Corporate governance weak, capital mkt underdeveloped in Bangladesh
Tuesday, 15 September 2009
FE Report
Bangladesh faces significant challenges in improving corporate governance despite the improvements undertaken in the recent years, a workshop held in Dhaka was told Monday last.
The workshop organised jointly by the World Bank, Global Corporate Governance Forum of IFC, and Bangladesh Enterprise Institute (BEI) discussed the findings of the Corporate Governance Report on Standards and Codes (ROSC).
The ROSC, which was prepared in cooperation with the Securities and Exchange Commission (SEC), said good corporate governance helps to protect small shareholders, leads to better decision making and ensures that companies use their resources more efficiently.
It said good corporate governance is an important prerequisite for attracting the capital needed for Bangladesh's sustained long-term economic growth. Both the public and private sector in Bangladesh have taken steps to improve corporate governance in recent years.
The ROSC provides an assessment of Bangladesh's corporate governance policy framework.
"While the SEC has been active in trying to protect investors, outdated laws, insider dominated boards, a shortage of qualified accountants and other professionals, and weak institutions all create problems for investors and hurt company performance." said Mr. David Robinett, Private Sector Development Specialist, World Bank and lead author of the ROSC.
"For capital markets to continue to grow and approach the size of other Asian economies, substantial and long term reform will be needed", he said
The report said Bangladesh's capital markets still remain some of the most underdeveloped in the region. The basic legal framework for corporate governance in Bangladesh is dated.
There is a need to streamline rules and regulations that apply to listed companies. More needs to be done to protect shareholders' rights regarding related party transactions, the choice of board members, or the disclosure of control, it said.
The Boards of both listed companies and state-owned enterprises need greater independence and professionalism. Current efforts to improve accounting and auditing should be accelerated, and the disclosure of corporate control be improved.
The Registrar of Joint Stock Companies and the courts must be able at enforcing the Companies Act (CA). Further, changes in CA are needed as part of broader reform to make the legal framework for corporate governance more coherent and effective.
Bangladesh faces significant challenges in improving corporate governance despite the improvements undertaken in the recent years, a workshop held in Dhaka was told Monday last.
The workshop organised jointly by the World Bank, Global Corporate Governance Forum of IFC, and Bangladesh Enterprise Institute (BEI) discussed the findings of the Corporate Governance Report on Standards and Codes (ROSC).
The ROSC, which was prepared in cooperation with the Securities and Exchange Commission (SEC), said good corporate governance helps to protect small shareholders, leads to better decision making and ensures that companies use their resources more efficiently.
It said good corporate governance is an important prerequisite for attracting the capital needed for Bangladesh's sustained long-term economic growth. Both the public and private sector in Bangladesh have taken steps to improve corporate governance in recent years.
The ROSC provides an assessment of Bangladesh's corporate governance policy framework.
"While the SEC has been active in trying to protect investors, outdated laws, insider dominated boards, a shortage of qualified accountants and other professionals, and weak institutions all create problems for investors and hurt company performance." said Mr. David Robinett, Private Sector Development Specialist, World Bank and lead author of the ROSC.
"For capital markets to continue to grow and approach the size of other Asian economies, substantial and long term reform will be needed", he said
The report said Bangladesh's capital markets still remain some of the most underdeveloped in the region. The basic legal framework for corporate governance in Bangladesh is dated.
There is a need to streamline rules and regulations that apply to listed companies. More needs to be done to protect shareholders' rights regarding related party transactions, the choice of board members, or the disclosure of control, it said.
The Boards of both listed companies and state-owned enterprises need greater independence and professionalism. Current efforts to improve accounting and auditing should be accelerated, and the disclosure of corporate control be improved.
The Registrar of Joint Stock Companies and the courts must be able at enforcing the Companies Act (CA). Further, changes in CA are needed as part of broader reform to make the legal framework for corporate governance more coherent and effective.