Experts for bringing biggies into stock market

FE Team | Published: March 29, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

FE Report
Experts at a panel discussion have said the stock exchange regulator should pay more attention to bringing big business entities into the stock market rather than imposing strict regulations on existing corporations in the capital market.
"The corporate entities in the stock market are at best 5 per cent of the total number of business entities in Bangladesh…. Bangladesh Securities & Exchange Commission (BSEC) should pay more attention to bringing the remaining 95 per cent into the stock market rather than regulating the 5 per cent," said Mr A Matin Chowdhury, managing director of Malek Spinning Mills Ltd, while speaking as a panelist.
"The strict regulations on the 5 per cent corporate entities only slow their growth while the 95 per cent are doing business without going public," he added.
The Institute of Cost and Management Accountants of Bangladesh (ICMAB) organised the discussion on 'Corporate Governance: Role of Independent Directors' at its campus Thursday night.
The other panelists were: BSEC Commissioner Arif Khan, Chittagong Stock Exchange (CSE) Director Mohammad Mohiuddin, Professor of the Finance Department at Dhaka University Dr. Mohammad Osman Imam and BD Venture Vice Chairman Mamun Rashid. ICMAB seminar committee chairman Muzaffar Ahmed moderated the discussion.
ICMAB President Mohammad Selim delivered the address of welcome and Executive Director AKM Nazrul Islam delivered the concluding address.
Agreeing that corporate governance in Bangladesh was still not up to the global standard, BSEC commissioner Arif Khan said the regulator had been working hard with that end in view.
"After introduction of independent directors in the corporate boards of directors it now looks like a board meeting while a corporate board meeting earlier looked like a discussion at the breakfast table," he said.
He also said the regulator was not happy yet over the existing level of corporate governance. In the present situation 70 per cent were compliant while the remaining 30 per cent were not compliant, he added.
He also alleged that independent directors were not playing their due role in the boards. A Matin Chowdhury said the introduction of independent directors was a very good idea but the country was not having as many independent directors as it needed.
He also pointed out the poor remuneration of independent directors that might be one of the key reasons for their apathy to play the due role in board meetings.
He said the top ten corporate entities in Bangladesh did not come into the stock market and the regulator also did not put enough efforts to bring them into the stock market.
Noted banker Mamun Rashid raised a question as to how much independent an independent director was in view of the current facilities and rights given and the conditions set.
He said there was no specific guideline on selecting independent directors; there was a serious shortage of experts or appropriately qualified people.
"If few are available, most of them are reluctant to join the boards, these being very demanding but non-rewarding. The owner directors get dividend at the end of the day while the independent directors have to remain satisfied with the meager board meeting attendance fee, unless he or she wants to abuse his or her power," he said.
Mr Rashid said: "While the idea of engaging more independent director is very good, we should also be loudly saying who would be those independent directors, how they are likely to be engaged and more importantly how they are going to be compensated."
He said while the economy was growing fast, business owners were not adequately knowledgeable or experts. Independent directors, if truly engaged, could really help the companies move forward.
Mohammad Mohiuddin said: "Independent directors cannot ask anything about what is not included in the agenda placed at the board meeting."
He also said the board composition is nonfunctional in Bangladesh. There must be more independent directors with more power.
Professor Osman Imam said the chairman of the audit committee of a company should be an independent director with some knowledge about accountancy.
He raised a question about the process of selecting an independent director in a company.
"Independent directors must have more power to play their due role in the board and the regulator also should regulate the independent directors to see whether they are playing their due role," he said.
In reply, the BSEC commissioner said the process of selecting an independent director was very clearly spelled out in corporate governance guidelines.
Mr Khan said whether an independent director should be elected from among the unheard small shareholders of a company rather than being selected was now being discussed.