Corporate governance in BD business ‘challenging’

Establishing corporate governance in family businesses is a big challenge as it needs major shifting from the trend of functionality of board, management, regulatory authority, financial closure and

culture.

There is a need for cultural shift, building trust and professionalism as well as successor planning in family businesses in the long journey of establishing good governance, said speakers on Tuesday.

They made the observations at a seminar on the 'role of corporate governance in investment decision-making with Japanese stakeholders'.

The International Financing Corporation (IFC) organised the seminar with the support of Japanese Embassy at a city hotel to discuss major investment issues.

It also discussed the challenges facing the private sector in implementing corporate governance best practice in Bangladesh.

Japan External Trade Organisation (JETRO) country representative Daisuke Arai, Bangladesh Securities and Exchange Commission commissioner Dr Swapan Kumar Bala, Abdul Monem Limited deputy managing director Mainuddin Monem and Brummer and Partners chief executive officer Khalid Quadir were panelists at the 'corporate governance practices in Bangladesh' session.

The 'challenges of family businesses in improving corporate governance practices in Bangladesh session was attended by Rahimafrooz group director Mudassir Murtaza Moin, PRAN Group finance director Uzma Chowdhury, Shoo-Koo-Kai president Akihisa Tomioka and vice-president Prodip Das as panel speakers.

Sanaa Abouzaid of the IFC and Tareq Rafi Bhuiyan of Japan Bangladesh Chamber of Commerce moderated the sessions.

The panellists focused on board formation and transparent accounting system as crucial to good governance.

They said independent directors, shareholders directors as well as independent management are a must to reach a target level in this regard.

The directors' mindset needs to be changed to elevate companies and perform better from the point of sustainability including economic sustainability.

Mr Arai of JETRO highlighted the issues of professionalism and proper auditing for making investment attractive for Japanese investors.

He spoke of moving towards corporate governance can ensure proper role of the companies' board in the emerging market of the country.

Meanwhile, Mr Bala said the country is still struggling for qualified accountants and maintaining universal accounting system as different companies follow different ways.

But pictures of listed companies are comparatively better than other companies, he said, expressing hope that new international system Key Auditing Matters is expected to change the scenario.

Mr Qudir highlighted the lower number of board members for proper functionality of the company.

He said the role of independent directors is important to guide board members dominated now mostly by first, second or third generations of family members from the point of sustainability.

Mr Monem, however, said board functionality depends on the strong performance of management highlighting reform in educational system for developing knowledge and dedicated honest professionals.

He also stressed introduction of scoring system based on the book checking and professionals on boards as practised by different developed countries.

The panellists at the family business session highlighted 80 per cent of the world's businesses run by family members.

They said Japan's family-based business with highest 500 years maintain the book, accountability, affirmative information as a compliance to corporate governance.

Lots of research and study are needed to prepare successor planning and its implementation in the family businesses of the country, they continued.

Meanwhile, Mr Moin said Bangladeshi companies need to learn more to formulate and adopt successor plan.

"You can buy a plane, but a successor plan is a must to operate the plane," he stated.

Mr Moin said the orientation of the companies and rules and regulations is needed in this regard as both family businesses and governance are tricky issues.

Mr Tomioka said Japanese companies dominated by families maintain values and philosophy for taking a right decision.

Ms Uzma Chowdhury said the family-run companies spend a good amount to educate generations, but they are yet to earn maturity in establishing good governance.

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