The Bangladesh Securities and Exchange Commission has drafted revised corporate governance guidelines for the listed companies of the stock exchanges to ensure transparency in the companies’ boards of directors for the interest of investors at the capital market.
The revised guidelines will supersede its earlier guidelines gazetted on August 30, 2012.
The BSEC has sought public opinion on the draft of the revised corporate governance guidelines.
After receiving public opinion, the regulator will finalise the guidelines.
The draft has given importance to the formation of the company’s board and its various responsibility regarding making of policy, code of conduct, financial health and plans, and dissemination of information to their shareholders and regulators.
According to the draft guidelines, the board of a company will lay down a code of conduct for all board members and senior management of the company, which will be posted on the web site of the company.
The code of conduct set by the company must include prudent conduct and behaviour, confidentiality, conflict of interest, compliance with rules and regulations, protection and proper use of company assets or property, prohibition of insider trading and political activity.
The corporate governance guidelines have a provision that the board of directors will have at least five subcommittees including audit, nomination and remuneration, risk management, environment and social responsibility, and executive committee to ensure good governance in the listed companies.
For making policy and implementation of environmental and social responsibilities (ESR), the company has to constitute a committee which will be responsible for making policies on environmental issues in line with the provisions or directives or notifications or requirements as per respective government authority as applicable for the respective industry and service sector.
The guidelines also encourage the profit-making companies to make a fund for corporate social responsibility from its profits.
‘The board of directors shall act on a fully informed basis, in good faith, with due diligence and care for the best interest of the company and shareholders applying high ethical standards,’ according to the draft guidelines.
The draft guidelines also have a provision that at least one member of the board must be a female who will be qualified as a shareholder director or executive director or independent director.
Furthermore, if any company fails to maintain the minimum ratio of independent directors (one-fifth of total directors), the commission will nominate independent director in the company’s board for maintaining of such minimum ratio.
The boards of directors have to receive clearance from the BSEC to appoint the independent director before placing for approval before the shareholders.
The company will have to disclose its dividend policy focusing the rights of ordinary and minority shareholders and equitable rights in dividend on ordinary shares, says the draft of the revised corporate governance guidelines.
If the company declares stock dividend for the year, it has to explain the reason for the declaration and utilisation of such retained amount. It has to be disclosed in the annual report.
‘Any litigation, conviction, violation of securities laws, loan defaulting by the company, its directors and senior management shall be disclosed with status,’ it said.
While disclosing quarterly statements, the company will provide reasons for significant deviation from any parameter between the quarterly periods.
The regulator has also set that the company must have an official web site linked with the web site of the stock exchanges. The issuer will keep the web site functional from the date of listing.
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