Independent directors appointed or nominated by the regulator have been relieved from the responsibility of furnishing and signing documents on behalf of companies to get bank loans or any other mortgage.
The independent directors, who are appointed under any special circumstances, will enjoy indemnity from any criminal and civil lawsuits involving other directors of the companies unless it is proved that they have been part of the misconducts subject to trial.
The Bangladesh Securities and Exchange Commission (BSEC) on Wednesday issued a directive securing the protection of independent directors.
It said the role and responsibilities of independent directors needed to be outlined so they could work for good governance, sustainability, and overall welfare of the companies they were appointed to.
BSEC spokesperson Mohammad Rezaul Karim said independent directors worked voluntarily to establish good governance in companies that had been non-functional forcing the regulator to restructure the boards.
The directive was issued to make sure independent directors will work "without fear and pressure", he added.
The regulator said the Securities and Exchange Ordinance, 1969 would be applicable for an independent director nominated or appointed by the commission under special circumstances.
"No suit prosecution or other legal proceedings shall lie against the (commission) or an officer or authority subordinate to it or specially appointed for the purpose of this ordinance for anything which is in good faith done or intended to be done," reads the ordinance.
Md. Sharif Hossain, of the accounting & information systems department of Dhaka University, said an independent director would not be able to provide voluntary service unless he was relieved from the responsibilities that might put him in an awkward position.
Referring to a case that might have led to the BSEC directive, he said a listed company's shareholder directors had filed a lawsuit against independent directors over a disagreement tied to company decisions.
Sources familiar with the issue said independent directors of Bangladesh Industrial Financial Corporation (BIFC) had faced a lawsuit over the company affairs.
The BIFC's company secretary, however, refused to make any comment on the matter.
The securities regulator restructured boards of some 28 non-performing companies listed under 'Z' category by appointing independent directors; the aim is to bring those back to production.
In some companies, for example Familytex (BD), independent directors failed to play their due role due to non-cooperation of shareholder directors.
The Wednesday's directive also exempted independent directors from furnishing any guarantee for the purpose of loan or any other liabilities or obligations.
The directors will not be obliged to sign any document relating to loan, mortgage or other liabilities unless he holds a position where it is compulsory to give signature by virtue of their designation.
According to the BSEC directive, the independent directors shall not be reported to the Credit Information Bureau (CIB) of the Bangladesh Bank as obligor in connection with loan or any other liabilities or obligations with any bank/financial institution.
But they shall be reported to the CIB for his personal loan and debt obligations.
The responsibilities of the independent directors appointed by the BSEC include laying out plans for resumption of the companies' operations, extending support to the companies so they can hold annual general meetings, and submitting financial statements timely.
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