the exchange
to traders those participating in commodity futures trading face substantial amounts of speculative risk. Commodity exchanges are typically organizations that are owned by trading members and are organized to facilitate transactions between buyers and sellers of various commodities. Commodity Exchange is a market place, that coordinates better, that links faster, and that protects the interests of both sides of the trade. It is time for a marketing system that is transparent, efficient, and innovative, that will take Bangladeshi investors into a new sector of investment. It provides market integrity at three important levels: the integrity of the product itself, the integrity of the transactions and the integrity of the market actors. Objectives of the Market: Objective is to be a Commodity Exchange to provide a wide spectrum of commodity derivatives platform driven best global practices, technology, professionalism and transparency and also contribute to the wealth of the nation by creating value through commodity trading. Commodity Exchange is offering a helping hand in the following fields: i. Minimization of Risk. ii. Facilitating the Market. iii. Providing the knowledge of futures trend in commodities. iv. Facilitating Farmer to choose an apt cropping and harvesting pattern, and time to sell. v. Initiating to facilitate the quality backed warehouse management system. vi. Effective and guaranteed clearing and settlement system.
THE CHARTERED SECRETARY JANUARY - MARCH 2012
35
Article Members: Commodity Exchange may have two types of members• •
Clearing Member (CM) Non-Clearing Member (NCM)
Trade Automation With the development of internet and software technology every business need to adopt a trusted technology. Commodity Exchanges are also adopting the latest technology, for the effective convenience to market participants. From the client end trading, to central clearing and settlement, all processes are executed through the automated trading system which is functioning as purely internet based. Trade automation minimizes the time for placement of an order; also in one window it provides such information like technical analysis and fundamental news flow which updates the trader 24x5.
Member’s
Price
iii. Trading process: Commodity Exchange functions 24x5, round the clock, in line with global market. During this times, price continues to display in Central Order Book maintained at the Clearing and Settlement division of the Exchange , the prices are subject to disseminate in TWS. For the imported price discovery Commodity market operates round the clock. But for the price collected from local market, market operation shall be followings: • • •
Pre-Trading Trading Post-Trading
Commodity Exchange Beneficiaries:
Trading
The product and services offered by COMMODITY EXCHANGE is ultimately beneficial to the following groups of the population:
i. Price imported from the global market:
Merchandiser
•
Merchandiser can be industrialist, wholesaler, distributor, exporters-importers as well. These groups of business people always sticking with risk associated with fluctuating price of commodities. Simply like speculative trader they can’t run their business unless they are not equipped with risk mitigating place. Associated risk can be neutralized by using the different segment of market apart from where they are facing the day to day risk. COMMODITY EXCHANGE offers them a well managed and well versed trading and risk mitigating system, by utilizing this system these groups of people be always benefited in their course of business.
• • • •
Globally traded volatile commodities falls under these categories: Precious metals like Gold, silver etc., Metals like Copper, Energy like Crude Oil, Natural gas, Heating Oil etc., Agro Products like Paddy, Cotton, Coffee, and Wheat etc.
ii. Price obtained from local market: In domestic level Exchange or its component survey the market of mostly consumable commodities. Based on that survey Exchange determines the market and price collection areas. During the market survey proper storage system shall also be ensured. Devoid of a proper warehousing system, local commodities cannot be introduced for trading purpose. Once Exchange approves the storage system, this shall act as fair price discovery mechanism for domestic commodities. This price shall be disseminated in central order
36
book through Clearing discovery software only.
THE CHARTERED SECRETARY JANUARY - MARCH 2012
Actual Grower Growers are known as raw producers. Mostly growers in our context are known as farmers. These groups of people can utilize this market segment for the followings:
Article
i. ii. iii. iv. v.
To receive information for the future trend of commodities. To finalize the cropping pattern basing on demand and supply reflected on futures trading. To store the crop during supply season, to safeguard their investment by affecting lower price trend. To receive warehouse receipt as a negotiable instrument, that serves short term capital need of grower. To exchange warehouse receipt utilizing COMMODITY EXCHANGE for the profit optimization.
Investors At COMMODITY EXCHANGE generally investors are speculators. They don’t own the commodity or they are not willing to own the commodity but they invest money to take advantage of price fluctuation and lock on the profit. Role of banks in clearing & settlement As a Clearing Banker, Bank acts as an intermediary carrying out the flow of funds to various accounts under the COMMODITY EXCHANGE trading system. Members shall have two types of accounts i.e. Segregated account and Collateral/Member Deposit account. The Clearing Bank will debit/credit the segregated account of Members as per instructions received time to time from COMMODITY EXCHANGE. In order to fund transfer among the accounts for Clearing & Settlement, the Exchange and Members shall authorize the Clearing Bank.
i.
To debit and credit their accounts as per the instructions of COMMODITY EXCHANGE. ii. To report the balances and operations as may be required by COMMODITY EXCHANGE from time to time. For this purpose, COMMODITY EXCHANGE has prescribed a format to be obtained while opening the accounts of segregated accounts and Member deposit account. Operational account Every member of COMMODITY EXCHANGE as well as COMMODITY EXCHANGE itself shall maintain this account with designated bank. This account shall be operated by respective member only. This account shall be used by member for its operational purpose. Operational procedure shall follow normal banking procedure. In case of COMMODITY EXCHANGE the deposit and withdrawal procedure shall follow normal banking procedure. If Commodity Exchange runs its operation smoothly in our country, we will get another market for investing our savings and it will increase country’s total investment and savings. The writer is a Council Member of ICSB and S. Reza & Co., Chartered Accountants
THE CHARTERED SECRETARY JANUARY - MARCH 2012
37
Article
SME BANKING IN BANGLADESH: AN OVERVIEW Dr. Toufic A. Choudhury * Lutfun Nahar Begum **
1.
Prelude:
Banks and their core intermediation activities are not really meant for themselves rather directed towards supporting economic activities of the country. This does not mean that provision of banking services to the economic activities (sectors) of a country should be always proportionate to their contribution to GDP. For example in the context of Bangladesh, though the contribution of agriculture sector in our economy is around 20 percent yet the proportionate share of agriculture credit is only 6 percent of total credit in 2010. On the other hand, industrial sector is having a share of 36 percent of total credit, but contributing only 18 percent to GDP in 2010. The issue of proportionate share in total credit versus contribution to GDP might be debated, but keeping a deserving economic activity/ sector unserved or substantially underserved by the banking sector is undoubtedly not an ethical banking practice.
2. The Economic Importance of SMEs: The SME sector is important to national economies because it contributes significantly to employment and GDP, and because its growth is linked with the formalizing of an economy. In many countries, the majority of jobs are provided by SMEs. In developed countries, SMEs employ an average of 67 percent of the formal employment in the manufacturing sector. In developing countries, this number is around 45 percent. Similarly, SMEs contribute a sizeable share to formal GDP – 49 percent on average in high income countries and 29 percent on average in low income countries. The contribution of SMEs to employment and GDP in developing countries seems comparatively modest, but estimates suggest that the informal sector (which
38
THE CHARTERED SECRETARY JANUARY - MARCH 2012
consists essentially of SMEs) accounts for up to 48 percent of the total labor force and 37 percent of GDP in developing countries. (IFC – 2010). In a study M. Ehsanul Haq et al (December, 2011) opined that SMEs are considered the engine of economic growth due to their contribution in employment creation, income generation on higher productivity, innovation, transformation, poverty reduction and overall economic growth. SMEs are typically labor intensive industries with relatively low capital base as such for a country like Bangladesh SMEs have a natural comparative advantage. 3. It is generally recognized that in Bangladesh too, SMEs have a significant role in generating growth and employment. SMEs account for about 40% of gross manufacturing output, about 80% of industrial employment, and about 25% of the total labor force in Bangladesh. At present there are about 60 lakh SMEs and micro enterprises in Bangladesh. The near past (2001–2003) Census of Non-Farm Economic Activities (Urban and Rural) estimated the number of persons employed by SMEs at 1.72 million, which is about 45% of the total number employed in nonfarm small, medium, and large establishments. The 2003 Private Sector Survey estimated that micro, small, and medium enterprises contributed around 20–25% of GDP. (Ahmed – 2008). Given the critical role of SMEs in economic growth and poverty reduction, it is imperative that the Government develop and implement targeted policy measures to address specific constraints to SMEs to enable them to realize their full potential and contribute more effectively to economic growth and employment generation. 4. Size and Definition of SME Market: While there is general agreement that the SME
Article
market is significant in size and importance, there is considerable variation in their definition around the world. Many countries and international organizations set their own guidelines for defining an SME, often based on the number of employees, sales or assets. SMEs are sometimes distinguished from microenterprises in the context of minimum number of employees. SMEs can further be divided into small enterprises (SEs) and medium enterprises (MEs), though there is no consensus on where to divide them. For example, the European Union (EU) defines SMEs as firms with 10 to 250 employees, with less than Euro 50 million in turnover or less than Euro 43 million in balance sheet total. Other countries (for example USA, Canada, Malaysia) have also set their own definitions based on either number of employees or sales volume or both. The definitional issue is further complicated by the fact that individual banks or concerned organizations in the same country use different definitions of SME for their own strategic and risk management purposes (Appendix – A). 5. The government of Bangladesh has announced a new Industrial Policy – 2010, according to which, a medium industry in the manufacturing and service sector must comply the following: Value of Fixed Asset other than land and Employed Sector Building (Tk. In Manpower crores) Manufacturing 10 – 30 100 - 250 Service
1 – 15
50 – 100
Likewise, a small industry is required to fulfill following conditions: Value of Fixed Asset other than Employed Sector land and Building Manpower (Tk. In crores) Manufacturing 0.5 – 10 25 – 99 Service
0.05 – 1
10 – 25
Unlike the definitions of outside world, Bangladesh definition is not linked to turnover. However, for the purpose of financing, Bangladesh Bank in its publication titled, “Small and Medium Enterprise (SME) Credit Policies and Programmes”, has given the following definitions of medium and small enterprise. A medium enterprise refers to establishment/firm which is not a public limited company and complies the following criteria: Sector Service
Value of Fixed Employed Asset other than Manpower land and Building (not above) (Tk. In crores) 0.5 – 10 50
Business
0.5 – 10
50
Manufacturing
1.5 – 20
150
A small enterprise refers to firm/business which is not a public limited company and complies the following criteria: Sector Service
Value of Fixed Asset Employed other than land and Manpower Building (Tk. in crore) (not above) 0.0005 – 0.5 25
Business
0.005 – 0.5
25
Manufacturing
0.005 – 1.5
50
According to Bangladesh Bank SME credit guidelines, public limited companies even after complying required conditions, are not eligible for getting what we call SME financing. Moreover, as compared to Industrial Policy – 2010, an additional category of SME, called business SME (in addition to manufacturing and service) has been included in Bangladesh Bank guidelines. Medium enterprises are not adequately covered in the Bangladesh Bank guidelines, as they have some other opportunities of getting access to finance. In view of announcement of new industrial policy and new upgraded definitions of Small and Medium industrial enterprises, how come Bangladesh Bank is going to redesign its definitional guidelines for SME Credit?
THE CHARTERED SECRETARY JANUARY - MARCH 2012
39
Article
6. SME Banking and Micro Finance Institutions: The SME banking sector is best defined conceptually by its position between large corporations and mostly-informal microenterprises. The development of a commercial banking sector in many countries began with addressing the needs of large corporate clients. This model has historically consisted of managing very high-value transactions for a small number of low-risk clients. Outside of the commercial banking sector, micro finance institutions (MFIs) arose to offer working capital loans to microenterprises, typically ranging from amounts of $100 in South Asia to $1,600 in Eastern Europe. SME finance is referred to as the “missing middle” because SME financial requirements are too great for most MFIs and SMEs have been viewed as too small, risky, or costly for traditional commercial banks. The SME banking market therefore consists of firms whose financial requirements are too large for microfinance, but are too small to be effectively served by corporate banking models. 7. The issue which is under debate is whether it’s better to upscale from micro to small or the downscale from formal financial institution to the small sector. The advantage for a micro finance institution is that it’s committed to that particular segment, the staffs are trained up, they are used to dealing with borrowers who do not have financial information and records. The disadvantage is that firstly the products are designed really for the alleviation of poverty and really for the micro entrepreneur just going into business. It’s not for the formal business as such. Secondly, the organizational structure, the financial structure is set and that makes it slightly difficult to expand the products and services. Small businesses need a variety of financial products whereas the micro financial institutions are normally offering one or a few limited financial products. For example, small business may need to finance fixed investment which needs longer term maturity, it may need a
40
THE CHARTERED SECRETARY JANUARY - MARCH 2012
gestation period before a project can generate cash flow, it may need different forms of services, not only working capital but letters of credit, it may need equity. These products are quite often produced by the larger financial institutions. But the problem with them is that they feel small business lending is risky, it’s high cost to serve. So both aspects are possible. 8. International Finance Corporation (IFC) in its publication The SME Banking Knowledge Guide argues that really we are looking at (perhaps) up-scaling from micro to small. IFC’s micro and small business lending has 5 approaches, firstly establishing Greenfield financial institutions; up-scaling and transforming NGOs into formal financial institutions; introducing micro and small business finance windows in commercial banks, so downscaling; developing linkages between micro financial institutions and commercial banks and so the hybrid structure between the Micro Finance Institutions (MFIs) and the Formal Financial Institutions (FFIs). Also creating wholesale investment vehicles that channel capital to microfinance institutions. 9. Sources of SME Finance: Despite the recognized importance of the SME sector, evidence indicates that SMEs of emerging countries continue to be undersupplied with the financial products and services that are critical to their growth. Many studies indicate that small firms rely on internal financing much more than large firms do, and that the likelihood of a small firm having access to a bank loan in low income countries is about a third of what it is for a medium sized firm, and less than half of what it is for a larger firm. Other sources of SME finance, such as leasing and factoring, are also less developed in emerging countries. Equity finance also remains a major challenge in these countries. SMEs are particularly in need of bank services because they lack the cash flow to make large investments, they cannot
Article
access capital markets as large firms can, and they often lack qualified staff to perform financial functions. Here, bank-provided long-term debt can enable SMEs to invest in expansion without losing ownership. In addition, short-term and working capital loans help SMEs grow incrementally. Lastly, bank deposit and transaction products can improve operational efficiency and enable SMEs to outsource financial functions. 10. A recent study by IFC and Mckinsey & Company suggests that there are close to 365 – 445 million micro, small and medium enterprises in emerging markets of which 25-30 million are formal SMEs and 55-70 million are formal micro enterprises, while the rest (285 – 345 million) are informal enterprises and non-employer firms. The same study also shows that close to 45 - 55 percent of formal SMEs (11 – 17 million) in the emerging market do not have access to formal institutional loans or overdrafts despite a need for one. The finance gap is far bigger when considering the micro and informal enterprises – 65 to 72 percent of all micro, small and medium enterprises (240 – 315 million) in emerging markets lack access to credit. One IFC study (2010) shows that close to 70 to 76 percent of formal SMEs (18 – 22 million) in emerging markets already have a banking relationship via deposit/chequing accounts, which is only about 30 to 35 percent of SMEs (8-10 million) have access to credit. Therefore, intervention is required to support banks in extending credit facilities to SMEs who have a deposit/chequing account, but do not yet have access to credit. However, for the informal SMEs, the first step on the part of banks and other financial institutions is to build up deposit relationships with them (informal SMEs). 11. A large number of empirical literatures observe that restricted access of the SMEs to formal sector financing in Bangladesh is their most intractable operational bottleneck. Like their counterparts worldwide, the SMEs face what is called “frustrated credit demand” as
demonstrated by wide gap between substantial SME demands for loan finance and rather lean supply of institutional credit. This is also indication of a vast potential SME market going hungry for funds with only 40 to 50 percent of their requested credit requirements being met. A World Bank estimate puts the potential SME financing market to be of Tk. 400 billion required by 1.5 million SME borrowers. Ahmed (2008) observes that SME financing situation in Bangladesh reveal two facts: banks are insignificant lenders to SMEs and their preference is for short-term lending to traders rather than long-term lending to manufacturers. 12. SME Financial Services & Operational Problems: IFC (2010) opines that the SME financing gap is the result of a mismatch between the needs of the small firms and the supply of financial services by the banks and other financial institutions. The SME bankable universe, in which providers are able to meet their expected return on capital while serving clients needs, is severely limited. This is due to SME intrinsic weaknesses, flaws in delivery models, and most importantly, existing deficiencies in the enabling environment for providing financial services. The enabling environment consists of financial infrastructure (accounting and auditing standards, credit reporting systems, collaterals and insolvency regimes) and the legal and regulatory framework for financial instruments and institutions. To a certain extent, weaknesses in the enabling environment for financial services can be mitigated through reforming internal lending technologies that reduce information asymmetries such as adoption of relationship lending model. This means banks can reorganize themselves internally so as to develop SME business and optimize the balance between risk, reward and cost to serve, even in weak enabling environments. For instance, more effective business models for SME banking can be developed through a clear strategy, dedicated SME units with specialized staff, a standardized set of products to reduce THE CHARTERED SECRETARY JANUARY - MARCH 2012
41
Article
cost to serve, internal credit scoring models and a client relationship approach that does not focus on credit only but on the cross-selling of a mix of financial services beyond credit. 13. Bangladesh Bank annual report 2006-07 observes, the SMEs’ demand for bank loan, especially, medium and long term financing is relatively high. However, banks are reluctant to extend loans, especially, term loans to SMEs. The reasons for banks’ reluctance to extend loans to SMEs are: (1) perception that the current legal system is unable to protect their interest; (2) funding costs are relatively high (3) shortage of access to long-term capital; (4) inability to conduct proper due diligence and the current unavailability of information (such as, corporate records and audited financial information) on loan applicants; and (5) inability to assess, manage and price risks associated with term loans due to lack of experience and skills. 14. Access to Credit to SMEs: Choudhury and Raihan (2002) observed that the barriers of access to credit on the part of SMEs were not only supply side phenomena; demand side factors were also significantly responsible. The following table shows that collaterals, bribes and delays in getting loans are the first three important barriers of access to credit as opined by the SME borrowers. Table 1: Barriers of Access to Credit to SMEs: Overall Perception of Demand Side Barrier
Percentage of Respondents
Collateral
79.4
Bribe
66
Delays
54.6
High Interest Rate
39.2
Banker’s Disinterest
27.8
Guarantees Required
27.8
Inadequate Volume of Credit Harassment High Sunk Cost
22.7 11.3 8.2
Source: Choudhury and Raihan (2002)
42
THE CHARTERED SECRETARY JANUARY - MARCH 2012
15. The banking reform measures of 1990s and onwards though brought about structural changes and improvement in the overall banking sector, but efficiency in terms of credit allocation showed the reverse trend. The sectoral distribution of credit has experienced drastic reduction of credit to agricultural sector, which was around 16 17% in the first quarter of 1990s but declined to 6 7% by the end of 2010. Likewise the small and cottage industry’s share in total bank credit stood at only 3.10% in 2009. It therefore shows that the sectoral distribution of bank credit after the financial sector reform did not demonstrate better allocation of resources in favour of economically priority sectors. It was expected that the interest rate deregulation would not only bring competitiveness, but also better resource allocation of the banks including Private Commercial Banks (PCBs). However, the PCBs provision of credit to productive sectors is not significant both before and after the financial sector reforms. 16. SME Sector – Priority Considerations of the Government: Now-a-days, as already said, small and medium enterprises (SMEs) are being considered as the driving forces of pro-poor economic growth in Bangladesh. In the current budget, the SME sector has been treated as a thrust sector. On the part of Bangladesh Bank, it has taken a number of proactive measures for increasing the flow of credit to SME sector. In fact, the approach of Bangladesh Bank for addressing the “financing gap” of SME and other priority sectors (like agriculture) has been envisioned within the framework of “Financial Inclusion” strategy. Dr. Atiur Rahman, Governor, Bangladesh Bank has said, financial inclusion is a high policy priority in Bangladesh for faster and more inclusive growth. Considering SME as one of the important agenda of economic development, Bangladesh Bank, for the first time, has fixed up a target of Tk. 23,995 crore for disbursement by the BFIs and NBFIs in 2010. In the meantime, Bangladesh Bank has given an uniform
Article
definition of SME (within the framework of Industrial Policy – 2005) for the purpose of financing by the BFIs and NBFIs. In order to accelerate credit flows to SME sector, Bangladesh Bank has arranged refinancing facilities for the BFIs and NBFIs from the proceeds of its own (BB) fund and funds from IDA and ADB. Since the beginning of the refinancing schemes, Tk. 16.48 billion were refinanced to a large number of BFIs and NBFIs till the end of June -2010.
Moreover, the fund allocation for women entrepreneurs under the refinancing schemes has been raised from 10% to 15% with a view to extending participation of women entrepreneurs in the industrial development of the country (Appendix – B). Besides, following data indicates the current trends of SME finance in Bangladesh:
Table 1: SME Loan Targets and Achievements [Amount in Crores Taka for the Period of January to September 2011] Types of Banks State Owned Bank Specialized Banks Local Private Bank Foreign Banks Sub -total of Banks Non Bank FIs Grand Total
Target 7,668.00 3,365.00 42,303.89 1,197.43 54,534.32 2405.80 56.627.12
Disbursement 2997.11 1897.69 32,839.67 892.96 38,627.43 1313.19 39940.62
Achievements in Percentage 39.09 % 56.39 % 77.63% 74.57 % 70.83 % 54.58 % 70.14 %
Source: SME & Special Programs Department, Bangladesh Bank
Table 2: SME Loans to Total Loans [Amount in Crore Taka as on September 2011] Banks/Non -Bank FIs
Total
Loans
Total SME SME % to total Loans
State Owned Banks
79021.08
22290.55
28.21%
Specialized Banks
22510.91
5017.28
22.29%
Private Banks
227424.18
46121.34
20.28%
Foreign banks
20759.36
1995.67
9.61%
Bank's Total :
349715.53
75424.84
21.57%
19876.52
2954.90
14.87%
369592.05
78379.74
21.21%
Non Bank FIs Total of Financial Sector
Source: SME & Special Programs Department, Bangladesh Bank
THE CHARTERED SECRETARY JANUARY - MARCH 2012
43
Article
17. To ensure institutional financial facilities under easy conditions, Bangladesh Bank has taken diverse steps; like opening of ‘Dedicated Desk’ for SME and ‘SME Service Centre’ in the banks and special facilities for the women entrepreneurs. A new department namely 'SME and Special Programmes Department' has been established in Bangladesh Bank recently which will be solely responsible for policy formulation, facilitating fund, monitoring and development of entrepreneurship in the SME sector. The guidelines formulated by the newly created department for compliance of the banks and financial institutions for the development of SME sector are enumerated below: •
44
Each bank/financial institution shall follow a separate business strategy in financing SME loan with least formalities in executing documentation to ensure easy and speedy loan sanction and disbursement process.
•
Following the 'Area Approach Method' banks/financial institutions will try to attain their indicative targets separately by dividing it as branch wise, region wise & sector wise.
•
Priority shall entrepreneurs.
•
For small entrepreneurs credit limit will be ranged from Tk. 50,000 (Fifty thousand) to Tk. 50, 00,000 (Fifty lacs).
•
Priority shall have to be given to potential women entrepreneurs in respect of SME credit disbursement.
•
Banks & Financial Institutions shall put highest priority in settling the loan disbursement process within very reasonable time from the date of acceptance of the application.
•
Each bank and financial institution shall
be
THE CHARTERED SECRETARY JANUARY - MARCH 2012
given
to
small
establish a separate 'Women Entrepreneurs' Dedicated Desk' with necessary and suitable manpower, provide them training on SME financing. •
Banks and financial institutions may sanction up to Tk. 25, 00,000 to women entrepreneurs against personal guarantee. In that case, group security/social security may be considered.
•
The success in SME loan disbursement will be considered as yardstick for further approval of new branches of the concerned bank.
•
Each bank/financial institution shall fix the interest rate on SME loan sector/subsector wise, inform Bangladesh Bank, and ensure disbursement of refinanced fund to the clients (women entrepreneurs) at Bank rate +5% interests.
•
Training programs shall be arranged for the entrepreneurs.
18. Now, let us examine the SME credit target - 2010 and policies of Bangladesh Bank. In the meantime, first three quarter data has been released by Bangladesh Bank, which of course, shows encouraging trend, but still there is scope of further improvement. Banks and financial institutions have crossed their aggregate 2010 target long ago. By the end of September – 2010, the aggregate outstanding SME credit reached Tk. 61,680 crore, more than 2.5 times higher than 2010 target with still 3 month to go. However, banks have been observed more interested to disburse SME credit mainly to trade and service sector rather than more productive (manufacturing) sectors. It is revealed that only 35 percent of SME credit has been channeled to manufacturing sector and the rest 65 percent to trade and service sectors. Again, only 3 percent SME credit has been provided to women entrepreneurs. Everyday a lot of complaints are being received by the Bangladesh Bank regarding irregularities (like asking for collateral, bribe, unnecessary delay etc.) practiced by
Article
the
banks and non-banking financial institutions. Providing a huge amount of refinance by Bangladesh Bank itself is the reflection of not considering SME financing by the banks as core banking. Let alone the question of “SME Banking”, Bangladesh banking system even is far away from pro-active “SME financing.” The policy framework of Bangladesh Bank may also be made more robust. There are clear differences between rural SME and urban SME and accordingly policy focus must be location/ area specific instead of location neutral. Even between small and medium, there are wide gaps. Small and medium are really two different aspects and need different products and services to serve these aspects. In the Bangladesh Bank guidelines, banks and non-bank financial institutions should be encouraged to adopt relationship banking technology, starting with deposit relationship. As a part of long-term goal, the guidelines may also think of other financing products like equity financing, factoring, leasing etc. Though for building enabling environment for SME banking, government intervention is a must, yet central bank persuasions in this regard can only-materialize it.
19. Concluding Remarks: Undoubtedly, pursuing a policy/strategy relentlessly and also brining modification in it is a precondition for achieving desired grads. It is also worthwhile at the same time to look at the success stories or best practices elsewhere to learn and incorporate appropriate lessons to make the strategy more robust and goal oriented. In this regard, let us look at the success stories of ICICI and Wells Fargo in regard to their SME banking. 20. Keys to ICICI’s Success a. “Beyond-lending” approach – ICICI recognizes that SME needs to go far beyond loans. As 95 percent of the bank’s SME customers are non-borrowers, ICICI’s strategy includes profitably serving the complete needs of its SME customers
through checking accounts, transaction banking services, cash management services, trade services, etc. b. Effective segmentation – By effectively dividing its customers according to industry and business linkages, ICICI is able to customize its service approach and manage risk. c. 360-degree credit risk evaluation – ICICI Bank uses trade references, business profiles, transaction histories and other non-traditional mechanisms to help compensate for SMEs’ lack of financial statements. Lessons from Wells Fargo’s Experience a. Prioritize up-front learning – By balancing its goals of customer acquisition with the need to understand market risks and demand, Wells Fargo built a solid foundation and identified prime opportunities. b. Match service approach to client types – Wells Fargo recognized that many of its SME clients shared more commonalities with retail clients than corporate and capitalized on these similarities. c. Experiment with marketing approaches – In acquiring its large portfolio of clients, Wells Fargo has found that “constant testing, measuring, and learning is key to effective small business marketing.” References Ahmed, M.U. “Institutional Financing of SMEs in Bangladesh: Current Scenario and future Directions.” A paper presented in a seminar organized by FBCCI and EBL on January 15, 2008. Bakht, Zaid. “Development of SME Sector in Bangladesh”. In Emerging Issues in Bangladesh Economy. 2008. CPD/UPL. Bangladesh Bank. Enterprise (SME) Programmes. 2010.
Small Credit
and Medium Policies and
Bangladesh Bank Annual Report. Various Issues. THE CHARTERED SECRETARY JANUARY - MARCH 2012
45
Article
Bangladesh Perspective”, A Key Note Paper Presented at FBCCI SME Fair Seminar on 23 December, 2011.
Choudhury, T. A. and Raihan. A. “Structural Adjustment Performance Review Initiative: Implications for Financial Sector.” In the Policy Roots of Economic Crisis. SAPRIN. 2002.
Rahman, Atiur. “Financial Inclusion as Tool for Combating Poverty”. Bangladesh Bank Quarterly. October- Decmber-2009.
IFC. Scaling up SME Access to Financial Services in the Developing World. Ocotober -2010.
Teima, G.O. et. al. “IFC’s SME Banking knowledge Guide.” Access Finance. World Bank. January-2010.
M. Ehsanul Haq et al, “Access to Finance & Technological Up-gradation for SMEs :
Appendix – A: Sample SME Definitions TABLE A.1: EUROPEAN UNION SME DEFINITION
< 250
Turnover or ≤ € 50 million
≤ € 43 million
Small
< 50
≤ € 10 million
≤ € 10 million
Micro
< 10
≤ € 2 million
≤ € 2 million
Firm Size
Headcount
Medium-sized
Balance Sheet Total
Source: European Commission Recommendation 96/280/EC TABLE A.2: MALAYSIA SME DEFINITION Firm Size Manufacturing, Agro -based Industries Service, ICT, or Primary Agriculture Micro
<5 employees OR <$66,000 in sales
<5 employees OR <$53,000 in sales
Small
<50 employees OR <$ 2 million in sales <19 employees OR <$200,00 in sales
Medium <150 employees OR <$6.6 million in sales <50 employees OR <$1 million in sales TABLE A.3: IFC DEFINITION (ENTERPRISES MUST MEET AT LEAST 2 OF 3 CRITERIA) Firm Size
Employees
Assets
Annual Sales
Micro
<10
<$100,000
<$100 000
Small
10<50
$100,000 <$3 million
$100,000<$3 million
Medium
50<300
$3 million < $15 million
$3 million < $15 million
Source: WB Enterprise Survey and IFC's SME Banking Knowledge Guide (2009)
46
THE CHARTERED SECRETARY JANUARY - MARCH 2012
Article
TABLE A.4: OTHER COUNTRY EXAMPLES Country
Employees
Annual Sales (Revenues)
United States
10-499
Canada Mexico South Africa Turkey
10-499 11-250 Agriculture <100; other <200 20-249
<$7 million for most nonmanufacturing, but Rang up to $ 35.5 million <CAD 50 million <ZAR 64 million, depending on industry <TL 25 million in Net Sales or <TL 25 million in Total Assets
Appendix – B Table 1: Position of Refinancing Schemes for SMEs (as on June – 2010) No. of Banks/ NBFIs Refinanced
No. of Projects
Tk. 10.42 Billion
40
10988
EGBMP (WB)
Tk. 2.71 Billion
30
2773
ADB Fund
Tk. 3.35 Billion
16
3264
Name BB (SEF)
Total
Amount Refinanced
Tk. 13.48 Billion
17025
Source: BB Annual Report, 2009-10. Table 2: Women Entrepreneurs Loan to Total SME Loan [Amount in crores Taka from January to September 2011] Service Trading Manufacturing Total Banks/Non Bank FIs Number Amount Number Amount Number Amount Number Amount Total SME Loan 9333 2681.90 172810 25606.79 52311 11651.93 234454 39940.62 disbursed Disbursed to 975 151.91 7559 913.43 2765 473.00 11299 1538.73 Women Percentage of women 10.45 5.66 4.37 3.57 5.28 4.06 4.82 3.85 Loan to SME Loan Source: SME & Special Programs Department, Bangladesh Bank.
The writer is an * Director General, Bangladesh Institute of Bank Management (BIBM). ** Associate Professor, Department of Sociology, University of Chittagong.
THE CHARTERED SECRETARY JANUARY - MARCH 2012
47
Article
WHO OWNS YOUR ERP IMPLEMENTATION PROJECT? Rubaiyat Jamil
Since 2007 businesses in Bangladesh have
started realising the need to have an enterprise software solution connecting all the departments in order to stay competitive and keep earning the expected margins from the business. For most of our large corporate houses with multiple companies storing, sorting and monitoring data is a big problem. More often than not this is ignored simply because it is a monumental task to start organizing data which has been stored for more than two decades. Enterprise Resource Planning (ERP) applications allow an organization to implement an enterprise wide software solution where departments are integrated with each other thereby minimizing duplication of data entry. With an ERP in place, managers have better control of data and as such they can transform data into information and make informed decisions based on statistics. An ERP project comprises of three main players - the customer, the ERP software licensee and the implementation company. The most crucial part of a successful implementation is the harmony between these three stakeholders. In Bangladesh this problem of teamwork can be identified as the most crucial problem hindering the successful implementation of ERP in the local business houses. The first cause of this discord is the confusion of ownership of the project. The objective of this article is to highlight the reasons for this ownership confusion and the problems that arise because of this issue. What is an ERP? According to the definition in Wikipedia an Enterprise Resource Planning (ERP) integrates internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with
48
THE CHARTERED SECRETARY JANUARY - MARCH 2012
an integrated software application. Its purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. Essentially an ERP solution forms the vessels for your organization through which the blood of your organization, which is data, flows. The most significant impact that an ERP makes to an organization is single point for data entry. If your organization is running manually on paper books then a simple supplier invoice needs to have data which will come from procurement, accounts and your delivery section. As such we see that three departments will need to input data and thereby increasing the chance of data mismatch. With an ERP in place data is inserted in the solution once when the supplier was selected and the work order was placed. So at the time of payment the accounts department can just locate information from one data source. An ERPâ&#x20AC;&#x2122;s second most crucial impact in an organization is installing best practices. As businesses grow processes are needed to be defined in order to better manage the organization. Steps need to be in place so that a structure of corporate governance is in place and information flows smoothly from the owners of the business, to the management, to the employees and the customers. The three stakeholders implementation
in
an
ERP
The three most important stakeholders in an ERP implementation is the customer, the ERP software license holder and finally the implementation partner. Let us see the role of each of these stakeholders so that we can better understand the ownership conflict. The Customer The customer needs no detailed definition as
Article
he is simply the one procuring the ERP software applications for his organization. But the customer’s role is the most important among the three stakeholders. First the customer realizes that an ERP application is needed. Second the customer defines which parts of his business organization he wants to automate, in which order and how he wants to pace his implementation. Most of the time a mature customer will use a consulting agency to define his requirements and also draw up a basic implementation road map which will later be defined in more details by the implementation partner. Unfortunately in Bangladesh we find majority of our customers not using any consulting company to define their requirements. The task of defining the requirement is left to the ERP vendor and they are expected to do a quick study and then propose the solution. Most often than not the ERP vendor proposes the solution that will help him to close the sale in the shortest possible time. This creates the room for the ERP vendors to manipulate the solution according to the budget. The third crucial task of the customer is accepting the product being delivered. At each stage of the implementation process the customer needs to check the work for accuracy, relevance and quality and sign off the deliverable so that the project can move to the next phase. This acceptance process is the single most important reason why the customer should own an ERP implementation project. The ERP software licensee The ERP software licensees are the software development companies that have developed the core ERP software. Their main role is to continue R&D on the product so that the latest best practices in terms of business processes are incorporated in the software. The ERP vendor’s role finishes after the selection of the product. The three main foreign ERP vendors currently present in Bangladesh are IFS Applications (Sweden), Oracle (USA) and SAP (Germany). These companies carry out the “product demonstrations” and after the product is selected passes over the
responsibility to the implementation partner companies. The Implementation Partner Company (IP) The implementation partners (IP) are the companies who are trained on a respective ERP product and they carry out the all important task of installing the ERP software at the customer premise. The IP are companies like Atos Origin, WIPRO, TATA consulting, IFS Consulting carry out the actual work of implementing the ERP software at the customer site. After the customer the second most important role in an ERP implementation lies with the IP. The IP studies the existing processes of the customer and defines the processes that will be automated. As such he takes the customer’s manual processes and maps them with the ERP application. The other most critical work of the IP is training the users of the customer. Without a properly trained ERP user team at the customer site the implementation will not be successful. The Ownership implementation
issue
of
an
ERP
The ownership issue of an ERP implementation affects the project roll out in every single step or phase of the project. The impact is felt within the project as the decision making time gets delayed. In Bangladesh decision making is already a point of concern for most companies. Our mangers are not trained and in majority instances they are not empowered to make decisions. As such all decisions come from the C level; hence the decisions making process is slow. Coupled with this there is a prevalent business practice which states that vendors need to be dominated in order to get the best work out of them. In some industries it might be effective and may be necessary but in a knowledge industry where knowledge workers are performing the task this particular practice works negatively and de-motivates the vendor and affects the performance. Now these two combined we are faced with a scenario where the ERP implementation team identified by the companies does not take any decisions.
THE CHARTERED SECRETARY JANUARY - MARCH 2012
49
Article
Very recently I have had the opportunity to over see an ERP implementation in a large corporate house in Bangladesh engaged in the business of power generation and supply of heavy equipment for maintenance. The project started with the management selecting a very strong ERP implementation team to work closely with the implementation partner. The project required changes in the business processes of the company to adapt to best practices and in some instances the ERP also needed customizations. The first problem that the IP faced was that there was no one to make a decision on the changes in the business processes that needed to be made. All these decisions were left for the Managing Director and due to his work pressure decisions which were due in 7 days took over a month. This had a direct impact on the project delivery time line. Because an ERP implementation requires the IP consultants to study each and every process of the customer in details, a lot of the times the consultants come across internal fraud that are hidden from the management due to manual processes. Here also the consultants identified internal fraud but due to the supreme detachment of the customer project team from making decisions these were also hidden by the customer project team from the management so that the ERP best practices could be implemented. At the end even though the product was accepted due to time delay the customer canceled the implementation project. Here we find a classic case of ownership problem which led to the cancelation of an ERP deployment project. If we delve into the problems we see that even though a strong project team was established the customer failed to realize that the ownership has to be with him. The IP is the company that will perform a job for the customer which the customer will accept. The service the IP will perform will directly affect the customer’s business process and profitability so it is crucial that the customer owns the project. In the above company not only did the customer’s team take responsibility to take decisions, the customer also did not realize that the delay was due to their decision making delays. In the
50
THE CHARTERED SECRETARY JANUARY - MARCH 2012
customer’s mind they are thinking that the IP is the owner of the project and as such all delays are ascribed to him. Another classic problem we find in Bangladesh which we can directly attribute to the issue of lack of ownership is the payment clearance procedure. In a typical ERP deployment project the payments to the vendor is made as per pre-defined milestones. The milestones are defined based on the work that will be done in each phase. Once the customer signs and accepts the work completed in a particular phase the payment for that particular phase is made to the vendor. In a typical scenario in Bangladesh we find that once a phase is complete the payments are not made because there is no one to sign the acceptance letter. Even though a team has been defined the key people in the team hesitate to sign because of a lack of ownership of that particular phase. I experienced this issue at a private bank where a Human Resource Management module was being implemented. The bank identified the team but no one in the team took ownership of the project. So at the time of signing acceptance certificates for completing each phase no one was willing to take the responsibility to check that the work had been done and give the written approval that he or she accepts the work of the vendor. From the vendor’s perspective this creates two major hurdles in completing the project. The first hurdle is that they cannot move to the next phase of the project without receiving the acceptance sign off for the current phase. The second more crucial issue is covering the cost of the consultants that they deploy to work in that particular project. If a project payment is delayed due to which the particular consultant is sitting idle, then after a point the consultant is assigned to a different project where he can be used more effectively. Now when the first project finally makes the payment the IP has to deploy a new consultant to finish the work. Whenever there is a change in consultants in the middle of the project there is a possibility that it will affect the quality of the project. So the project falls into an undue risk in terms of quality and completion time.
Article
Why do we find this problem of ownership so acute in Bangladeshi business houses? One reason is that our large business organizations do not have a corporate structure in place. In majority of the cases we find the founder directors as the C level executives (CEO, CFO, CXO) and as such the management team that works under the C level does not feel any affiliation to the company. Hence when they are placed in a team that needs to take decisions they are unable to fathom the responsibility and rely on the C level to take the project forward. Culturally we are also not taught to take decisions. In a family setting we see the head of the family taking the decisions and all major resolutions have to be consulted with the head of the family. This impacts significantly the ability of the family members to take decisions in their own work environment because they are still looking up to the head of the family to take the decisions. The situation is same in a business organization. If we focus on our education system we will also see that most of the time the teaching method focuses on memorizing and recalling. Rarely are we taught to solve case studies and as such our skills to take decisions are not nurtured at all. Conclusion An ERP implementation can be akin to starting an internal control or internal audit department in an organization. The implementation touches each and every process from all the departments of the organization because its
main objective is to create a single data entry scenario and this data will be projected to the departments it is meant for in a format which the end department wants it in. Bangladesh business houses have reached the size and scale to start competing aggressively with global companies. An ERP is essential to equip the organizations to be better prepared with relevant information and make informed decisions when faced with global competition. The ownership problem is the single most crucial issue which is hindering the implementation of ERPs in Bangladesh. It is vital that the customer takes the ownership of the project since the ERP implementation will affect all its business processes and help him to adapt to best business processes. Taking ownership is also the only way for the company to equip itself better to take decisions and get trained on the ERP product they have implemented. The customers in Bangladesh should also realize that an ERP implementation is carried by knowledge workers and the model of dominating the vendor to perform only creates a sense of mistrust between the teams. The only way to overcome this problem is to establish a culture of Corporate Governance and to empower decision making in all levels of the organization.
The writer is an active entrepreneur in the field of IT, Retail and Financial Services and can be reached at : rjamil@icebd.com
THE CHARTERED SECRETARY JANUARY - MARCH 2012
51
Knowledge Bank
KNOWLEDGE BANK Compiled by Itrat Husain FCMA, FCS LEGALLY SPEAKING Acceptance The taking and receiving of anything in good faith, with the intention of retaining it. Aid and Abet To actively, knowingly, or intentionally assist another person, in commission or attempted commission of a crime. Alternative Dispute Resolution (ADR) Any of a variety of techniques for resolving disputes without the need for conventional litigation. It may include mini trial (a shortened and simplified form of court hearing) informal methods of Arbitration and structured form of conciliation using a specially trained mediator acting as a go-between. Escrow Money or a written statement such as a deed that, by agreement between two parties, is held by a neutral third party (held in escrow) until all the conditions of the agreement are met. Hearsay Statements by a witness who did not see or hear the incident in question but heard about it from someone else. Hearsay is usually not admissible as evidence in court. Judgement Debtor A person against whom Court judgement has been entered ordering him to pay money that he owes (the judgement debt). Jurisprudence The study of law and the structure of the legal system. Next of Kin A personâ&#x20AC;&#x2122;s closest blood relations. Parents and children are treated as being closer than grandparents, grand children or siblings. Patent A grant to an inventor of the right to exclude others for a limited time from making, using or selling his invention. Shadow Director A person who is not a director of a company but who gives instructions (rather than professional advice) upon which the directors are accustomed to act. Certain statutory provisions (e.g. those relating to put call options) apply to both shadow directors and directors proper.
QUOTATIONS Kindness is a mark of faith; whoever is not kind has no faith - Hazrat Muhammad (PBUH) The best of you is he (or she) who is of most benefit to others - Hazrat Muhammad (PBUH) He who deals unfairly with others can never become a useful member of the society - Hazrat Muhammad (PBUH) A committee is a thing which takes a week to do what one good man can do in an hour - Ebert Hubbard Coming together is a beginning. Keeping together is progress. Working together is success - Henry Ford
52
THE CHARTERED SECRETARY JANUARY - MARCH 2012
Corporate Declarations 2011
CORPORATE DECLARATIONS 2011 Name of Company Green Delta Insurance Company Ltd. Global Insurance Ltd.
Year end 31.12.11 31.12.11
Dividend (%) 25% B 10% B
Beacon Pharmaceuticals Ltd.
N/A
N/A
Berger Paints Bangladesh Ltd.
31.12.11
180% C
Singer Bangladesh Ltd.
31.12.11
30% C
United Commercial Bank Ltd.
31.12.11
12% C & 15% B
Reliance Insurance Ltd.
31.12.11
15% C & 15% B
Central Insurance Company Ltd. AB Bank Ltd.
31.12.11 31.12.11
15% B 5% C & 20% B
Ocean Containers Ltd.
31.12.11
25% B
Industrial Promotion and Development Company of Bangladesh Ltd. (IPDC)
31.12.11
10% B
Sinobangla Industries Ltd.
31.10.11
10% C
Summit Alliance Port Ltd.
31.12.11
10% C & 10% B
Bay Leasing & Investment Ltd. Kay & Que (Bangladesh) Ltd.
31.12.11 31.12.11
15% C & 20% B 5% C
The City Bank Ltd.
31.12.11
25% B
United Insurance Company Ltd.
31.12.11
10% C & 10% B
First Lease Finance & Investment Ltd.
31.12.11
20% B
Active Fine Chemicals Ltd.
31.12.11
20% B
International Leasing And Financial Services Ltd.
31.12.11
5% B
Linde Bangladesh Ltd. Padma Oil Company Ltd.
31.12.11 30.06.10
100% C (Final) 50% C & 50% B
GSP Finance Company (Bangladesh) Ltd.
31.12.11
10% B
Heidelbergcement Bangladesh Ltd.
31.12.11
45% C
Uttara Bank Ltd.
31.12.11
20% C & 15% B
ICB Islamic Bank Ltd.
31.12.11
Nil
Islami Bank Bangladesh Ltd.
31.12.11
7% C & 25% B
IBBL Mudaraba Perpetual Bond
31.12.11
Annual Profit @ 13.20%
National Life Insurance Co. Ltd. Bangladesh Lamps Ltd.
31.12.11 31.12.11
50% C & 10% B 30% B
Nitol Insurance Company Ltd.
31.12.11
5% C & 8% B
Apex Adelchi Footwear Ltd. Intech Online Ltd.
31.12.11 31.12.11
45% C 10% B
Premier Leasing & Finance Ltd.
31.12.11
5% B
BSRM Steels Ltd.
31.12.11
15% C
THE CHARTERED SECRETARY JANUARY - MARCH 2012
53
Corporate Declarations 2011
Khulna Power Company Ltd.
31.12.11
Al-Arafah Islami Bank Ltd.
31.12.11
25% B (general public shareholders only) 21% B
Safko Spinning Mills Ltd.
31.12.11
10% B
Jamuna Bank Ltd.
31.12.11
23% B
Rangpur Dairy & Food Products Ltd.
31.12.11
12% B
Uttara Finance and Investments Ltd.
31.12.11
40% B
Mutual Trust Bank Ltd.
31.12.11
12% C
Square Textiles Ltd. Takaful Islami Insurance Ltd.
31.12.11 31.12.11
16% C & 20% B 17% B
Information Services Network Ltd.
N/A
Republic Insurance Company Ltd.
31.12.11
10% B & 1R:1*
Standard Bank Ltd.
31.12.11
20% B
Pragati Insurance Ltd.
31.12.11
15% C & 10% B
Bangladesh Finance and Investment Co. Ltd.
31.12.11
10% B
City General Insurance Co. Ltd.
31.12.11
10% B
Trust Bank Ltd. Eastland Insurance Company Ltd.
31.12.11 31.12.11
10% C & 10% B 40% C
Northern General Insurance Co. Ltd.
31.12.11
15% B
Lafarge Surma Cement Ltd.
31.12.11
Nil
FAS Finance & Investment Ltd.
31.12.11
5% B
Popular Life Insurance Company Ltd.
31.12.11
40% B
Phoenix Finance & Investments Ltd.
31.12.11
30% B & 1R:10*
Bata Shoe Company (Bangladesh) Ltd.
31.12.11
105% C (Final)
People's Leasing and Financial Services Ltd. Peoples Insurance Company Ltd.
31.12.11 31.12.11
10% C & 5% B Nil
Karnaphuli Insurance Company Ltd.
31.12.11
15%C
MJL Bangladesh Ltd.
31.12.11
15%C & 15%B
Marico Bangladesh Ltd.
31.03.12
Nil**
Janata Insurance Co. Ltd.
31.12.10
15% B
Delta Life Insurance Company Ltd.
31.12.04
30% C & 20% B
C = Cash Dividend, B = Bonus Dividend and R = Rights. Source: Dhaka Stock Exchange Ltd.
54
THE CHARTERED SECRETARY JANUARY - MARCH 2012
N/A
Notifications
THE CHARTERED SECRETARY JANUARY - MARCH 2012
55
Notifications
56
THE CHARTERED SECRETARY JANUARY - MARCH 2012
Notifications
THE CHARTERED SECRETARY JANUARY - MARCH 2012
57
Notifications
58
THE CHARTERED SECRETARY JANUARY - MARCH 2012
Notifications
THE CHARTERED SECRETARY JANUARY - MARCH 2012
59
Notifications
60
THE CHARTERED SECRETARY JANUARY - MARCH 2012