The Bangladesh Securities and Exchange Commission has waived some conditions of the corporate governance guidelines for the Investment Corporation of Bangladesh virtually making the independent directors in the state-owned financial institution ineffective.
The waiver has drawn criticism from the stock market experts as the exemption might demoralise other institutions.
A BSEC notification issued on May 28 waived for the ICB five conditions — 1.2, 1.3, 1.4, 3.2(i) and 4(ix) — of the corporate governance guidelines that made independent directors ineffective in the organisation, said market experts.
‘There is nothing positive in the BSEC’s waiver for the ICB from complying with some key conditions of the corporate governance guidelines,’ said Mohammad Musa, professor (School of Business) at United International University.
The exemption might encourage other entities for not complying with these conditions, he said.
‘Waiver to a government entity by another government entity may demoralise other organisations, Musa said adding that the BSEC’s move might create discrimination in the field.
Section 1.2 of the corporate government guidelines asks all the companies to appoint at least one fifth independent director at the board, while qualifications of the independent directors are set by the section 1.3 of the guidelines.
Section 1.4 of corporate governance guidelines says that the positions of the chairman of the board and the chief executive officer of the companies will be filled by different individuals.
The chairman of the company will be elected from among the directors of the company. The board of directors will clearly define respective roles and responsibilities of the chairman and the CEO, the guidelines say.
The condition 3.2(i) say that an independent director of the board will be the chairman of the audit committee as appointed by the board.
The issuer company should not engage its external auditors to certify on compliance of corporate governance guideline, the section ix of condition of the guidelines say.
‘The ICB is a statutory organisation governed by the ordinance approved by parliament, where independent directors are appointed from government officials, that’s why the BSEC waived some sections of the corporate governance guidelines for the organisation,’ BSEC executive director Saifur Rahman told New Age.
Saifur, however, said that none of the subsidiaries of the organisation would enjoy the waiver.
Current BSEC chairman M Khairul Hossain earlier worked as the chairman of the ICB.
The BSEC earlier had extended tenure of the ICB-operated mutual funds for several times after end of their regular time-limit.
-With New Age input
