Many cos avoid submission of \\\'returns filing\\\' to RJSC

Most of the public and private companies do not submit their annual 'returns filing' to the Registrar of Joint Stock Companies and Firms (RJSC) every year taking the advantage of its feeble enforcement in regulatory provisions.
As a result, the RJSC and other relevant agencies remain in the dark about operational activities, transparency and efficiencies of such companies, officials and experts said.
Moreover, non-submission of the annual returns filing cause a roadblock towards the establishment of good corporate culture in the country, they observed.
Under the existing provisions, a registered company is required to submit its annual returns filing to the RJSC every year, failure of which is subjected to imposition of financial penalty and other actions including cancellation of its registration at one stage.
But official data revealed that only 9.84 per cent of the companies registered with the RJSC had submitted their annual returns filing before it in 2012.
Of them, only 4.0 to 5.0 per cent of public companies submitted their annual returns while the percentage of private companies was only 10.5 per cent in the mentioned year. The figure remained almost same in most of the previous years.
Acknowledging companies' poor response to the submission of annual returns, Registrar at the RJSC office Bijon Kumar Baishya told the FE: "Generally, the country's people are not law-abiding. So, there is need to enforce the law. But we don't have sufficient manpower to do so."
Up to October 1, 2013, as per the data, there are 1,24,283 public and private companies registered with it in Bangladesh. Out of them, 12,000-15,000 are public companies, an RJSC official concerned said.
Of the total public companies, only 596 submitted their annual 'returns filing' in 2012. The figure is 558 in 2011, 527 in 2010 and 578 in 2013 (till November 20).
Out of the private companies, only 11,637 submitted their annual 'returns filing' in 2012. The number is 10,626 in 2011, 9,513 in 2010 and 11,049 in 2013 (till November 20).
In the returns filing, the companies are to submit information relating to their management and operation including: annual summary of share capital, list of shareholders and directors, balance sheet, profit and loss account and consent and particulars of directors.
The returns filing protects the interest of the people as it unveiled the entities' operational activities to the shareholders and other stakeholders, a chartered accountant said quoting relevant sections at the Companies Act-1994.
Arif Khan, commissioner of the Bangladesh Securities and Exchange Commission (BSEC), told the FE, "Such non-compliance by the majority companies to submit their annual returns filing is a barrier to ensure good corporate culture in the country."
Mr Khan, however, refrained from commenting detail on the issue.
Mohammad Abdul Hannan Zoarder, executive president of the Bangladesh Institute of Capital Market (BICM), said all the responsibilities of the public companies can be given to the securities regulator that has better capacity, if the RJSC does not work 'at all'.
Mr Zoarder, also former executive director of the BSEC, however, emphasised on recruiting at least 100 qualified officials at RJSC and giving them well-training so that it doesn't remain as just an office of 'clerical works'.
He also suggested increasing salary of the employees at the RJSC office, attracting qualified manpower and finally enabling it to accomplish its works better.
Expressed concern over such depiction of returns filing especially at the public companies, an expert in the corporate sector said that the public companies with such prior practice of poor corporate culture continued such behavior at the stock market, abetting volatility there.
Mahbub Ahmed Siddique FCA, director (technical), the Institute of Chartered Accountants of Bangladesh (ICAB), laid stress on properly checking the all companies' audited financial statements, which are submitted with the returns, as it is needed to facilitate integrity, transparency and accountability in the firms.
Mr Siddique also sees the non-compliance with the returns filing provisions by majority companies as a barrier to look into their financial statements. "Such practice raised concern about financial transparency inside the companies," he added.
Mr Baishya, RJSC Registrar, further said that following recommendations of Enam Commission in 1983, when Bangladesh has only about 15,000 entities, RJSC's four offices across the country were given 78 employees. The number of employees remains same till now though the number of total entities rose to about 1,75,000, which is over 11 times higher than that of 1983.
Explaining the reasons behind the poor response to returns filing, the Registrar again said, "The companies generally come to submit their annual returns filing only when they feel its requirement (such as need for update documents from RJSC to take bank loans or sign any deal)."
However, Mr Baishya recommended increasing of the manpower, giving them well-training and holding view exchange meetings with the businesses to strengthen the RJSC and make the companies compliant.
A high official at RJSC told the FE seeking anonymity, "It is not possible to scrutinise all the submitted returns filings properly due to lack of sufficient and especially qualified manpower to deal with the technical works like scrutiny of financial statements."
Lack of qualified manpower also hardly led them to move to examine and challenge the companies' financial statements, audited by the chartered accountants, another official said.
Apart from the public and private companies, there are 311 foreign companies, 13083 societies, 38186 partnership firms and 953 trade organisations till October 1, 2013 while the numbers of their returns filing in each category in 2012 are 16, 386, 10 and 191 respectively.