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Investors' confidence hinges on updating, enforcement of laws

Two-day SEC-ADB workshop on corporate governance ends

STAR BUSINESS REPORT
Laws need to be updated in line with changing business scenario and proper enforcement of the laws must be ensured to gain investors' confidence in the capital market.
This common observation came at technical sessions of the two-day workshop on corporate governance in Bangladesh, which concluded in Dhaka yesterday. The workshop was jointly organised by the Securities and Exchange Commission (SEC) and the Asian Development Bank (ADB).
The speakers also favoured an ADB recommendation on assigning independent directors in every company. They, however, failed to reach a consensus on the modalities of how such directors will be appointed or what will be the basis
of their appointment.
Eminent lawyer Dr Kamal Hossain chaired the workshop's concluding session on legislative recommendations. ADB Technical Assistant Team Leader Alan G Rosenberg presented the keynote paper, prepared by The Aries Group of the United States.
International mutual fund specialist Arthur Sokolow, partner of Rahman Rahman and Haq & Co Abdul Hafiz Chowdhury and Institute of Chartered Accountants of Bangladesh (ICAB) acting President M Farhad Hussain attended as panel discussants.
Dr Kamal Hossain said there are adequate laws for the capital market in Bangladesh but their proper enforcement is absent.
He said there are allegations against companies for not being
able to hold annual general meetings (AGMs) peacefully due to some unruly persons. "All are aware about it but there is no effort to bring these musclemen into book".
Dr Kamal said it will be difficult to find independent directors even if there is an agreement to have them in company boards. "But such an option will surely be helpful to protect rights of the minority shareholders."
"Recently the central bank has directed commercial banks to appoint two independent directors but the banks are yet to appoint them," Dr Kamal said.
Sokolow said independent director might be appointed from the retired businessmen, academics, judges and non-resident Bangladeshis.
ICAB acting President M Farhad Hussain laid stress on a guideline for appointing a chief accountant under the ADB prescribed accounting board in every company.
At present young persons lacking required experiences are seen to be occupying some important posts like chairman and managing director, he observed.
The ICAB acting president said there should be a set of guidelines on fixing the maximum number of directors to sit in a board similar to banks.
The ADB paper suggested that as the audit committees serve the important functions of controlling the financial activities of company management, it should ensure the recruiting, training and monitoring of the committee members.