Nomination body's recommendation must for independent director appointment: BSEC
The Bangladesh Securities and Exchange Commission (BSEC) issued a notification in this regard on Tuesday, with the new directive taking effect from 16 October.
From now on, all listed companies will be required to seek prior approval from the securities regulator before appointing independent directors to their boards, following the recommendation of the Nomination and Remuneration Committee (NRC) of the company.
The Bangladesh Securities and Exchange Commission (BSEC) issued a notification in this regard on Tuesday, with the new directive taking effect from 16 October.
According to the notification, a minimum of two or one-fifth of the directors on the company's board must be independent, in compliance with all other applicable laws.
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Individuals identified as defaulters in the latest Credit Information Bureau (CIB) report of Bangladesh Bank, owing to nonpayment of loans, advances, or obligations to a bank or financial institution, will be ineligible for the role of an independent director.
In response to queries, a BSEC official emphasised that the commission will only grant approval for the appointment of independent directors upon the recommendation of the NRC committee of the company.
"The board, after obtaining approval from general shareholders, will have the authority to appoint independent directors."
Furthermore, current government officials seeking the position of independent directors must obtain office clearance, the official further said.
The official also said that the chief financial officer (CFO) or company secretary of any listed company may assume the same position in another listed or non-listed company within the same group, aiming for cost reduction or leveraging technical expertise. However, this move requires prior approval from the BSEC.
Also, the remuneration and perks of the CFO or company secretary will be distributed proportionately among the appointing companies, as stipulated in the notification. This clause has been introduced to facilitate cost reduction and harness the technical expertise within the group while ensuring equitable sharing of remuneration, he added.
