The Companies Act needs to be updated

State-of-the-art corporate law is as important as developed infrastructure for attracting investors, domestic as well as foreign. However, mere codification of law is not enough unless good governance exists. That again depends on the political goodwill.
Company affair is now conducted under the Companies Act 1994 which replaced the Companies Act 1913. Changes in the corporate world are taking place quickly. New ideas are emerging in the corporate world, e.g., Corporate Social Responsibility  (CSR) - a buzz word around the globe. Of course, this is not exactly new concept. It was, earlier, limited to the individual entrepreneur level but now it has been corporatised.  Many countries, including India, have codified CSR provisions. Bangladesh should also do the same. The greatest weakness of our company law is the absence of any authority for overseeing the implementation of the law. In Pakistan and India, there are a corporate law authority and company law board respectively.
The Companies Act of 1994 has given some power to the Registrar of Joint Stock Companies and Firms but the office itself does not have any acceptability or image. The office is considered as a loyal recipient of reports and returns of the companies; it also gives clearance of the name of a proposed new company. In a way, the Companies Act of Bangladesh is an orphan.
The Companies Act needs to be updated - some to be added and some to be jettisoned.  The following issues deserve immediate attention apart from the formation of an authority in whatever nomenclature it may be:
1. Specified companies  should constitute  a corporate  Social Responsibility Committee of the Board to formulate and recommend CSR policies which will indicate the activity  or activities  to be undertaken by the company as specified  in Schedule VII and shall  also recommend  the amount  of expenditure  to be incurred on  CSR activities.
2. "Private Placement" should be clearly defined.
3. Voting at meetings of the Board members should be conducted through electronic means.
4. Documents should be maintained in electronic forms.
5. If  an auditor or   cost accountant or the company secretary  has reasons to believe  that an offence, involving  fraud, is being or has been  committed  against  the company by its officers  and employees, he should immediately report  the matter to the government.
6. Some classes of companies should have at least one woman director.
7 Every listed company and other prescribed classes of companies should have independent directors.
8. A data bank of independent directors should be maintained.
9. Participation of Directors in board meetings by Video conferencing or by electronic means should be introduced.
CORPORATE CRIME: Crime/offence is as old as the human society. Adequate legal system exists in developed   countries for the trial of the offenders. In Great Britain, there is a government department known as the Fraud Department  for detection and  trial of corporate  fraud.  Western  world speaks of the free market economy,  open competition,  liberalisation and  freedom of private entrepreneurs. But adequate legal machineries  are  there in those countries  such as fair price commission, merger and acquisition   commission, anti-monopoly  commission  etc. Anti-monopoly laws are very strictly applied in the US for the greater good of the country. The US government framed  new laws and authorities very promptly  to deal with the rogue companies during the 2001 share disaster 2001.
The Law Commission enjoys wide powers to update the existing laws and also recommend the framing of new laws.
 In section 6 (kha (1), (2), (3) of the  Law Commission  Act 1996 there are specific mention of  acting upon corporate laws with reference to the market economy and for attracting  both local and foreign investors.
Framing of any law involving corporate affair is a tough affairs. The Finance  Ministry has been trying to frame the Financial  Reporting  Act  for bringing  financial discipline in the publicly traded companies. This has triggered a rivalry between the elite chartered accountants and the cost & management accountants. Similarly, there is a difference of opinion between the Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC) with regard to the draft  law for the  financial  institution.
Under these circumstances, the Law Commission should establish   a separate  cell for specifically handling the proposed  and probable corporate  laws as may be required   from time to time. Experts on corporate law affair should be included in the cell. That will help smoothen the performance of the corporate law matters.
rezaulparvaz@live.com