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Chapter 1

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Introduction

CSR is concerned with treating the stakeholders of the firm ethically or in a responsible

manner. Ethically or responsible means treating stakeholders in a manner deemed

acceptable in ciili!ed societies. Social incl"des economic responsibility. Stakeholders

e#ist both within a firm and o"tside. $he nat"ral enironment is a stakeholder. $he wideraim of social responsibility is to create higher and higher standards of liing% while

presering the profitability of the corporation% for peoples both within and o"tside the

corporation.

Objective of the study

&rinciple ob'ectie of this st"dy is to identify and facilitate the initiaties to instit"tionali!e

C( in )angladesh. *ith this ob'ectie% this st"dy paper is str"ct"red as follows. Section + ofthis st"dy gies an oeriew of corporate goernance% as that determines the scope of the

iss"es. +t briefly describes the growth of international practices to instit"tionali!e C(. Section++ e#amines the c"rrent state of C( practices in )angladesh% +ndia% Sri ,anka% &akistan%

$hailand and -ong ong. /rom the o"tset% it has been obsered that )angladesh lagged

behind its neighbors and important trading partners with regard to C( standards and practice.

0 comparatie analysis proides regional e#amples of initiaties that co"ld be applied in)angladesh to improe the sit"ation. Section +++ briefly assesses the contemporary C( iss"es

to proide an oeriew of the weaknesses and reg"latory efforts at implementing andenforcing good C( str"ct"re in )angladesh. 0fter analy!ing the )angladesh landscape% a

brief policy o"tline has been form"lated in the section +. Section leads to e#amine the

modalities of g"idelines to implement good C( practices in )angladesh based on

sectorspecific

approach. $his policy paper identifies fo"r categories of sectors SEs% /+s% &SEsand 4(s.5 Section + identifies the forces that act as barrier for C(. +n section ++% thepaper concl"des by identifying some important policy recommendations and research iss"es

that re6"ire f"rther st"dy. +n the concl"ding section +++% possible role of 7CC+ ininstit"tionali!ing C( practices in )angladesh has been s"ggested.

Limitations of the Study

$his st"dy has certain limitations that need to be taken into acco"nt when considering the

recommendations and its implications. Some of these limitations can be seen as fr"itf"laen"es for f"t"re research "nder the same theme. $his st"dy has foc"sed on a phenomenon

that is a ery e#tensie and ma'or one% i.e. corporate goernance. +n this paper% assessment ofthis comple# phenomenon has been st"died from a rather narrow empirical perspectie.

7"ring this st"dy% it has been fo"nd that not m"ch of research has been cond"cted on the C(

landscape in )angladesh. +ndeed% there are ample of st"dies aailable on the methods andprinciples of C( from )angladeshs perspecties b"t there is a s"bstantial lack of sectorspecific empirical and real8 life st"die s. $here is an absence of credible data and releant

information on the real C( concerns in )angladesh. (ien the time limitation%comprehensie access to information was a diffic"lt task. 0 systemic and periodic s"rey of

C( practices in )angladesh has th"s become an important task for the organi!ations like7CC+% )E+% and SEC.

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Chapter- I

1. Understanding Corporate Governance

$he word corporate goernance has become a b"!!word d"e to the 0sian financial crises in1::;8:Corporate goernance therefore calls for three factors

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1. $ransparency in decision8making?2. 0cco"ntability which follows from transparency beca"se responsibilities co"ld be

fi#ed easily for actions taken or not taken% and?3. $he acco"ntability is for the safeg"arding the interests of the stakeholders and the

inestors in the organi!ation.

er the last few years different co"ntry gro"ps hae been establishing their own common

set of benchmarks for corporate goernances% for instance% the EC7 Co"ncil called "ponthe EC7 to deelop a set of C( standards and g"idelines and p"blished in @ay 1::: a

A need for corporate governance is urgent:Above scenarios suggest that for effective CG in Bangladesh; it requires a clearunderstanding of the respective roles of the board and of senior management and theirrelationships with others in the corporate structure. Removing these weaknessesrequires appropriate reform and implementation thereof are highly necessary inBangladesh.! "ollowing policy is intended to clarify these relationships and

responsibilities and to promote effective CG#The Board of Directors:$he Board of %irectors has the important role of overseeing management performanceon behalf of stockholders. $he board e&ercises its oversight responsibilities and authorityby#

%elegating authority and responsibility for managing the everyday affairs of the

corporation to the C'( and senior management while monitoring and overseeingmanagement)s e&ecution of these responsibilities and performance;

*lanning for management succession;

+nderstanding, reviewing, and monitoring implementation of the corporation)s

strategic plans;

+nderstanding and reviewing annual operating plans and budgets;

$aking reasonable steps, through its audit committee, to become comfortablethat the corporation)s financial statements and other related disclosures fairly andaccurately present the corporation)s financial condition and results of operations;

Reviewing internal controls;

-electing, overseeing and compensating through its compensation committee/,

a well qualified and ethical chief e&ecutive officer who, with senior management,runs the Corporation on a daily basis;

Reviewing and approving significant corporate actions;

$hrough its nominating0CG committee, nominating directors and committee

members and overseeing CG; and

Reviewing and implementing any other actions which, in the discretion of the

board or its committees, are necessary to promote the interests of the

shareholders and effective CG.%irectors should bring a range of e&perience and knowledge to the co rporation andshould not have any interests which, in the reasonable discretion of the board, couldreasonably be e&pected to interfere with the %irector)s obligation to effectively representthe interests of the shareholders or effectively govern the corporation.12n performing its oversight function, the board is entitled to reasonably rely on the advice,reports, and opinions of management, counsel, auditors and e&pert advisors. 2n this3; *orld )ank. 2>>3.eport on the observance of standards and codes !O"#$ %angladesh &ccounting and

&uditing. $he *orld )ank Report. www.worldbank.orgAifaArosc aa bgd.pdf

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3< 0hmed% @amta! ddin% D"s"f% @"hammad 0b". 2>>5. Corporate (oernance )angladesh &erspectie. 'he#ost and (anagement. ol. 33. 4o. B. 4oember87ecember 2>>5. pp. 1

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Corporate Governance Practice for Sector-specific Firms:Above scenario stresses the need for a comprehensive framework for implementation ofCG in Bangladesh. $he following graphic describes functionality of CG at the nationallevel by depicting the different entities, or players, that occupy the social and economiclandscape.

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Corporate Governance in the Financial nstitutions !Fs":$he need for a competent financial sector is important to stimulate and supporteconomic growth through efficient resource allocation. Good CG practices are essentialto the effectiveness, competitiveness and safety and soundness of financial institutions.Streamlining the Guidelines with the Code of Corporate Governance43# A Code of CGhas been published by B'2 can be streamlined to reduce duplication and resources to

comply with CG requirements for the "2s.Protection of depositors: Given the special nature of banking institutions, a broad view ofCG where regulation of banking activities is required to protect depositors. 2n developedeconomies, protection of depositors in a deregulated environment is typically providedby a system of prudential regulation, but in developing economies such protection isundermined by the lack of well3trained supervisors, inadequate disclosure requirements,the cost of raising bank capital and the presence of distributional cartels. 66Improvements in prudential regulation: 7iberali5ation policies need to be gradual, andshould be dependent upon improvements in prudential regulation. Bangladesh needs toe&pend resources enhancing the quality of their financial reporting systems, as well asthe quantity and quality of bank supervisors.68 Given that bank capital plays such animportant role in prudential regulatory systems, it is necessary to improve investorprotection laws, increase financial disclosure and impose fiduciary duties upon bankdirectors so that banks can raise the equity capital required for regulatory purposes. Afurther reason as to why this policy needs implemented is the growing recognition thatthe CG of banks has an important role to play in assisting supervisory institutions toperform their tasks, allowing supervisors to have a working relationship with bankmanagement, rather than adversarial one.

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common set of g"iding principles on corporate goernance for all EC7 member co"ntries.$o instit"tionali!e C( practice% EC7 has introd"ced following principles are

Rights of

shareholders

1. Recognition of basic shareholder rights

2. Shareholders hae the right to participate in decisions concerning

f"ndamental corporate changes3. oting rights of shareholders

9. 7isclos"re of disproportionate oting rights of certain shareholdersto obtain a degree of control

5. @arkets for corporate control sho"ld be allowed to f"nctionB. Shareholders sho"ld consider the costs and benefits of e#ercising

their oting rightsEuita!le

treatment of

shareholders

1. 0ll shareholders of the same class sho"ld be treated e6"ally

2. +nsider trading and ab"sie self8dealing sho"ld be prohibited3. )oard members and managers sho"ld disclose material interests

Role of

sta"eholders

1. 0ss"re that rights of stakeholders are protected by law

2. Stakeholders sho"ld hae the opport"nity to obtain effectienessredress for iolation of their rights

3. &ermit performance8enhancing mechanisms for stakeholderparticipation

9. Stakeholders sho"ld hae access to releant information in thecorporate goernance process

#isclosure and

transparency

1. Scope of material information to be disclosed2. +nformation sho"ld be prepared in accordance with high

acco"nting standards

3. 0nn"al a"dit sho"ld be cond"cted by an independent a"ditor

9. /air% timely and cost8effectie means of disseminating informationResponsi!ilitie

s of the !oard

1. )oard members sho"ld act on the best interest of the company

with d"e diligence and care2. $he board sho"ld treat all shareholders fairly

3. $he board sho"ld ens"re compliance with the law and takeacco"nt the interest of stakeholders

9. 7efinition of key f"nctions of the board5. $he board sho"ld e#ercise ob'ectie '"dgment independent

from managementB. )oard members sho"ld hae access to acc"rate% releant

and timely information

"ource* EC7 &rinciples of Corporate (oernance 1:::F.

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-oweer% members of 0&EC considered that the EC7 g"idelines hae the problem of onesi!e cannot fit all and some may be applicable to some% b"t not all. 0&EC co"ntries therefore

called "pon the &acific Economic Cooperation Co"ncil &ECCF to deelop a set of g"idelineswhich were in line with the EC7 principles. $he 0&EC g"idelines can be considered as a

middle step for emerging markets to achiee a better practice of good corporate goernance.

$his set of g"idelines forms the standard for indiid"al (oernments% reg"latory bodies and

professional bodies to deelop their agendas and with a iew to setting "p acceptable codesof practice. 1111 Che"ng% Stephen% D,.% and% Chan% )ob%D. 2>>9. Corporate (oernance in 0sia. &sia-+acific ,evelopment ournal. ol. 11. 4o. 2.

7ecember 2>>9.

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Chapter-II

Corporate Governance in Some $sian Countries

0s C( is the prod"ct of a comple# set of c"lt"ral% economic% and social iss"es and that the

goernance str"ct"res of corporations differ from co"ntry to co"ntry% it is appropriate that C(

g"idelines and practice codes be designed and adopted by each constit"ent co"ntry. +n the

end% C( sho"ld prod"ce an enironment within each co"ntry that corporations identify withand can adhere to in their decision8making processes. +n 0sian co"ntries% the interest in

corporate goernance has been sporadic b"t has stepped "p in the late 1::>s following the1::;81::< crises. S"bse6"ent to the o"tbreak of the 0sian c"r rency crisis in 1::;% the flow

of capital from foreign inestors s"ddenly dried "p% leading to intense li6"idity problems in

local capital markets and a real impact on the economy d"e to ins"fficient capital and

inestor apprehensions. 120 report prod"ced by )angladesh Enterprise +nstit"te 2>>9F has showed that% in +ndia there

was the sec"rities scam inoling a large n"mber of banksF leading to the stock market crashin 1::2% followed by the consolidation of e6"ity ownership by m"ltinational companies listed

on the stock markets% and then by the stock market b"bble in 1::3 and crash of thedisappearing companies in 1::9% which deastated the primary market "ntil the end of the

cent"ry. $hese led to the formation by the Confederation of +ndian +nd"stry of the )a'a'

Committee on corporate goernance in late 1::5% well before the East 0sian financialcrisis. 13+n Sri ,anka% the concern for C( originated in the n"mero"s company fail"res% especially

finance companies% in the late 1:s and early 1::>s% which ca"sed inestors to lose faith inthe reg"latory and semi8reg"latory frameworks% as well as the standards of financial

reporting. 0ccordingly% the +nstit"te of Chartered 0cco"ntants of Sri ,anka set "p a task

force in 1::2 abo"t the same time as the Cadb"ry committee in F to enforce Sri ,ankan

acco"nting standards% and then e#tended this initiatie in 1::B again before the East 0sianfinancial crisisF to set "p a committee to make recommendations on the financial aspects of

corporate goernance.19&akistan commenced its C( programmes later% following the Sec"rities and E#change

Commission of &akistan 0ct in 1::;% the commencement of operations by the Commission in

1:::% and the introd"ction of the national Code for Corporate (oernance in early 2>>2. )"tdespite the later start% it is eident that the initiaties in &akistan were drien by home8grown

realities% in partic"lar the recognition that the traditional str"ct"res and operations of the

capital market% especially lending from state8owned banks% co"ld no longer s"stain thefinancing needed for growth% hence there is a critical need for reform of the capital markets in

order to mobili!e domestic saings and foreign portfolio inestment. +n fact% despite the laterstart with formal national policies% it co"ld be said that &akistan foc"sed on corporate

goernance earlier than many co"ntries in the world% not '"st the region G the &akistan

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co"ntry report emphasi!es the importance of the 1:>9.& #omparative &nalysis of #orporate )overnance in "outh &sia* #harting a oadmap for

%angladesh. )angladesh Enterprise +nstit"te.19bid.15bid.

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+n -ong ong% since 1::3 the Stock E#change of -ong ong SE-F has incorporated the

Code of )est &ractices as an appendi# to the E#change ,isting R"les with an intention toincrease the acco"ntability of the directors to shareholders and to improe shareholdersH

access to information. -oweer% the Code is a set of ol"ntary g"idelines for boards ofdirectors. $h"s% all p"blicly listed companies in the SE- are only re6"ired to e#plain in

their interim and ann"al reports whether or not they comply with the Code and gie reasons

for non8compliance. +n 1::9% the SE- ,is ting R"les re6"ired listed companies to appoint

atleast two independent non8e#ec"tie directors on the board in an attempt to improe

corporate goernance. )esides% in 7ecember 1::5 and in Ian"ary 1::;% the -ong ongSociety of 0cco"ntants in its reports of the working gro"p on corporate goernance made a

recommend that as a self8 reg"latory good practice% that listed companies sho"ld try not tohae members of the same family making "p more than half of the members of the boards. +t

beliees that this meas"re will help to increase the effectieness of the independent directors

and tackle the domination of the board in the -ong ong companies more effectiely.

/"rther% in 1:::% the SE- has established (E@ (rowth Enterprise @arket or -ong ongHssecond boardF to enco"rage listings by smaller companies with short track records. 1B $he

(E@ ,isting R"les are less strict than the main board. /or e#ample% companies do not needto show three years of clear profit. -oweer% like listed companies in the main board% the

companies in (E@ m"st hae at least two independent directors. 1;+n $hailand% the Stock E#change of $hailand SE$F first p"blished HCode of )est &ractice for

7irectors of ,isted CompaniesH in 7ecember 1::;. -oweer% most of the listed companies in$hailand are controlled by ma'ority shareholders. $he ma'ority shareholders can appoint

board members witho"t approal of other minority shareholders thro"gh the ma'ority ote.$herefore% the board of directors is often neither independent from management nor

acco"ntable to small shareholders. $o tackle this problem% the SE$ re6"ires that there m"stbe at least two independent non8e#ec"tie directors on the board in order to monitor the

management of the company. 0n a"dit committee in $hailand is comp"lsory. +n Ian"ary

1::>>. Corporate (oernance in -ong ong. 'he %usiness 1nvironment in 2ong 3ong.

1< Che"ng% Stephen% D,.% and% Chan% )ob%D. 2>>9. Corporate (oernance in 0sia. &sia-+acific ,evelopment ournal. ol. 11. 4o. 2.7ecember 2>>9.

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Chapter-III

Issues in Corporate Governance in %angladesh

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@ost of the companies in )angladesh depend on the banks as their ma'or so"rce of financing.Capital market in )angladesh is still at an emerging stage with market capitali!ation

amo"nting to only B.5J of (7& with low inestor confidence on corporate goernance andfinancial disclos"re practices in many companies listed in the stock e#changes.1: $he

neighboring co"ntries are well ahead is 8K8is )angladesh in terms of depth of capital

market. /or e#ample% in +ndia% &akistan and Sri ,anka% the market capitali!ation is 5BJ% 3>J

and 1>5F arg"e that there has been fail"re in most of theelements of C(. 2> Some of these indiid"al elements can be portrayed with a iew to seeing

their weaknesses in implementing C(#orporate ownership structures* 0ll corporate goernance systems reole aro"nd fo"r core

principles /airness% acco"ntability% responsibility and transparency. $he specific challengesof "pholding these principles depend on the ownership str"ct"re of the corporate sector.

-oweer% in )angladesh% general practice is that the corporate str"ct"re is dominated byfamily members. S"ch practice hinders the leel of fairness% acco"ntability and

transparency. 211: 7"% -"a. 2>>B.oundtable ,iscussion on #orporate )overnance )uidelines of "1# and its implementation practices in %angladesh.

0sian 7eelopment )ank. 23 September 2>>B.2> 0hmed% @amta! ddin% and% D"s"f% @"hammad 0b". 2>>5. Corporate (oernance )angladesh &erspectie. 'he #ost and (anagement.ol. 33. 4o. B. 4oember87ecember 2>>5. pp. 1>>. +t is also reported that een when the company is listed on the stock e#change% few shares are

aailable for trading% as ma'ority remain held by the original sponsors. $he original sponsors often b"y additional shares from the market toraise their holdings to as high as ;> percent or percent tho"gh shares are floated in the primary market on 5>5> basis. Chowdh"ry% 00

@ahboob ddin. 2>>B. Role of corporate goernance for the deelopment of )angladesh capital market. Editorial &age. $he 4ew 4ation.1; @ay 2>>B. httpAAnation.ittefa6.comAartmanAp"blishAarticleL2;:2:.shtml

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nade4uate %an0ruptcy 5aws* )ankr"ptcy laws and processes are inade6"ate in terms of

proisions and not strong in terms of enforcement in )angladesh. 4o co"ntry can hae good

C( standards with poor bankr"ptcy laws and processes. )esides% inefficient foreclos"res andsec"riti!ation processes hae compo"nded the problems in )angladesh. 22

5ac0 of initiatives to drive for #) from the nternational nvestor #ommunity* @ostcompanies in )angladesh hae a pessimist approach in attracting foreign inestment. 0s a

res"lt% there is a lack of drie from the international inestor comm"nity for better corporategoernance. ,eel of penetration of )angladeshi companies in the foreign stock e#changes is

also ery low. ,ately tho"gh% )EM+@C &harmace"tical Company has been gien with the

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aspect is that capital market in )angladesh does not react significantly to corporateperformance in terms of higher stock al"ation for acc"rate disclos"re and poor stock price

for fail"re of acc"rate and f"ll disclos"re. $here is little incentie in becoming a p"bliccompany and listing on the stock e#change in )angladesh. Companies with good rep"tations

can get bank financing relatiely easily than thro"gh share iss"e. @oreoer% there are no

bonds% fi#ed income or debt instr"ments in the capital market. $his means there are no

press"re gro"ps31 for enforcing C( principles.32 nlike the priate m"t"al f"nds% thestateowned

inestment company G +nestment Corporation of )angladesh +C)F G has not% "ntilrecently% been re6"ired to p"blish the net asset al"e of its m"t"al f"nds or s"bmit

performance reports to the SEC.33)eneral (eeting "cenario* (eneral meetings of a company% in partic"lar the 0nn"al (eneral

@eeting 0(@F are the primary platform where shareholders can raise their concerns andmake their infl"ence felt oer the management towards attaining good goernance. 0ltho"gh

a good n"mber of proisions in the 0ct proided s"fficient leerage to allow shareholders aoice in companies% most companies in )angladesh% are closely held. Small gro"ps of

shareholders own or control the ma'ority of shares% and by "sing that ma'ority% control the

decision making processes of the companies. 39 +n n"mber of st"dies it has been fo"nd thatthere is a negatie correlation e#ists between good C( and defa"lting in holding ann"al

general meetings in d"e time.

%oard #ommittees* )oard committees a"dit% rem"neration and nominationF are of criticalimportance in C(. 0"dit Committee is now being treated as a principal player in ens"ring

good C( and reb"ilding p"blic confidence in financial reporting. $he role of 0"ditCommittee% among others are monitoring integrity of financial statements% reiewing internal

financial controls% recommending appointment of e#ternal a"ditor and reiewing a"ditorindependence and ob'ectiity and a"dit effectieness.35 $he Rem"neration Committees

responsibilities incl"de establishment and reiew of the @anaging 7irectors rem"nerationpackage and senior management salary packages. Rem"neration Commit tee assists the

)oardto attract% retain and motiate high caliber e#ec"ties and director thro"gh proposing

rem"neration that commens"rate to their performance. 7espite significant importance of the

board committees as describedF% few boards e#cept for banksF has 0"dit Committees and

almost none hae nomination or Rem"neration Committees in )angladesh.3B

'he %oards of ,irectors* $he Companies 0ct% 1::9 proides for many stringent r"les inrespect of any negligence% defa"lt% breach of d"ty or tr"st on the part of director% manager or

officer of a company. -oweer% e#perience s"ggests that these are more honored in thebreach than obserance. +n an oerwhelming ma'ority of the non8bank listed companies% the

board is heaily dominated by sponsor shareholders who generally belong to a single family.$he boards are actiely inoled in management. @ost independent directors represent

c"rrent or former goernment officials or b"rea"crats. $hey are appointed directors to assistcompany in getting licenses or as payback for preio"s faors. +n the conte#t of )angladesh%

independent directors do not act as an adocate for minority shareholders or as a so"rce ofinnoatie ideas.3;5ac0 of "hareholder &ctivism* Shareholder rights are today recogni!ed in co"ntries across theglobe as releant to efforts for improing and strengthening C(. $he aerage non8controlling

or minority shareholders do not possess significant leel of ed"cation% "nderstanding and

sophistication re6"ired to e#ert press"re on a company to change behaior. $he n"mber of

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shareholders with s"fficient knowledge and skills to "nderstand company operations and tohold management and the board of directors acco"ntable is ery low. @oreoer% general

shareholders do not pay attention on iss"es of performance% b"siness strategy% f"t"re b"sinessplans% disclos"res and processes that co"ld gie them a greater oice in the policy decisions

of a company. +n fact% there is ery little awareness abo"t shareholders rights and

responsibilities. Shareholders actiism is still an ill"sion in )angladesh.3>5. *hy shareholders actiism is still an ill"sion in )angladesh. 'he :inancial 1xpress6 7haka. >1 0"g"st 2>>5.3: @orrison% I. 2>>9. ,egislating for (ood Corporate (oernance 7o *e E#pect $oo @"chN 'he ournal of #orporate #itizenship.0"t"mn. +ss"e 15. &p. 1218133.9> 0hmed% @amta! ddin% D"s"f% @"hammad 0b". 2>>5. Corporate (oernance )angladesh &erspectie. 'he #ost and (anagement. ol.33. 4o. B. 4oember87ecember 2>>5. pp. 1

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7isclos"re of information sho"ld be the pre8re6"isite for the shareholders or for the

capital market to act against errant managements. $he reg"lator can enhance the

scope% fre6"ency% 6"ality and reliability of the information that is disclosed.

Reg"latory meas"res that promote an efficient market for corporate control wo"ld

create an effectie threat to some classes of dominant shareholders as disc"ssed

earlier. Reforms in bankr"ptc y and related laws wo"ld bring the disciplining power of the

debtholders to bear "pon recalcitrant managements.

,arge blocks of shares in corporate )angladesh are held by p"blic sector financial

instit"tions who hae proed to be passie spectators. $hese shareholdings co"ld be

transferred to other inestors who co"ld e#ercise more effectie discipline on thecompany managements. 0lternatiely% these instit"tions co"ld be restr"ct"red and

priati!ed to make them more igilant g"ardians of the wealth that they control.99 0hmed% @amta! ddin% D"s"f% @"hammad 0b". 2>>5. Corporate (oernance )angladesh &erspectie. 'he #ost and (anagement. ol.33. 4o. B. 4oember87ecember 2>>5. pp. 1

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Clarifying their mandates and respecting their independence

Separating the role of Chairman and CE and giing boards the power to appoint

CEs

Systematically monitoring the boards performance

mprove transparency by

Strengthening internal controls

Carrying o"t independent% e#ternal a"dits based on international standards

7isclosing any financial assistance from the state

&rod"cing aggregate performance reports95 *orld )ank. 2>>B.2eld by the

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1conomics and 5aw. *orking &aper 4o. 951. -arard @assach"setts.53bid.59 /or closer e#position see han% Safi Rahman. 2>>B.9)O )over nance +rinciples. )angladesh Enterprise +nstit"te. www.bei 8bd.org

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nformation is sincere6 reliable and available* Each person receies all the information

appropriate for his or her position% in an appropriate form. $he 6"ality of the information is

checked% and its circ"lation is adapted to the "se that m"st be made of it.

'he 9)O?s financial management is impartial. $he notion of the 4(s impartialmanagement m"st be s"b'ect to internal disc"ssion% beca"se it can be interpreted in different

ways. "ynergie @ualitA defines it as follows $he people who manage and administer the4(% by themseles or by people who interene for them% hae no direct or indirect

adantage from the financial res"lts of the operations.55 $he balance between administratieand organi!ational costs and the reso"rces allocated to the operational pro'ects is to be

e#amined reg"larly% o"t of concern for efficiency. (ood goernance% for e#ample% has a cost%b"t it contrib"tes to improing the interentions to the beneficiarys adantage. $he b"ilding

"p of reseres% inestments% loans% g"arantees and deposits is goerned by the re6"ired r"lesof e#actness and caref"lness.

'he representative bodies* $he representatie bodies of the internal stakeholders can be

cons"lted before a significant e#pendit"re is made p"rchase of b"ildings% for e#ampleF. $hemembers of a )oard of $r"stees of an 4( m"st be ol"nteers.55 ("ide Synergie Q"alit. 2>>9.+roposal for @uality 2umanitarian &ctions. http*BBCD.EF.=F.CGBsearch;4Hcache*03rFwh2ir*www.politi0a.lvBindex.phpIE:fIE,ECJ9)OJgovernanceJprincipleKhlHbnKctHcln0KcdHEKglHbdKclientHfirefox-a

17

Chapter-&I

)orces $gainst and )or Corporate Governance

Resistance comes from ested interests oligopolists% relationship8based inestorsF who wantsto retain stat"s 6"o. 5B +n )angladesh there is a tendency to make large inestments in

highlycapitalintensie enterprises with an eye to price incenties thro"gh relationship. $his leads

to wastage of scarce capital reso"rces. @any firms now need foreign capital to finance

e#penses that again can lead to demand for better C(. &olitical t"rmoil and ested interests

are the key factors to hinder the process of good C( framework in )angladesh. $h"s% policymakers hae to foc"s not only on reg"lar A acc"rate financial acco"nts transparency% b"t

they hae to address iss"es like whether a large b"siness gro"p sho"ld also be allowed to owna bank. +n brief% following are the iss"es that hinder the enforcement of C( in )angladesh5;$he )oards of 7irectors

+nade6"ate e#amples of role in form"lating ision and strategy

,ack of independent representation

,ack of power held by CE

0bsence of acco"ntability str"ct"re of management to the boardAshareholders

*hen the )oard Chairman is also a Cabinet @inister there may be a tendency to treat

the SE as a (oernment departmentCommercial foc"s

&roced"res are set and not easy to deiate from

&rice controls are not market drien

Sometimes face "nfair competition from the priate sector

0cco"ntability and @onitoring

0ccess to acc"rate information is diffic"lt

0mple of eidence of management coll"sion with trade "nions

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Control 0"dits of +nternal 0"dit% (oernment Commercial 0"dit% and E#ternal 0"dit

Commercial 0"dits res"lts are do"btf"l and not transparent

Employee incenties

4o gen"ine incentie for better performance

Q"ality people not attracted to SEs

&ress"re from trade "nions5B 0f!al% @"een. 2>>;.ole and esponsibilities of ndependent ,irectors. ey note paper. Ro"ndtable disc"ssion on the Role andResponsibilities of +ndependent 7irectors. )angladesh Enterprise +nstit"te. @arch 1< 2>>;.

5; Rahman% ,opa. 2>>B. #orporate )overnance for "O1s* 'he %angladesh #ontext . )angladesh Enterprise +nstit"te 7haka.

18

Chapter-&II

Implementation of Corporate Governance in %angladesh

+n an earlier section% this st"dy has reiewed the problems and e#isting C( practices in

)angladesh. /indings are presented as a matri# in the following bo# which also highlights the

scopes for policy interention in this regard2atri* an overvie+ of Corporate Governance 2echanisms in %angladesh/3

Corporate

Governance

2echanism

Importance in %angladesh Scope for policy intervention

,arge blockholders

,ikely to be an important goernance

mechanism in )angladeshStrengthen r"les protecting minority

shareholders@arket for

Corporate

Control

@arket does not e#ist in )angladesh.

nlikely to be important in aconcentrated ownership str"ct"re.Can still take place thro"gh debt

contracts% b"t re6"ires ade6"atebankr"ptcy laws

Strengthen the bankr"ptcy laws

&ro#y otes nlikely to be important in a

concentrated ownership str"ct"re0(@s needs to be effectie and

SEC may oersee the o"tcomes of0(@s

)oard actiity 4on8transparent recr"iting system of

the board members are widely

practiced% and lack of separation ofownership and management

+mplement Code of C( andintrod"ce g"idelines for )est

&ractices% training of directors%transparent recr"itment of the )oard

members

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E#ec"tiecompensation

,ess important when owner can hireand fire and has priate benefits

SEC or )angladesh )ank can

introd"ce codes for E#ec"tie

compensation% transparentcompensation policy

)ankmonitoring

and reg"latoryenironment

Critically important for )angladesh Strengthen banking reg"lation andinstit"tions? enco"rage

acc"m"la tion of information oncredit histories% deelop s"pporting

credit b"rea"s and other

information intermediariesEmployee

monitoring

&otentially ery important for S@Eswith highly skilled h"man capital

threat of leaing is ery high&roper incentie practice on h"man

capital sho"ld be instit"tionali!ed,itigation 7epends on 6"ality of general

enforcement enironment% howeer itsometimes work in )angladesh

/acilitate comm"nications amongthe shareholders

@edia andsocial control

&otentially important in )angladesh

as competition and independence of

media is risingEnco"rage competition and

diersification of media% actiep"blic campaigns can empower

p"blicRep"tation +mportant at general enforcement is Enco"rage competition in factor5< 0"thors compilation

19

and selfenforcement

relatiely weak markets by enabling competition

policy

0rbitrationand a"ditors

&otentially important% often the originof p"blic law% b"t the enforcement is

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a problem in )angladesh% a"dits areoften ab"sed

/acilitate laws for the third partymechanisms% 0"diting processes

needs to be strengthened

Competition 7etermines scope for potential

mistreatment of factors of prod"ctionincl"ding financing

&roper competition policy can beintrod"ced

$o implement reforms in C(% based on the aboe matri#% with a iew to hae good corporategoernance in )angladesh% the following proposalsArecommendations can be p"t forward

Short-term

Code of Corporate Governance and %est (ractice Recommendations*

$he c"rrent stat"s is that many 0sian co"ntries hae adopted goernance g"idelines andcodes of best practice. ,ike these co"ntries% )angladesh needs to hae a OCode of Corporate

(oernance and )est &ractice RecommendationsP which can be either r"le based or

principles based. )angladesh Enterprise +nstit"te )E+F% Corporate (oernance Committee of+C0)% and SEC hae deeloped separate Codes for Corporate (oernance for )angladesh.

$he (oernment m"st take initiaties to make these implemented by making necessary

changes in the Companies 0ct.Implement Competition (olicy*

0n effectie competition policy fosters a fle#ible% dynamic% and competitie priate sectorthat leads to s"stained and widely shared economic deelopment. )angladesh needs to

form"late a Competition &olicy which will ens"re a c"lt"re of good corporate goernance tothrie. Competition policy helps bring abo"t efficiency% red"ce price distortions% lower the

risk of poor inestment decisions% promote greater acco"ntability and transparency inb"siness decisions% and lead to better corporate goernance.5:

Medium-term

4he legal and regulatory frame+or" should ensure that non-controlling shareholders or

minority shareholders are protected from eploitation !y insiders and controlling or

sponsor shareholders*

(oernment sho"ld introd"ce meas"res% or enhance e#isting meas"res% to proide

noncontrolling

shareholders with ade6"ate protection from e#ploitation by controllingshareholders.

$hese meas"res may incl"de% among other things iF strengthening disclos"re re6"irementspartic"larly of self8dealingArelated8party transactions and insider tradingF?B> iiF ens"ring that

reg"lators hae the capacity to monitor companies for compliance with these re6"irementsand to impose s"bstantial sanctions for wrongdoing? iiiF clarifying and strengthening the

fid"ciary d"ty of directors to act in the interest of the company and all of its shareholders?iF

prohibiting indemnification of directors by companies for breaches of fid"ciary d"ty? and Fproiding shareholders who s"ffer financial losses with priate and collectie rights of action

against controlling shareholders and directors.5: rgani!ations like )angladesh Enterprise +nstit"te hae already "ndertaken comprehensie pro'ect on Competition &olicy.B> 7isclos"re sho"ld be in line with +0SsA+/RSs.

20

Improve the capacity of the %oards of directors*

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$he directors m"st improe their participation in strategic planning% monitoring of internalcontrol systems and independent reiew of transactions inoling managers% controlling

shareholders and other insiders. $here is a need for director training% ol"ntary codes ofcond"ct% e#pectations for professional behaior and directors reso"rces and a"thority vis-

vis

management. 0lso it is re6"ired to red"ce or eliminate loopholes by tightening standards

for director OindependenceP% by making OshadowP directors liable for their actions% byincreasing sanctions for iolations of d"ties of loyalty and care and by adocating delineation

of a core set of related8party transactions s"ch as company loans to directors and officersFthat sho"ld be prohibited o"tright. +t is important to facilitate mechanisms to ade6"ately

empower the shareholders to seek redress for iolations of their rights and to ens"re directoracco"ntability. $he most ital thing that can ens"re good C( is high standards of ethical and

personal behaior. $his can only be ens"red if the al"e system of society imposes this ontheir people as the norm in eery aspect of life. (ood C( m"st become an "nshakable social

and moral imperatie.B1

Long-term

Strengthen the Capacity of the Government to 2onitor and Enforce the

Implementation of Corporate Governance*$he Sec"rities and E#change Commission SECF of )angladesh need to be strengthened so

that it can deise and enforce a code for good C(. $he Companies 0ct has to be amended

and "pdated to hae consistency with )angladesh 0cco"nting Standards )0SF% SECre6"irements and the )ank Companies 0ct. +ndependent 0"dit Committee sho"ld be made

comp"lsory for all listed companies. Strict implementation of acco"nting and a"ditingstandards are ery important. 0s the lead reg"latory body oerseeing corporate acco"nting

and reporting% the SEC has a critical role to ens"re that p"blic co mpany boards are properlystr"ct"red and organi!ed and hae the reso"rces to accomplish the ob'ecties of adding al"e

to shareholders% minimi!e risk of key shareholders and hold management responsible forcorporate res"lts. R"thless monitoring of compliance and seere p"nishment of transgressors

can ens"re good C(. )"t )angladesh has to wait a lot to ens"re enforcement of anycorrectie meas"res properly. +f the policymakers implement the recommendations s"ggested

aboe% "ndo"btedly a good C( enironment will preail in )angladesh. B2Strengthen the Capacity of (u!lic5(rivate partnership*

&"blic8 and priate 8sector instit"tions sho"ld contin"e to raise awareness among companies%

directors% shareholders and other interested parties of the al"e of good C(. )angladesh has

made little progress in raising awareness of the al"e of good C(. $o 0chieing the desiredC( framework in )angladesh% re6"ires not only a strong national commitment to C(% b"t

onethat is also broad based.

Government should intensify its efforts to improve the regulation and corporate

governance of SEs*

Shortcomings in the goernance of SEs and /+s not only lower ret"rns to the banksshareholders% b"t% if widespread% it destabili!es the financial system. $o restore confidence to

both debt and e6"ity markets% policy8 makers and reg"lators need% in addition to ens"ringade6"ate banking laws and reg"lations and s"perision of banks operations% to promoteB1 Cha"dh"ry% 0.@. 2>>9. Corporate (oernance G 0n +nd"stry &erspectie. 'he %angladesh &ccountant6 ctober87ecember% Q"arterly

'o"rnal of the +nstit"te of Chartered 0cco"ntants of )angladesh.B2 0hmed% @amta! ddin% D"s"f% @"hammad 0b". 2>>5. Corporate (oernance )angladesh &erspectie. 'he #ost and (anagement. ol.

33. 4o. B. 4oember87ecember 2>>5. pp. 1

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relationships sho"ld be disclosed. Self8dealingArelated8party transactions sho"ld be s"b'ect toboth banking and corporate8goernance restrictions. )ank directors sho"ld be able to pass

Ofitand properP tests for serice. $hese directors sho"ld also ass"me responsibility for bank

systems and proced"res that ens"re so"nd lending and monitoring practices% as well as the

capacity to handle distressed debt. ,astly% local insolency systems m"st protect and enforce

creditors rights and proide efficient li6"idation of debtors which cannot be e#peditio"slyrestr"ct"red into commercially iable enterprises.

Introduction of Good Governance (ractices in SEs*

+n order to proide a strong demonstration effect% C( reforms in strategic SEs that handle

electricity gene ration and distrib"tion% gas distrib"tion% telecomm"nications% andairtransportation

can be "ndertaken. $hese enterprises are f"lly owned by the (oernment.$ll 6urisdictions should strive for effective implementation and enforcement of

corporate-governance la+s and regulations*

er the past seeral years% most So"th 0sian co"ntries hae s"bstantially reamped their

laws% reg"lations and other formal corporate8goernance norms. )angladesh is still lagging

behind in this matter. ,eadership from the "ppermost reaches of goernment is necessary topromote p"blic confidence in the states commitment to the r"le. +n this regard% adoption of

international acco"nting% a"dit and financial disclos"re standards and practices will facilitate

transparency% as well as comparability% of information across different '"risdictions. S"chfeat"res% in t"rn% strengthen market discipline as a means for improing C( practices.

Institutional Capacity %uilding*

$here is a need for disseminating C( and enterprise restr"ct"ring principles and for

implementing the related g"idelines and standards. &"blic awareness and deelopment ofgoernance str"ct"re i.e.% enforceable reg"lation% ens"ring financial transparency% stop

financial malpractice and any form of market manip"lation are essential for enabling a so"ndframework for C(. +t is% therefore% re6"ired to ed"cate the p"blic abo"t their rights as

shareholders and abo"t the work of modern corporations thro"gh o"r own speciali!edp"blications and thro"gh the national and regiona l mass media.

Improving the uality of )inancial Reporting*

+n )angladesh% 6"ality of financial reporting needs to be improed. $his re6"ires a rob"st

reg"latory regime and effectie enforcement of the acco"nting and a"diting standards. $r"e

independence of the a"ditor is at the cr"# of good C(. 0"ditors need to be able to f"nction

with real independence and witho"t fear or faor. Sim"ltaneo"sly% a"ditors also need to bemonitored thro"gh strict enforcement of professional code of ethics of a"ditors. +n the long

r"n% a"ditors will become irreleant if they fail to act independently. B3 $here m"st be aconsolidating financial report for the gro"p of companies.B3 Cha"dh"ry% 0.@. 2>>9. Corporate (oernance G 0n +nd"stry &erspectie. 'he %angladesh &cco untant6 ctober87ecember% Q"arterly

'o"rnal of the +nstit"te of Chartered 0cco"ntants of )angladesh.

22

Chapter-&IIIRole of #ha"a Cham!er of Commerce and Industry

E#perience from aro"nd the world shows that good C( helps enterprises attract capital%

strengthen their operations% and red"ce conflicts between shareholders and management.+mplementing and enforcing so"nd C( systems and practices is essential for )angladesh in

order to b"ild confidence% strie to reitali!e prod"ction% and f"rther market reforms. $ostrengthen the oerall enironment for C( in )angladesh% following iss"es are re6"ired to be

"ndertaken

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regular 0 accurate financial accounts transparency, but they have to address issues

regular 0 accurate financial accounts transparency, but they have to address issues5> ("ide Synergie Q"alit. 2>>9.+roposal for @uality 2umanitarian &ctions.http*BBCD.EF.=F.CGBsearch;4Hcache*03rFwh2ir*

www.politi0a.lvBindex.phpIE:fIE,ECJ9)OJgovernanceJprincipleKhlHbnKctHcln0KcdHEKglHbdKcl

ientHfirefox-a51 0f!al% @"een. 2>>;.ole and esponsibilities of ndependent ,irectors. ey note paper. Ro"ndtable

disc"ssion on the Role and Responsibilities of +ndependent 7irectors. )angladesh Enterprise +nstit"te. @arch 1>;.

17

like whether a large business group should also be allowed to own a bank. 2n brief,following are the issues that hinder the enforcement of CG in Bangladesh#8o genuine incentive for better performance

?uality people not attracted to -('s

*ressure from trade unions52 Rahman% ,opa. 2>>B. #orporate )overnance for "O1s* 'he %angladesh #ontext. )angladesh Enterprise

+nstit"te 7haka.

18

mplementation of Corporate Governance in Bangladesh:$his policy paper has reviewed the problems and e&isting CG practices in Bangladesh."indings are presented as a matri& in the following bo& which also highlights the scopes

for policy intervention in this regard#Matri#: an overvie$ of Corporate Governance Mechanisms in Bangladesh%&CorporateGovernanceMechanismmportance in Bangladesh Scope for polic' intervention7arge blockholders7ikely to be an important governancemechanism in Bangladesh

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-trengthen rules protectingminority shareholders:arket forCorporateControl:arket does not e&ist in Bangladesh.

+nlikely to be important in aconcentrated ownership structure. Canstill take place through debt contracts,but requires adequate bankruptcy laws-trengthen the bankruptcy laws*ro&y votes +nlikely to be important in aconcentrated ownership structure

AG:s needs to be effectiveand -'C may oversee theoutcomes of AG:sBoard activity >on3transparent recruiting system ofthe board members are widelypracticed, and lack of separation of

ownership and management2mplement Code of CG andintroduce guidelines for Best*ractices, training of directors,transparent recruitment of theBoard members'&ecutivecompensation7ess important when owner can hireand fire and has private benefits-'C or Bangladesh Bank canintroduce codes for '&ecutive

compensation, transparentcompensation policyBankmonitoringand regulatoryenvironmentCritically important for Bangladesh -trengthen banking regulationand institutions; encourageaccumulation of information oncredit histories, developsupporting credit bureaus andother information intermediaries'mployee

monitoring*otentially very important for -:'swith highly skilled human capital threatof leaving is very high*roper incentive practice onhuman capital should beinstitutionali5ed7itigation %epends on quality of generalenforcement environment, however it

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sometimes work in Bangladesh"acilitate communicationsamong the shareholders:edia andsocial control*otentially important in Bangladesh as

competition and independence ofmedia is rising'ncourage competition anddiversification of media, activepublic campaigns can empowerpublicReputationand selfenforcement2mportant at general enforcement isrelatively weak'ncourage competition in factormarkets by enablingcompetition policy

Arbitrationand auditors*otentially important, often the originof public law, but the enforcement is a"acilitate laws for the thirdparty mechanisms, Auditing53 0"thors compilation

19

problem in Bangladesh, audits areoften abusedprocesses needs to bestrengthenedCompetition %etermines scope for potentialmistreatment of factors of productionincluding financing*roper competition policy canbe introduced$o implement reforms in CG, based on the above matri&, with a view to have goodcorporate governance in Bangladesh, the following proposals0recommendations can beput forward#Short-termCode of Corporate Governance and Best Practice (ecommendations:7ike other countries86, Bangladesh needs to have a @Code of Corporate Governance andBest *ractice Recommendations which can be either rule based or principles based.Bangladesh 'nterprise 2nstitute, Corporate Governance Committee of 2CAB, and -'C

have developed separate Codes for Corporate Governance for Bangladesh. $heGovernment must take initiatives to make these implemented by making necessarychanges in the Companies Act.mplement Competition Polic':

An effective competition policy fosters a fle&ible, dynamic, and competitive private sectorthat leads to sustained and widely shared economic development. Bangladesh needs toformulate a Competition *olicy which will ensure a culture of good corporate governanceto thrive. Competition policy helps bring about efficiency, reduce price distortions, lowerthe risk of poor investment decisions, promote greater accountability and transparency in

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business decisions, and lead to better corporate governance.88Medium-termThe legal and regulator' frame$or) should ensure that non-controllingshareholders or minorit' shareholders are protected from e#ploitation *' insidersand controlling or sponsor shareholders:Government should introduce measures, or enhance e&isting measures, to provide

noncontrollingshareholders with adequate protection from e&ploitation by controllingshareholders.$hese measures may include, among other things# i/ strengthening disclosurerequirements particularly of self3dealing0related3party transactions and insider trading/;8ii/ ensuring that regulators have the capacity to monitor companies for compliance withthese requirements and to impose substantial sanctions for wrongdoing; iii/ clarifyingand strengthening the fiduciary duty of directors to act in the interest of the company andall of its shareholders; iv/ prohibiting indemnification of directors by companies forbreaches of fiduciary duty; and v/ providing shareholders who suffer financial losseswith private and collective r ights of action against controlling shareholders and directors.59 /or e#ample% 0"stralian Corporate (oernance Co"ncil has adopted O$he &rinciples of (ood Corporate(oernance and )est &ractice RecommendationsP for 0"stralian corporate entities.

55 rgani!ations like )angladesh Enterprise +nstit"te hae already "ndertaken comprehensie pro'ect onCompetition &olicy.

5B 7isclos"re sho"ld be in line with +0SsA+/RSs.

20

mprove the capacit' of the Boards of directors:$he directors must improve their participation in strategic planning, monitoring of internalcontrol systems and independent review of transactions involving managers, controllingshareholders and other insiders. $here is a need for director training, voluntary codes ofconduct, e&pectations for professional behavior and directors) resources and authorityvis--vis management. Also it is required to reduce or eliminate loopholes by tighteningstandards for director @independence, by making @shadow directors liable for theiractions, by increasing sanctions for violations of duties of loyalty and care and byadvocating delineation of a core se t of related3party transactions such as company

loans to directors and officers/ that should be prohibited outright. 2t is important tofacilitate mechanisms to adequately empower the shareholders to seek redress forviolations of their rights and to ensu re director accountability. $he most vital thing thatcan ensure good CG is high standards of ethical and personal behavior. $his can onlybe ensured if the value system of society imposes this on their people as the norm inevery aspect of life. Good CG must become an unshakable social and moralimperative.8Long-termStrengthen the Capacit' of the Government to Monitor and +nforce themplementation of Corporate Governance:$he -ecurities and '&change Commission -'C/ of Bangladesh need to bestrengthened so that it can devise and enforce a code for good CG. $he Companies Acthas to be amended and updated to have consistency with Bangladesh Accounting

-tandards BA-/, -'C requirements and the Bank Companies Act. 2ndependent AuditCommittee should be made compulsory for all listed companies. -trict implementation ofaccounting and auditing standards are very important. As the lead regulatory bodyoverseeing corporate accounting and reporting, the -'C has a critical role to ensure thatpublic company boards are properly structured and organi5ed and have the resources toaccomplish the ob4ectives of adding value to shareholders, minimi5e risk of keyshareholders and hold management responsible for corporate results. Ruthlessmonitoring of compliance and seve re punishment of transgressors can ensure good CG.But Bangladesh has to wait a lot to ensure enforcement of any corrective measures

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properly. 2f the policymakers implement the recommendations suggested above,undoubtedly a good CG environment will prevail in Bangladesh.8!Strengthen the Capacit' of Pu*lic , Private partnership:*ublic3 and private 3sector institutions should continue to raise awareness amongcompanies, directors, shareholders and other interested parties of the value of good CG.Bangladesh has made little progress in raising awareness of the value of good CG. $o

Achieving the desired CG framework in Bangladesh, requires not only a strong nationalcommitment to CG, but one that is also broad based.5; Cha"dh"ry% 0.@. 2>>9. Corporate (oernance G 0n +nd"stry &erspectie. 'he %angladesh &ccountant6

ctober87ecember% Q"arterly 'o"rnal of the +nstit"te of Chartered 0cco"ntants of )angladesh.5< 0hmed% @amt a! ddin% D"s"f% @"hammad 0b". 2>>5. Corporate (oernance )angladesh &erspectie. 'he

#ost and (anagement. ol. 33. 4o. B. 4oember87ecember 2>>5. pp. 1

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$rue independence of the auditor is at the cru& of good CG. Auditors need to be able tofunction with real independence and without fear or favor. -imultaneously, auditors alsoneed to be monitored through strict enforcement of professional code of ethics of22

auditors. 2n the long run, auditors will become irrelevant if they fail to act independently.81$here must be a consolidating financial report for the group of companies.

(ole of Dha)a Cham*er of Commerce and ndustr':'&perience from around the world shows that good CG helps enterprises attract capital,strengthen their operations, and reduce conflicts between shareholders andmanagement. 2mplementing and enforcing sound CG systems and practices is essentialfor Bangladesh in order to build confidence, strive to revitali5e production, and furthermarket reforms. $o strengthen the overall environment for CG in Bangladesh, followingissues are required to be undertaken#

2mplement the policy recommendations0interventions asserted in this economic

policy paper and assist the government on improving CG regulations, includingthe development and adoption of national CG codes.

=ork with the >G(s, such as institutes of directors, banking associations, civil

society think tanks to increase their ability to advocate for further CG reforms.

%evelop and deliver CG course materials to potential researchers, businessschools to ensure that future managers and lawyers understand the importanceof good CG and have the skills to practice it.

$raining for the managers, board members and e&ecutives should be undertaken

on regular basis in consultation with various stakeholders.

Adopt a long3term strategy to educate the relevant stakeholders about the issues

CG through conducting seminars, workshops and by conducting regular surveysof CG practices.5: Cha"dh"ry% 0.@. 2>>9. Corporate (oernance G 0n +nd"stry &erspectie. 'he %angladesh &ccountant 6

ctober87ecember% Q"arterly 'o"rnal of the +nstit"te of Chartered 0cco"ntants of )angladesh