The Bangladesh Association of Publicly Listed Companies (BAPLC) has urged the securities regulator to revise some corporate governance codes, including the appointment of managing director (MD) or chief executive officer (CEO) at listed companies.
The BAPLC working committee placed the suggestions at a discussion, held with the Bangladesh Securities and Exchange Commission (BSEC) on August 20.
As per the existing corporate governance code, the MD or CEO of a listed company will not hold the same position in another listed company.
In its recommendation, the BAPLC said the MD or CEO of a listed company will not hold the same position in another listed company, except in the companies of same group.
"The MD or CEO is a leadership position. Persons with right leadership qualities may not be available in a specific sector. Appointing a person with equivalent standing will incur high cost and may hamper continuity of business," said the BAPLC.
It also said the existing provision regarding appointment of MD or CEO will discourage the big group of companies to bring their shares in the capital market.
Another code of corporate governance said the MD or CEO, company secretary (CS), chief finance officer (CFO), and head of internal audit and compliance (HIAC) of a listed company will not hold any executive position in any other company at the same time.
The BAPLC's recommendation said the MD or CEO, CS, CFO and HIAC of a listed company will not hold any executive position in any other listed company at the same time, except in the companies of same group.
"It is a common practice in Bangladesh, and, globally as well, that the same person holds senior management positions in different companies under a group on cost sharing basis."
The BAPLC added that this provision may be applicable for those companies, which are working on a stand-alone basis and are not members of a group.
As per another code of corporate governance, the listed companies are required to explain briefly the financial and economic scenario of the country and the globe.
The BAPLC has urged to delete this provision, as all companies may not have expert professionals to work on independent analysis of economic and financial scenario of the country.
Another code of corporate governance said the board will appoint a MD or CEO, SC, CFO and HIAC, and all of them will attend the board meeting.
In its recommendation, the BAPLC said the board will appoint a MD or CEO, CS, CFO, and head of internal audit (HIA), and the MD or CEO, CS, and CFO will attend the board meetings.
"…If HIA attends the board meeting, it will create conflict of interest, and he will not maintain his independence during the auditing process," said the BAPLC recommendation.
Another code of the corporate governance said the professional, who will provide the certificate on compliance of this corporate governance code, will be appointed by the shareholders in the annual general meeting (AGM).
The BAPLC has urged the securities regulator to specify this code, as it is not clear whether the appointment is required in each AGM or not.
"There are different practices in the market. This appointment can be made similar to statutory auditor as mentioned in Section 210 of the Companies Act," it noted.
The BAPLC added that it also needs to be required for the compliance auditor to attend the AGM/EGM similar to external auditor.
The association also made some other recommendations on quorum in meeting of the nomination and remuneration committee (NRC) and audit committee.
Asked, the BAPLC's president Azam J. Chowdhury said some provisions on corporate governance are contradictory with the provisions set by other regulators such as Bangladesh Bank (BB) and Insurance Development & Regulatory Authority (IDRA).
"That's why we have proposed to revise some codes of corporate governance. The incumbent chairman of the securities regulator is very positive about the proposals made by BAPLC," Mr. Chowdhury told the FE.
He said two separate committees were formed at the securities regulator and the BAPLC to address the ambiguity and conflicts in some codes of corporate governance.
"Those codes may be revised as per recommendations to be made by the BSEC's committee," said the BAPLC president.
