Corporatisation of TCB
Saturday, 23 May 2009
Md. Ashraf Hossain
After having gone through the write-up, "Corporatization of TCBL," by Mr. Manzur Ahmed that appeared in the Financial Express in its issue on May 20, 2009. We do appreciate the issues raised by the writer. Mr. Ahmed's opinion are mostly pragmatic. But we would like to differ in some points only because of the scenario expressed hereinunder.
Frequent price-hike of different commodities is an irritating phenomenon in Bangladesh. People suffer much. Sometimes the prices increase for factors beyond control of the local businessmen but in most cases, businessmen manipulate the situation and cause price hike to earn extra money from the members of the public. In the present era, when price of anything goes high, the people make the government responsible. A democratic government can not avoid this responsibility. The role of public administration demands some mechanism to control price to a reasonable stage now-a-days. Only making policy does not serve the purpose.
The Trading Corporation of Bangladesh (TCB) was established to discharge the responsibility of balancing prices of commodities and help increase exports. But owing to various policies, rules and regulations of the government in force, it could not serve its purpose significantly in the past. At this stage, the measures have to be taken so that this organisation can serve the public on behalf of the government. To achieve this target, the TCB needs to be converted into a public limited company with its major share remaining in the hands of the government. This company will enjoy some sort of freedom to purchase commodities prompt, supply in time and will be able to cool the price situation.
Under the Companies Act, 1994, a company in the style of Trading Company of Bangladesh Limited (TCBL) may be organised and be registered with the Registrar of Joint Stock Companies and Firms converting the TCB into such a company.
Objectives of TCBL: The basic objective of the proposed TCBL will be to protect the interest of common consumers in Bangladesh through trading of commodities, that is, procuring commodities from local and foreign sources and selling those in Bangladesh at fair prices at minimum profit but this company should always attempt to avoid losses in the interests of its own survival.
It will export different items produced in Bangladesh by cottage, medium and large industrial units to increase earnings of foreign exchange and assist in efforts for creating more employment opportunities in Bangladesh.
To enjoy independence in management and not to confront complex rules and regulations that are applicable to government enterprises, the formation of a company is the only way out. It would serve the consumers promptly to protect their rights and would export products like private sector organisations.
The authorised capital of the TCBL may be Tk. 1000,00,00,000.00 divided in to 10,00,00,000 number of shares, each being of Tk. 100.00. Its paid-up capital may be Tk. 400,00,00,000.00, subscribed by the Ministry of Commerce (30%) that is Tk. 120,00,00,000.00, the Ministry of Industries(10%) that is Tk. 40,00,00,000.00, the Ministry of Agriculture(10%) that is Tk. 40,00,00,000.00, the Ministry of Food (10%) that is, Tk. 40,00,00,000.00 and the general public through initial public offering or IPO(40%) that is, Tk. 160,00,00,000.00.
If 51 per cent share of TCB is given to the private sector and the rest is kept for government, as suggested by Mr. Ahmed, it would work like a private sector company to make profit only and would ignore the suffering of general public consumers. That is why I would like to suggest for keeping the majority shares of the proposed company in the hands of the concerned government ministries.
Composition of Board of Directors: The Board of Director of the proposed company should be a policy-making board to be formed by at least seven and a maximum of eleven directors.
Its majority shareholder i.,e., the Ministry of Commerce can nominate three directors including its chairman, and other shareholders -- the ministries such as those of industry, agriculture and food -- may nominate one director each.
The private sector subscribers can elect three directors amongst themselves for a period of three years, provided that the shareholder ministries will not be eligible to vote in that election.
The Managing Director will be the ex-officio Director of the Board and he/she will be the Chief Executive Officer (CEO) of the company. The Managing Director will be a professional person and has to be selected by the Board of Directors for a period of three or five years' term on a contractual basis.
If a public limited company is organised with the above features, it would to serve the nation, supplying commodities at fair prices in any situation of abnormal price-hikes in the open market. The elected government can take steps to convert TCB into TCBL immediately.
The writer is Company Secretary, Power Grid Company of Bangladesh. He may be reached at e-mail: mah120cb@yahoo.com
After having gone through the write-up, "Corporatization of TCBL," by Mr. Manzur Ahmed that appeared in the Financial Express in its issue on May 20, 2009. We do appreciate the issues raised by the writer. Mr. Ahmed's opinion are mostly pragmatic. But we would like to differ in some points only because of the scenario expressed hereinunder.
Frequent price-hike of different commodities is an irritating phenomenon in Bangladesh. People suffer much. Sometimes the prices increase for factors beyond control of the local businessmen but in most cases, businessmen manipulate the situation and cause price hike to earn extra money from the members of the public. In the present era, when price of anything goes high, the people make the government responsible. A democratic government can not avoid this responsibility. The role of public administration demands some mechanism to control price to a reasonable stage now-a-days. Only making policy does not serve the purpose.
The Trading Corporation of Bangladesh (TCB) was established to discharge the responsibility of balancing prices of commodities and help increase exports. But owing to various policies, rules and regulations of the government in force, it could not serve its purpose significantly in the past. At this stage, the measures have to be taken so that this organisation can serve the public on behalf of the government. To achieve this target, the TCB needs to be converted into a public limited company with its major share remaining in the hands of the government. This company will enjoy some sort of freedom to purchase commodities prompt, supply in time and will be able to cool the price situation.
Under the Companies Act, 1994, a company in the style of Trading Company of Bangladesh Limited (TCBL) may be organised and be registered with the Registrar of Joint Stock Companies and Firms converting the TCB into such a company.
Objectives of TCBL: The basic objective of the proposed TCBL will be to protect the interest of common consumers in Bangladesh through trading of commodities, that is, procuring commodities from local and foreign sources and selling those in Bangladesh at fair prices at minimum profit but this company should always attempt to avoid losses in the interests of its own survival.
It will export different items produced in Bangladesh by cottage, medium and large industrial units to increase earnings of foreign exchange and assist in efforts for creating more employment opportunities in Bangladesh.
To enjoy independence in management and not to confront complex rules and regulations that are applicable to government enterprises, the formation of a company is the only way out. It would serve the consumers promptly to protect their rights and would export products like private sector organisations.
The authorised capital of the TCBL may be Tk. 1000,00,00,000.00 divided in to 10,00,00,000 number of shares, each being of Tk. 100.00. Its paid-up capital may be Tk. 400,00,00,000.00, subscribed by the Ministry of Commerce (30%) that is Tk. 120,00,00,000.00, the Ministry of Industries(10%) that is Tk. 40,00,00,000.00, the Ministry of Agriculture(10%) that is Tk. 40,00,00,000.00, the Ministry of Food (10%) that is, Tk. 40,00,00,000.00 and the general public through initial public offering or IPO(40%) that is, Tk. 160,00,00,000.00.
If 51 per cent share of TCB is given to the private sector and the rest is kept for government, as suggested by Mr. Ahmed, it would work like a private sector company to make profit only and would ignore the suffering of general public consumers. That is why I would like to suggest for keeping the majority shares of the proposed company in the hands of the concerned government ministries.
Composition of Board of Directors: The Board of Director of the proposed company should be a policy-making board to be formed by at least seven and a maximum of eleven directors.
Its majority shareholder i.,e., the Ministry of Commerce can nominate three directors including its chairman, and other shareholders -- the ministries such as those of industry, agriculture and food -- may nominate one director each.
The private sector subscribers can elect three directors amongst themselves for a period of three years, provided that the shareholder ministries will not be eligible to vote in that election.
The Managing Director will be the ex-officio Director of the Board and he/she will be the Chief Executive Officer (CEO) of the company. The Managing Director will be a professional person and has to be selected by the Board of Directors for a period of three or five years' term on a contractual basis.
If a public limited company is organised with the above features, it would to serve the nation, supplying commodities at fair prices in any situation of abnormal price-hikes in the open market. The elected government can take steps to convert TCB into TCBL immediately.
The writer is Company Secretary, Power Grid Company of Bangladesh. He may be reached at e-mail: mah120cb@yahoo.com