Chartered secretaries call to update Companies Act for stronger corporate governance

Prominent chartered secretaries have called for updating the Companies Act to strengthen corporate governance in the country, and boost investment and job creation.

They made the call at a seminar titled "Reforms of the Companies Act," organised by the Institute of Chartered Secretaries of Bangladesh (ICSB) at a city hotel today (22 February).

Commerce Secretary (Routing Charge) Md Abdur Rahim Khan spoke as the chief guest at the seminar while Additional Secretary Md Mizanur Rahman, registrar of the Office of the Registrar of Joint Stock Companies and Firms (RJSC), participated as the special guest.

Former ICSB president Mohammad Sanaullah, in his keynote highlighted his recommended changes in the Companies Act. ICSB Council Member Md Azizur Rahman and Salim Ahmed elaborately discussed the keynote.

The seminar, chaired by the institute's Acting President M Nurul Alam, had an introductory speech from ICSB Secretary and CEO Md Zakir Hossain. ICSB Member Secretary of Seminar & Conference Sub Committee Md Sarfaraz Hossain moderated the session.

"There have been certain initiatives of updating Companies Act that have not proven successful in the past, however, we remain optimistic that the Ministry of Commerce will take necessary actions to reform and update the Companies Act," said Zakir Hossain.

The acting president of ICSB emphasised the importance of updating company law to strengthen corporate governance, foster economic growth, and align with global best practices.

Highlighting the significance of legal reforms in ensuring investor confidence and business efficiency, the session-chair encouraged active participation and discussions.

Mohammad Sanaullah emphasised the need for modernisation to align with global best practices. The session highlighted key areas for reform, including corporate governance, digital compliance, board structure, and investor protection. Proposed changes include mandating Independent Directors, enhancing transparency in related party transactions, and strengthening regulatory enforcement.

He also emphasised the role of chartered secretaries in ensuring compliance and corporate accountability. Additionally, recommendations from the High Court were discussed, advocating for company law tribunals, mandatory holding of the AGMs.

The reforms aim to create a business-friendly environment that fosters entrepreneurship, investment and sustainable economic growth.

Salim Ahmed emphasised the outdated nature of the Companies Act 1994. He highlighted key areas that need to be reformed, such as corporate governance, company registration, related party transactions, and investor protection.

He also stressed the need to integrate the Chartered Secretaries Act 2010 into the new Companies Act.

Urging immediate action, he referenced the High Court's 2023 recommendations and called upon the government to enact necessary reforms without further delay.

Md Azizur Rahman, the other discussant of the seminar, emphasised the urgent need for modernising the Companies Act 1994 to align with business needs and global standards with artificial intelligence and so on.

He proposed ten key reforms, including mandatory secretarial audits, enhanced corporate governance, and stronger protections for minority shareholders. He highlighted the importance of digital transformation in regulatory processes, streamlined company registration, and alternative dispute resolution mechanisms.

He also advocated for M&A guidelines upgradation, SME-friendly provisions, and stricter penalties for non-compliance.

He urged policymakers to avoid blindly adopting foreign laws and instead tailor reforms to Bangladesh's unique business environment for sustainable economic growth.  

Md Mizanur Rahman, registrar of RJSC expressed his gratitude to ICSB for organizing such a timely and relevant seminar.

He also mentioned that Company Law reform is necessary because the old age law is creating problems. There were a few steps to make a new law but did not achieve success. However, he expressed hope that the government would take necessary steps to update it.

He also highlighted RJSC's transition towards a more online-based system and encouraged chartered secretaries to actively engage in collaborative initiatives to enhance corporate governance and compliance issues.