One of the main objectives of the Companies Act-1994 is to ensure good governance in the companies. It is principally based on English Companies Act-1908 with some amendments made in the Act of 1913. Our Companies Act is 18 years old, largely outdated for modern business practices and cannot cater to the needs of corporate governance in businesses.Â
Of late, initiatives for a thorough review of the Companies Act-1994 have been taken up by the Ministry of Commerce. The Institute of Chartered Secretaries of Bangladesh (ICSB), as a statutory body under the Ministry of Commerce to develop, promote and regulate the profession of Chartered Secretaries in Bangladesh, organised a workshop titled Reforms of Companies Act-1994 on the occasion of the celebration of 20th anniversary of ICSB. Â
All discussants in the workshop opined that such reviews would help work out an appropriate legislative proposal to meet the requirements of our country's growing economy. All stressed that a comprehensive reform of Companies Act-1994 was now a priority. Corporate governance and other legislative developments since the 2006's have further underscored the urgency of reform. Moreover, we are now living in a global village where accountability and good governance are vital for surviving in the keenly competitive market involving capital, goods and services. As such, we cannot afford to be left behind; we have to ensure high standards to facilitate governance in the company management.
Companies Act spells out the basic legal provisions regarding the right and ownership functions of shareholders of companies, especially in banking companies, including the right to a secure method of registration of ownership and transfer of share, to obtain audited financial statement and other relevant  information at regular intervals, to participate and vote in the general stakeholder meeting, to elect and remove members of the board and to share the profit of the company. In our case, due to failure in establishing corporate governance in the company management as a whole, a series of corporate failures have already occurred, especially in the area of our capital market.
ICSB president Mohammad Sanaullah, FCS presented some salient features in reforming the Companies Act-1994 in his keynote address. Other discussants recommended the following basic points:
1. Mandatory provision for appointing company Secretary in a company having capital more than Tk 50 million.
2. Provision should be made for secretarial audit to ensure compliance by the companies with the regulatory directives and governance issues.
3. Government companies should be treated at par with other companies and be subject to similar compliance standards.
4. Regular filing should be made easy, efficient and cost-effective. Non-filling of documents or incorrect disclosures should be dealt with seriously. Delays in filing should be penalised through non-discretionary late fee relating to the period of default. There should be a system of random scrutiny of filing to be carried out by the registration authorities.
5. A company law tribunal should be established consisting of four members.
6. Aligning Central Depository System (CDS) with traditional system and covering various reports and returns for Registrar of Joint Stock Companies & Firms (RJSCF)
7. The Companies Act should, as far as possible, be allowed maximum flexibility to use technology.Â
Commerce Minister Tofail Ahmed and Commerce Secretary Shubhashis Bose agreed that reform of the Companies Act-1994 was very urgent. The ICSB's professionals believe that reforms never happen easily and it should go through a comprehensive team work.Â
The writer is a Chartered Secretary of ICSB.
forhad01818491848@gmail.com
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Reforming Companies Act 1994
Md Forhad Hossain Patwary | Published: August 01, 2017 20:45:52 | Updated: October 23, 2017 23:12:24
Reforming Companies Act 1994
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