Modernisation of companies act the need of the hour

Modernisation of the existing Companies Act 1994 is the need of the hour and can foster broader business confidence in Bangladesh while attracting more foreign direct investment (FDI), according to speakers at a seminar yesterday.

"Substantial amendments to the Company Act have been brought and will be sent to the cabinet division for scrutiny," said Tapan Kanti Ghosh, senior secretary of the Ministry of Commerce.

He was addressing a seminar titled "Reforms of the Companies Act 1994", organised by the Dhaka Chamber of Commerce and Industry (DCCI) at its office auditorium.

"We are trying to make it user-friendly and avoid excess regulations. If the act is excessively restated, business will be hampered," he added.

Regarding the automation of the office of the Registrar of Joint Stock Companies and Firms (RJSC), he said that the relevant software would be put in place by December this year.

"We don't want to make business complicated. At the end of the day, we believe in the philosophy that less interference brings more efficiency," he added.

He further requested businesses to think less about profits and more about the community, society, and well-being of mankind.

Md Abdus Samad Al Azad, registrar (joint Secretary) of the RJSC, said that automation of the RJSC would enhance efficiency, adding that at least seven to eight more of its functions should be streamlined in order to provide better services.

Matters of confidentiality in relation to business accounts and passwords should be maintained by the act, he mentioned.

Moderating the seminar, Md Sameer Sattar, president of DCCI, said a reform of the existing Companies Act 1994 was the most pressing demand of time.

He added that formulation of relevant policies, including in the Companies Act, would be instrumental to fostering a pro-business environment in Bangladesh.

Md Zaved Akhtar, Chairman and Managing Director of Unilever Bangladesh Limited, emphasised on integration of and compliance with the Company Act.

He also underscored the need to implement an Alternative Dispute Resolution (ADR).

Md Shahadat Hossain, council member and former president of the Institute of Chartered Accountants of Bangladesh (ICAB), said that holding timely Annual General Meetings is very important in terms of compliance.

"Winding up procedures should be easier, and the process should be shorter. Independent directors can be introduced for transparency in maximum private companies," he noted.

There is no unique definition of SME in the country, but it is very essential, he added.

Abdur Rahman Khan, additional secretary of the Ministry of Finance, said there should be transparency and accountability in the functioning of companies in line with the Company Act.

"I strongly believe the Company Act is going to be very strong as soon as possible. And every three years, the act needs to be amended," he noted.

He also suggested keeping in mind not to hamper companies due to over-regulation as the private sector is the growth engine of Bangladesh.

Martin Holtmann, International Finance Corporation country director in Bangladesh, also advocated for the modernisation of the Company Act.

He emphasised the need to ensure governance practices through the Companies Act and suggested protecting local and foreign direct investment by law.

In her presentation, Rashna Imam, an advocate of the Supreme Court of Bangladesh, highlighted a few reform proposals, identifying the need for a robust legal framework for mergers and acquisitions to fill the legislative vacuum.

Currently, winding up procedures are a lengthy and expensive process. She recommended to make it much easier.

She also said that independent directors should be mandatory for unlisted public companies for greater transparency.