Experts suggest Company Law reforms in Bangladesh

The Academy of Law and Policy (ALAP), in collaboration with The Daily Star, in its 7^th webinar, on 7^th May 2021, discussed the adequacy and effectiveness of the company law reforms of 2020 and the need for further reform of the Companies Act, 1994 and rules framed thereunder.

The Hon'ble Minister of Commerce, Mr. Tipu Munshi, MP and Mr. Justice Khurshid Alam Sarkar, Hon'ble Judge (currently presiding over the Company Bench), High Court Division, Supreme Court of Bangladesh graced the webinar as Chief Guest and Special Guest respectively. Barrister Nihad Kabir, Senior Partner, Syed Ishtiaq Ahmed & Associates, President, MCCI and Mr. Md. Mokbul Hossain, Registrar (Additional Secretary) of the Office of the Registrar of Joint Stock Companies and Firm (RJSC) attended as distinguished panellists.

The opening remarks for the session was delivered by Mohammed Golam Sarwar, Assistant Professor of Law, University of Dhaka and In-Charge of Law & Our Rights, The Daily Star. This was followed by a Keynote presentation by Barrister Reshad Imam, Partner, Akthar Imam & Associates, Founder Trustee and Director of Finance, ALAP presenting an in-depth analysis of the 2020 amendments and the Companies Act, identifying gaps and proposing reform. Barrister Mafruha Murphy, Advisor, Bangladesh Competition Commission delivered her address on the draft mergers regulations of Bangladesh. Barrister Rashna Imam Managing Partner, Akthar Imam & Associates, Founder Trustee & Executive Director, ALAP delivered the closing remarks. The webinar was moderated by Barrister Anita Ghazi Rahman, Founder and Managing Partner, the Legal Circle, Founder Trustee & Director of Communications, ALAP.

Mr. Justice Khurshid Alam Sakar suggested various reforms to the Companies Act, 1994. He recommended inclusion of definitions of 'Financial Report' (keeping in mind the Financial Reports Act, 2015), 'Inspector' and 'Official Liquidator' in the definitions section. He suggested reform of the sections on reconstruction and amalgamation of companies, ensuring consistency of such reforms with the Competition Act, 2012. He recommended increasing the number of Company Courts and giving the Company Court jurisdiction to deal with all company-related matters. He suggested enabling the Bangladesh Securities and Exchange Commission to lodge a case upon receiving complaints from small investors in the capital market. He also highlighted the need for judges to play a more proactive role in managing cases, suggesting a legislation like the Indian Legal Services Authority Act to promote this.

Barrister Nihad Kabir emphasised the need for a business-friendly company law regime. She recommended targeted reforms over an overhaul of the Act. She criticised the prohibitively high paid-up capital requirement (BDT 25 Lakhs) of the one-person-company (OPC), which defeats the very reason behind its introduction, namely, to enable sole entrepreneurs to take advantage of the company structure. She urged for the need for more ICT resources for the RJSC and suggested the following to improve its efficiency and transparency: use of electronic signatures, electronic record-keeping, end-to-end use of digital submissions for filing, and online payment of requisite charges.

Mr. Md. Mokbul Hossain, the Registrar called for decrease of the paid-up capital requirement of OPC. He informed that the infrastructure for the use of electronic signatures to approve share transfers at the RJSC has already been acquired and installed and shall be operational soon. He discouraged the practice of lifting from the Indian legislation when reforming our law as that would create more complications than solve in the local context.