An Emprical Study On

Corporate Governance Position

in Bangladesh through the study
of Food & Beverage Industries

corporate Governance position in bangladesh

An Emprical Study On Corporate Governance Position in

Bangladesh through the study of Food & Beverage
Industries
SUBMITTED TO
Masric Hasan
Assistant Professor
Department of Finance
Jagannath University,Dhaka
SUBMITTED BY
GROUP: 02
NAME

ID No.

Saiful Islam
Jinnat Jahan
Nazma Akter
Md. Al Mahmud Kabir
Ankhirunnesa Monnu
Nahida Sultana

M150203730
M150203740
M150203713
M150203733
M150203707
M150203741

DATE OF SUBMISSION : 03-12-2016

Department of Finance
MBA(Eve) Program,6th Batch (Sec-A)
Jagannath University, Dhaka

corporate Governance position in bangladesh

corporate Governance position in bangladesh

Table of Contents
Abstract......................................................................................................................................4
Introduction................................................................................................................................5
1.2 Objective of the study......................................................................................................5
Primary Objective..............................................................................................................5
Secondary Objective..........................................................................................................5
1.3Scope of the study.............................................................................................................5
Literature Review.......................................................................................................................5
2.1 Meaning & importance of Corporate Governance...........................................................6
2.2 History of Corporate Governance....................................................................................7
2.3 Parties to corporate governance.......................................................................................8
2.4 Principles..........................................................................................................................8
2.5 Systemic problems of corporate governance...................................................................9
2.6 Mechanisms and controls.................................................................................................9
Internal corporate governance controls..............................................................................9
External corporate governance controls...........................................................................10
Methodology of the Study........................................................................................................10
Data Analysis & Findings of the Study....................................................................................11
4.1 Overveiw of Corporate Governance on Food & Beverage Industries...........................12
4.1.1 Gemini Sea Food Ltd..............................................................................................12
4.1.2 Rangpur Dairy & Food Products Ltd......................................................................12
4.1.3 Fu-Wang Foods Ltd.................................................................................................12
4.1.4 Rahima Foods Ltd...................................................................................................13
4.1.5 Olympic Food Ltd...................................................................................................13
4.1.6 Apex Food Ltd.........................................................................................................13
4.2 Corporate Governance Disclosure.................................................................................14
4.2.1 Gemini Sea Food Ltd..............................................................................................14
4.2.2 Rangpur Dairy & Food Products Ltd......................................................................15
4.2.3 Fu-Wang Foods Ltd.................................................................................................15
4.2.4 Rahima Foods Ltd...................................................................................................15
4.2.5 Olympic Food Ltd...................................................................................................15
4.1.6 Apex Food Ltd.........................................................................................................18
Conclusion................................................................................................................................28
References................................................................................................................................29

corporate Governance position in bangladesh

5
Abstract

We prepared the report on Corporate Governance Researches in Bangladesh fully based

on secondary data and information. The study has been conducted mainly on the basis of
literature survey and secondary information. For this specific purpose we collected data and
information from various sources like published materials such as Various journals and
research papers, Apex Food Ltd report, Fu-Wang Foods Ltd report, Olympic Food Ltd
report, Gemini Sea Food Ltd report, Rahima Foods Ltd report, Rangpur Dairy & Food
Products Ltd report have been surveyed in making this study. We furnished the full contents
of the report in Four chapters. In the very first chapter we point out the information about
the report. That is its origin, objective, data collection and presentation. It will facilitate the
understanding what the report is for and how it is designed. As we prepared the report on
Corporate Governance Researches in Bangladesh, we think a brief discussion about the
Corporate Governance with a full effort to clear the term -definition of corporate
governance, Views of corporate governance in mainstream research, the importance of
corporate governance for transition economies will enhance the understanding of the
report. With this view in the mind, through out the chapter two we highlight on the above
matters. In chapter three, we focused mainly on the Corporate Governance Scenario of
Bangladesh in the light of some Scholarly articles. There has been some work done in the
area of corporate governance by Food & Beverage Industries in Bangladesh, but overall
there is a lack of material on corporate governance issues in Bangladesh. The brief
summaries of the major articles and studies relating to CG are presented here.The chapter
four is the concluding part of the report. It covers the Problems and findings of corporate
governance in Bangladesh & conclusion drawn on the basis of data presented earlier.

Keywords: ( Accountability,Fairness,Transparency,Independent,Openness,Intigrity,Govenance )

corporate Governance position in bangladesh

Study of Corporate Governance in Bangladesh throughthe Impact of Ownership Structure on

Firms Performance

SUBMITTED TO

Corporate governance can be defined as a combination of fairness, precision, accountability and

sustainability of corporate behavior. Good Corporate governance is a key factor to achieve the
improved performance of an organization. It is fundamental element to safeguard interest of
shareholders. For continuous and sustainable growth of an organization, there is no alternative to
effective Corporate Governance. The positive effect of corporate governance on different
stakeholders ultimately is a strengthened economy, and hence good corporate governance is a tool
for socio-economic development. The modern era of Corporate Social Responsibility (CSR) concept
was evolved in 1950s when it was more commonly known as social responsibility. CSR has been
defined as the integration of business operations and values whereby the interests of all
stakeholders, including customers, employees, investors, and the environment are reflected in the
organizations policies and actions. By CSR practices an organization can improve communication
with the community and other stakeholders, ensure accountability and transparency in its operation,
improve internal decision making and cost saving, enhance corporate image, improve reputation and
ability to enlarge market share and Enhancement of customer true worthiness, profitability and
sustainable development.

1.2 Objective of the study

Primary Objective
To observe the current status of Corporate Governance and Corporate Social Responsibility (CSR) and
their relationship with organization performance.

Secondary Objective
To see the Corporate Governance guidelines of Bangladesh
To see the Corporate Social Responsibility (CSR) practice by the listed companies.
To see the risk-return features of security stocks and their relationship with Corporate
Governance practices.
To see the Corporate Governance practices of other countries.

1.3Scope of the study

The scope of the study has been the listed companies of Dhaka Stock Exchange (DSE) specifically
banking sector. Corporate Governance and Corporate Social Responsibility (CSR) practices by the
banks in the year 2008 were the main ingredient of the report. Stock performance of the bank for the
sake of calculating return and risk has been taken up to 2007

corporate Governance position in bangladesh

Literature Review

Definition and Concept

Meaning and importance of corporate governance

History of corporate governance
Parties to corporate governance
Principles
Systemic problems of corporate governance
Mechanisms and controls
Literature review

2.1 Meaning & importance of Corporate Governance

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the
way a corporation is directed, administered or controlled. Corporate governance also includes the
relationships among the many stakeholders involved and the goals for which the corporation is
governed. The principal stakeholders are the shareholders/members, management, and the board of
directors. Other stakeholders include labor (employees), customers, creditors (e.g., banks, bond
holders), suppliers, regulators, and the community at large. For Not-For-Profit Corporations or other
membership Organizations the shareholders means members in the text below (if applicable).
Corporate governance is a multi-faceted subject. An important theme of corporate governance is to
ensure the accountability of certain individuals in an organization through mechanisms that try to
reduce or eliminate the principal-agent problem. A related but separate thread of discussions focuses
on the impact of a corporate governance system in economic efficiency, with a strong emphasis
shareholders welfare. There are yet other aspects to the corporate governance subject, such as
the stakeholder view and the corporate governance models around the world There has been
renewed interest in the corporate governance practices of modern corporations since 2001,
particularly due to the high-profile collapses of a number of large U.S. firms such as Enron
Corporation and MCI Inc. (formerly WorldCom). In 2002, the U.S. federal government passed
the Sarbanes-Oxley Act, intending to restore public confidence in corporate governance. In A Board
Culture of Corporate Governance, business author Gabrielle ODonovan defines corporate
governance as an internal system encompassing policies, processes and people, which serves the
needs of shareholders and other stakeholders, by directing and controlling management activities
with good business savvy, objectivity, accountability and integrity. Sound corporate governance is
reliant on external marketplace commitment and legislation, plus a healthy board culture which
safeguards policies and processes. ODonovan goes on to say that the perceived quality of a
companys corporate governance can influence its share price as well as the cost of raising capital.
Quality is determined by the financial markets, legislation and other external market forces plus how
policies and processes are implemented and how people are led. External forces are, to a large
extent, outside the circle of control of any board. The internal environment is quite a different matter,
and offers companies the opportunity to differentiate from competitors through their board culture. To
date, too much of corporate governance debate has centered on legislative policy, to deter fraudulent
activities and transparency policy which misleads executives to treat the symptoms and not the
cause. It is a system of structuring, operating and controlling a company with a view to achieve long

corporate Governance position in bangladesh

term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers, and
complying with the legal and regulatory requirements, apart from meeting environmental and local
community needs. Report of SEBI committee (India) on Corporate Governance defines corporate
governance as the acceptance by management of the inalienable rights of shareholders as the true
owners of the corporation and of their own role as trustees on behalf of the shareholders. It is about
commitment to values, about ethical business conduct and about making a distinction between
personal & corporate funds in the management of a company. The definition is drawn from the
Gandhian principle of trusteeship and the Directive Principles of the Indian Constitution. Corporate
Governance is viewed as ethics and a moral duty.

2.2 History of Corporate Governance

In the 19th century, state corporation laws enhanced the rights of corporate boards to govern
without unanimous consent of shareholders in exchange for statutory benefits like appraisal rights, to
make corporate governance more efficient. Since that time, and because most large publicly traded
corporations in the US are incorporated under corporate administration friendly Delaware law, and
because the USs wealth has been increasingly securitized into various corporate entities and
institutions, the rights of individual owners and shareholders have become increasingly derivative and
dissipated. The concerns of shareholders over administration pay and stock losses periodically has
led to more frequent calls for corporate governance reforms. In the 20th century in the immediate
aftermath of the Wall Street Crash of 1929 legal scholars such as Adolf Augustus Berle, Edwin Dodd,
and Gardiner C. Means pondered on the changing role of the modern corporation in society. Berle
and Means monograph The Modern Corporation and Private Property (1932, Macmillan) continues
to have a profound influence on the conception of corporate governance in scholarly debates today.
From the Chicago school of economics, Ronald Coases The Nature of the Firm (1937) introduced
the notion of transaction costs into the understanding of why firms are founded and how they
continue to behave. Fifty years later, Eugene Fama and Michael Jensens The Separation of
Ownership and Control (1983, Journal of Law and Economics) firmly established agency theory as a
way of understanding corporate governance: the firm is seen as a series of contracts. Agency
theorys dominance was highlighted in a 1989 article by Kathleen Eisenhardt (Agency theory: an
assessment and review, Academy of Management Review). US expansion after World War
II through the emergence of multinational corporations saw the establishment of the managerial
class. Accordingly, the following Harvard Business School management professors published
influential monographs studying their prominence: Myles Mace (entrepreneurship), Alfred D.
Chandler, Jr. (business history), Jay Lorsch (organizational behavior) and Elizabeth MacIver
(organizational behavior). According to Lorsch and MacIver many large corporations have dominant
control over business affairs without sufficient accountability or monitoring by their board of directors.
Since the late 1970s, corporate governance has been the subject of significant debate in the U.S.
and around the globe. Bold, broad efforts to reform corporate governance have been driven, in part,
by the needs and desires of shareowners to exercise their rights of corporate ownership and to
increase the value of their shares and, therefore, wealth. Over the past three decades, corporate
directors duties have expanded greatly beyond their traditional legal responsibility of duty of loyalty to
the corporation and its shareowners. In the first half of the 1990s, the issue of corporate governance
in the U.S. received considerable press attention due to the wave of CEO dismissals
(e.g.: IBM, Kodak, Honeywell) by their boards. The California Public Employees Retirement System
(CalPERS) led a wave of institutional shareholder activism (something only very rarely seen before),
as a way of ensuring that corporate value would not be destroyed by the now traditionally cozy
relationships between the CEO and the board of directors (e.g., by the unrestrained issuance of stock

corporate Governance position in bangladesh

options, not infrequently back dated). In 1997, the East Asian Financial Crisis saw the economies
of Thailand, Indonesia, South Korea, Malaysia and The Philippines severely affected by the exit of
foreign capital after property assets collapsed. The lack of corporate governance mechanisms in
these countries highlighted the weaknesses of the institutions in their economies. In the early 2000s,
the massive bankruptcies (and criminal malfeasance) of Enron and WorldCom, as well as lesser
corporate
debacles,
such
as Adelphia
Communications, AOL, Arthur
Andersen, Global
Crossing, Tyco, led to increased shareholder and governmental interest in corporate governance.

2.3 Parties to corporate governance

Parties involved in corporate governance include the regulatory body (e.g. the Chief Executive Officer,
the board of directors, management and shareholders). Other stakeholders who take part include
suppliers, employees, creditors, customers and the community at large. In corporations, the
shareholder delegates decision rights to the manager to act in the principals best interests. This
separation of ownership from control implies a loss of effective control by shareholders over managerial
decisions. Partly as a result of this separation between the two parties, a system of corporate
governance controls is implemented to assist in aligning the incentives of managers with those of
shareholders. With the significant increase in equity holdings of investors, there has been an
opportunity for a reversal of the separation of ownership and control problems because ownership is
not so diffuse. A board of directors often plays a key role in corporate governance. It is their
responsibility to endorse the organizations strategy, develop directional policy, appoint, supervise and
remunerate senior executives and to ensure accountability of the organization to its owners and
authorities. The Company Secretary, known as a Corporate Secretary in the US and often referred to
as a Chartered Secretary if qualified by the Institute of Chartered Secretaries and
Administrators (ICSA), is a high ranking professional who is trained to uphold the highest standards of
corporate governance, effective operations, compliance and administration. All parties to corporate
governance have an interest, whether direct or indirect, in the effective performance of the
organization. Directors, workers and management receive salaries, benefits and reputation, while
shareholders receive capital return. Customers receive goods and services; suppliers receive
compensation for their goods or services. In return these individuals provide value in the form of
natural, human, social and other forms of capital. A key factor is an individuals decision to participate in
an organization e.g. through providing financial capital and trust that they will receive a fair share of the
organizational returns. If some parties are receiving more than their fair return then participants may
choose to not continue participating leading to organizational collapse.

2.4 Principles

Key elements of good corporate governance principles include honesty, trust and integrity, openness,
performance orientation, responsibility and accountability, mutual respect, and commitment to the
organization. Of importance is how directors and management develop a model of governance that
aligns the values of the corporate participants and then evaluate this model periodically for its
effectiveness. In particular, senior executives should conduct themselves honestly and ethically,
especially concerning actual or apparent conflicts of interest, and disclosure in financial reports.
Commonly accepted principles of corporate governance include:
Rights and equitable treatment of shareholders: Organizations should respect the rights of
shareholders and help shareholders to exercise those rights. They can help shareholders exercise

corporate Governance position in bangladesh

10

their rights by effectively communicating information that is understandable and accessible and
encouraging shareholders to participate in general meetings.
Interests of other stakeholders: Organizations should recognize that they have legal and other
obligations to all legitimate stakeholders.
Role and responsibilities of the board: The board needs a range of skills and understanding to
be able to deal with various business issues and have the ability to review and challenge
management performance. It needs to be of sufficient size and have an appropriate level of
commitment to fulfill its responsibilities and duties. There are issues about the appropriate mix of
executive and non-executive directors.
Integrity and ethical behavior: Ethical and responsible decision making is not only important for
public relations, but it is also a necessary element in risk management and avoiding lawsuits.
Organizations should develop a code of conduct for their directors and executives that promotes
ethical and responsible decision making. It is important to understand, though, that reliance by a
company on the integrity and ethics of individuals is bound to eventual failure. Because of this,
many organizations establish Compliance and Ethics Programs to minimize the risk that the firm
steps outside of ethical and legal boundaries.
Disclosure and transparency: Organizations should clarify and make publicly known the roles
and responsibilities of board and management to provide shareholders with a level of
accountability. They should also implement procedures to independently verify and safeguard the
integrity of the companys financial reporting. Disclosure of material matters concerning the
organization should be timely and balanced to ensure that all investors have access to clear,
factual information. Issues involving corporate governance principles include:
a)
b)
c)
d)
e)

internal controls and internal auditors

the independence of the entitys external auditors and the quality of their audits
oversight and management of risk
oversight of the preparation of the entitys financial statements
review of the compensation arrangements for the chief executive officer and other senior
executives
f) the resources made available to directors in carrying out their duties
g) the way in which individuals are nominated for positions on the board
h) dividend policy

2.5 Systemic problems of corporate governance

Demand for information: A barrier to shareholders using good information is the cost of processing
it, especially to a small shareholder. The traditional answer to this problem is the efficient market
hypothesis (in finance, the efficient market hypothesis (EMH) asserts that financial markets are
efficient), which suggests that the small shareholder will free ride on the judgments of larger
professional investors.
Monitoring costs: In order to influence the directors, the shareholders must combine with others to
form a significant voting group which can pose a real threat of carrying resolutions or appointing
directors at a general meeting.
Supply of accounting information: Financial accounts form a crucial link in enabling providers of
finance to monitor directors. Imperfections in the financial reporting process will cause
imperfections in the effectiveness of corporate governance. This should, ideally, be corrected by the
working of the external auditing process.

corporate Governance position in bangladesh

11

2.6 Mechanisms and controls

Corporate governance mechanisms and controls are designed to reduce the inefficiencies
that arise from moral hazard and adverse selection. For example, to monitor managers behavior, an
independent third party (the external auditor) attests the accuracy of information provided by
management to investors. An ideal control system should regulate both motivation and ability.

Internal corporate governance controls

Internal corporate governance controls monitor activities and then take corrective action to accomplish
organizational goals. Examples include:
Monitoring by the board of directors: The board of directors, with its legal authority to hire, fire
and compensate top management, safeguards invested capital. Regular board meetings allow
potential problems to be identified, discussed and avoided. Whilst non-executive directors are
thought to be more independent, they may not always result in more effective corporate
governance and may not increase performance.[5] Different board structures are optimal for different
firms. Moreover, the ability of the board to monitor the firms executives is a function of its access to
information. Executive directors possess superior knowledge of the decision-making process and
therefore evaluate top management on the basis of the quality of its decisions that lead to financial
performance outcomes, ex ante. It could be argued, therefore, that executive directors look beyond
the financial criteria.
Internal control procedures and internal auditors: Internal control procedures are policies
implemented by an entitys board of directors, audit committee, management, and other personnel
to provide reasonable assurance of the entity achieving its objectives related to reliable financial
reporting, operating efficiency, and compliance with laws and regulations. Internal auditors are
personnel within an organization who test the design and implementation of the entitys internal
control procedures and the reliability of its financial reporting.
Balance of power: The simplest balance of power is very common; require that the President be a
different person from the Treasurer. This application of separation of power is further developed in
companies where separate divisions check and balance each others actions. One group may
propose company-wide administrative changes, another group review and can veto the changes,
and a third group check that the interests of people (customers, shareholders, employees) outside
the three groups are being met.
Remuneration: Performance-based remuneration is designed to relate some proportion of salary
to individual performance. It may be in the form of cash or non-cash payments such
as shares and share options, superannuationor other benefits. Such incentive schemes, however,
are reactive in the sense that they provide no mechanism for preventing mistakes or opportunistic
behavior, and can elicit myopic behavior.

External corporate governance controls

External corporate governance controls encompass the controls external stakeholders exercise over
the organization. Examples include:
competition
debt covenants
demand for and assessment of performance information
government regulations
managerial labor market
media pressure

corporate Governance position in bangladesh

12

takeovers

Methodology of the Study

The broad objective of the research is to understand the state of corporate governance in Public
limited companies Financial and Non-Financial institutions and State Owned Enterprises (SOE) in
Bangladesh.
In particular, the research is expected to know the followings:
a. The current practice of corporate governance in terms of accountability to its stakeholders.
b. How far the current practice of corporate governance passes the test of fairness.
c. Whether corporate governance system in Bangladesh is transparent for all stakeholders.
In the first instance, extensive literary reviews indicated that corporate governance has been
addressed, analyzed, defined from various perspectives. In order to narrow it down the scope the
study concentrated on three sectors of Bangladesh. These are:
a) state owned-enterprise (State Owned Enterprises), Public limited companies both
b) financial institutions, and
c) non-financial institutions.
After this, a series of discussions and meetings with key personnel of the organizations such as
active board members, board secretaries, and company executives were held to identify the focus of
the study within the context of Bangladesh. Similarly, consultation with academics and researchers
were also conducted to further broaden the study.
It was found that the key issues related to ensuring good governance in the corporate sector
includes
a) transparency to all stakeholders,
b) accountability of the management and the board,
c) fairness in the decision making, and
d) responsibility of the management and the board . Ensuring these in a corporate culture
requires following rules and regulations both in the spirit and in the practice.
Based on these preliminary findings, a questionnaire was developed to collect specific information on
the state of corporate governance in some selected industries. The questionnaire was divided into
several sections: a) company profile,
b) shareholders rights and disclosure,
c) Public disclosure and transparency,
d) effectiveness of the board,
e) Function of the board, and
f) effectiveness of the independent directors.
Preliminary discussion with key stakeholders also revealed that the corporate sector is yet not ready
to reveal information beyond their statutory requirements. At this point, the questionnaire was made
semi-structured to allow for in-depth interviews with key individuals of the companies.
This internationally agreed benchmark consists of more than fifty distinct disclosure items across five
broad categories:
Auditing
Board and management structure and process
Corporate responsibility and compliance
Financial transparency and information disclosure
Ownership structure and exercise of control rights

corporate Governance position in bangladesh

13

Data Analysis & Findings of the Study.

Corporate governance principles and codes have been developed in different countries
and issued from stock exchanges, corporations, institutional investors, or associations
(institutes) of directors and managers with the support of governments and international
organizations. As a rule, compliance with these governance recommendations is not
mandated by law, although the codes linked to stock exchange listing requirements may
have a coercive effect. There has been some work done in the area of corporate governance by
the , Apex Food Ltd, Fu-Wang Foods Ltd, Olympic Food Ltd, Gemini Sea Food Ltd,
National Feed Mills Ltd, Rangpur Dairy & Food Products Ltd in Bangladesh, but overall
there is a lack of material on corporate governance issues in Bangladesh. The brief summaries of
the major articles and studies relating to CG are presented here The summaries explain the
authors major points that relate to corporate governance.
4.1 Overveiw of Corporate Governance on Food & Beverage Industries

4.1.1 Gemini Sea Food Ltd

4.1.2 Rangpur Dairy & Food Products Ltd

Rangpur Dairy & Food Products Limited, commonly known as RD Milk, was incorporated in
Bangladesh on March 6, 2004 with registration no- C-52012(2307)/2004, as a Private Limited
Company under The Companies Act 1994. It has started commercial operation on 14th April, 2007
by establishing its factory at Salaipur, Baldipur, Rangpur on 935 decimal land owned by the
Company. The location of the factory is on the Dhaka-Rangpur Highway and 15 KM to the Rangpur
Municipality. The company was established under the EEF assistance of Bangladesh Bank and
project loan from NCC bank. Presently authorized capital of the Company is BDT 1,000 Million and
paid up capital stands at BDT 236.586 Million. The Company introduced Aseptic Pouch Packaging
for the first time in Bangladesh in manufacturing and marketing of fresh milk, flavored milk and
other by-products by using UHT technology. In 2008 it introduced candy production under the same
brand name. Its annual milk processing capacity is 21.90 million liters under two shifts of operation
at processing stage. The brand name of the products are RD Milk.
4.1.3 Fu-Wang Foods Ltd

Fu-Wang is much closed to the taste and food habit of generations. Accordingly to
research and development of products from state of art laboratory. Every developed

corporate Governance position in bangladesh

14

product from Fu-Wang foods is well accepted from each every valued customers group.
Due to much acceptance of Fu-Wang products many of the food producers taking the
scope of duplicating our products, packing shapes etc. Thank our valued customers for
their valued supports to choice the right product from the crowed of products in
shops/market. Remember nationwide growth of Fu-Wang Foods network & supply chain
only due to our customers. Presently we are having 350 dealers, more than dozens of
chain shops, eight numbers of branches & residential offices to serve you. More than 200
products option to your wide variety choice. 24 hour supervision of foreign technician for
producing quality, imported Taiwan, Italian machinery, good quality raw materials,
Business line

Food & Beverage Processing Industry

Authorized Capital

Tk. 1,000 Million

Paid-up Capital

Tk. 724.13 Million

Number of Employees

1620

4.1.4 Rahima Foods Ltd

The company is engaged in the production of refined oils and fats. The registered business
office of the company is located in Dhaka, Bangladesh. The company offers a wide range of
products such as cooking oil, peanut oil, soybean oil, edible vegetable oil, as well as corn
oil, and other related products. This producer of refined oils and fats is active and
operational in Bangladesh. Business SummaryThe Company is engaged in food
manfacturing. Description and history The Company is engaged in food manfacturing &
incorporated in 1900 & quoted in dhaka stock exchange in 1997.
4.1.5 Olympic Food Ltd

Olympic Food Ltd is the largest Food Beverage Company in Private Sector in Bangladesh. It
provides special services to the customers through its own network all over the country. This
company has been playing a vital role in socio-economic, industrial and agricultural development as
well as in the overall economic development of the country. During the last 5 years the growth rate of
Olympic Food Ltd earnings is more than 8% on average. The cash dividend to Tk. 3.00 per share
(30%) this year from Tk. 2.00 per share (20%) last year. We believe that this is in the best
interest of the company and shareholders, as it provides shareholders with access to current
income. The company is now in a position to responsibly distribute healthy dividends to
shareholders without any risk to its capital base.

corporate Governance position in bangladesh

15

4.1.6 Apex Food Ltd

Apex Foods Limited (AFL) was incorporated on 21.03.1979 under the Companies Act 1913
(Repealed in 1994). AFL is a 100% export oriented value-added shrimp processing
Company. It is the single largest processor & exporter of frozen seafood in Bangladesh and
is one of the most modern seafood processing plants in Asia, equipped with the latest
processing, freezing and storage machinery. Its high quality products are well known in the
international seafood market and it has built a blue chip customer base with a regular order
flow. AFL has received numerous commendations and trophies for product quality and
export turnover from the Government of Bangladesh as well as from abroad. AFL strictly
adheres to HACCP (Food Safety System of FDA) based quality assurance program in its
production process. In addition, AFL has 2 Star BAP Certification and BRC-Global Standard
for Food Safety (Issue 6). The products of the Company are exported to the markets in
North America, EU countries, Australia and Russia.
4.2 Corporate Governance Disclosure

4.2.1 Gemini Sea Food Ltd

Gemini sea food limited believes in the continued improvement of corporate governance. The Board
of Directors and the Management Team of Gemini Sea Food Limited is commited to maintaining
effective Corporate Governance through a culture of accountability and transparency.

Board of Directors
The Board of Directors comprises of 5 members including one Independent Directors.

Audit Committee
The audit committee was established as a sub committee of the Board and has jurisdiction
over Gemini Sea food limited. The Audit Committee assists the Board.

Purchase Committee
A purchase committee is functioning with a group of executives ,headed by the senior most
executive to examine the purchase proposal of goods.

Management Committee
The day to day management of the company is entrusted with the Chief Executive Officer
and the management committee.The Management Committee serves the interest of the company and
presently the committee achieves a sustainable growth.

Restriction on dealing in the companys share by insiders

The company has established policy relating to trading shares by the Directors,employees and
other insiders.The securities laws also impose restrictions on similar sort of transaction.The
committee encourages communication with the shareholder throughout the year and welcomes their

corporate Governance position in bangladesh

16

participation at shareholders meeting as it is transparent to them.This company reports to shareholder

minimum three times.These are
Quarterly and Annual financial statements.
Annual General Meeting
Price sensitive disclosures and other disclosures to the BSEC and the Dhaka Stock
Exchange.
Gemini sea food limited believes in transparency and accountability to the society as a whole
through establishment of an effective and efficient Corporate Governance procedure.
4.2.2 Rangpur Dairy & Food Products Ltd

4.2.3 Fu-Wang Foods Ltd

4.2.4 Rahima Foods Ltd

4.2.5 Olympic Food Ltd

Board of Directors Its Roles and Responsibilities

The Board determines the goals of the company on the basis of its vision and mission, sets
paths to best achieve the goals, reviews the paths and makes necessary alteration /
modifcation, wherever required, regularly monitors and reviews things to ensure that the set
paths are properly followed. It determines work plans, approves overall business strategy,
ensures that the investments are channelized in right direction consistent with the goals of the
company and provides guidance for effective risk management. The Board also establish
corporate values and standards, makes proper human resource planning, ensures effcient
fnancial management and proper maintenance of all records and registers and fnally the Board
ensures that the obligations of the company to the society and to its various stakeholders are
properly taken care of.
A) Compliance in respect of the Code of Conduct of Board Members
The Code of Conduct for the members of the Board of Directors of Olympic
Industries Ltd. includes, among others,the followings:
They must be loyal to the company and should take care of interest of the
company above any other interests while discharging their duties.
Shall take due care and diligence while performing any assignment.
Shall avoid making any undue favour.
Shall avoid exercising over power.
Shall put his / her best attention and quality time for the company.
Shall ensure that all actions are compliant to applicable laws, rules, regulations
and guidelines.

corporate Governance position in bangladesh

17

B) Chairman of the Board and Managing Director

In Olympic Industries Limited, Managing Director performs all functions of Chief
Executive Offcer (CEO). The positions of the Chairman of the Board and the
Managing Director are flled-up in the company by different persons as provided in
the Corporate Governance Guidelines. Mr. Mohammad Bhai is the Chairman of the
company and Mr. Mubarak Ali is the Managing Director. The Chairman is a
member of the Board of Directors and he is elected from amongst the directors of
the company. In line with the guidelines of the notifcation, the Board of Directors
of Olympic Industries Ltd. has defned the following roles and responsibilities for
the Chairman
and
Managing
Director:
Chairman
Roles: Chairman provides leadership to the Board and he ensures that the
functions of the Board are run properly and smoothly so that the objectives of the
company are fulflled. As he provides the leadership, his role is to formulate broad
policy guidelines for the company, to oversee that the functions are performed
properly by the Directors and to extend supports to the Managing Director in
implementing the guidelines.
Responsibilities: The responsibilities of Chairman include, among others, the
following:
1) To attend and preside over the meetings of the Board of Directors.
2) To ensure that the Board performs well in achieving the objectives of the company
as well as in discharging the responsibilities of the company to the Government
and to the society at large.
3) To ensure that the members of the Board take participation in the discussions and
place their judicious views in taking effective decisions.
4) To extend required support and guidance to the Managing Director in discharging
his responsibilities properly and smoothly.
5) To ensure that various Committees of the Board are properly formed, represented
and discharge their functions properly.
6) To ensure that the agenda of the meeting are properly discussed and harmonious
decisions are taken by the Board. In case of any discord or disagreement among
the Board Members on any issues, to help remove the discord and disagreement
and to maintain congenial atmosphere in the company.
Managing Director
Roles: Managing Director acts as liaison between the owners and management. He is
responsible to lead the company properly, create enthusiasm among the performers
and help achieve the strategy of the company. His role is to represent the company
and to act as chief communicator of Board to the management and vice versa. He
acts as spokesman of the company to the various stakeholders, regulators,
government authorities, employees and fnally to the shareholders.He is a visionary,
guide
and
decision
maker
to
bear
results
for
the
company.
Responsibilities: Managing Director leads the company in properly discharging the
everyday functions. The broad responsibilities of Managing Director are as follows:

corporate Governance position in bangladesh

18

1. To set the goals for the company, formulate policies and guidelines and to lead
the key organs in the company achieve those goals.
2. To represent to the Board various plans, programs, strategies and to arrange
required fnance for the company from proper sources for implementation of
various plans.
3. To ensure that proper recruitment takes place through effective human
resource planning to represent the company and to lead them achieve result
4. To maintain congenial working environment, disciplined behaviour and team
spirit in the organization.
5. To maintain effective two ways communication skill from and to the company.
6. To effectively control the costs, reduce wastage and improve effciency at all
levels to fulfll the objectives of the company.
7. To promote and maintain management succession and management
development plans.
8. To identify various risk factors for the company and develop strategy to
overcome those risks.
9. To ensure that performance is consistent and is recognized
C) Compliance in respect of appointment of Independent Director
The Board of Directors of Olympic Industries Limited consists of 6 Sponsors
Directors and following 2 Independent Directors:
1. Mr. Sharif M. Afzal Hossain : He was frst appointed on October 23, 2010 for
3 years term. Upon expiry of his term on October 22, 2013, he was
reappointed for one more term of 3 years which will expire on October
22,2016. His frst appointment as well as re-appointment was duly
approved by the shareholders of the company. The brief resume of Mr.
Sharif M. Afzal Hossain is provided in the annual report. He does not hold
any share in the company.
2. Ms. Noorbanu Virji : She has been inducted in the Board of Olympic
Industries Limited on September 25, 2014. Her brief resume is also
provided in the annual report. The term of Ms. Noorbanu Virji will be for 3
years which will expire on September 24, 2017. He appointment was
approved by the shareholders in 35th annual general meeting held on
December 24, 2014. She holds 56,906 share in the company
D) Remuneration to Directors including Independent Directors
The aforesaid remuneration paid to the Directors were approved by the
shareholders of the company as shown below:
31st AGM held on 30.12.2010 : Remuneration of Managing Director
32nd AGM held on 29.12.2011 : Remuneration of Chairman
34th AGM held on 26.12.2013 : Remuneration of Mr. Sharif M. Afzal Hossain,
Independent Director
The fees for attending each meeting of the Board is Tk.750.00 for each Director
and is contained in Article 111 of the Articles of Association of the company.
E) Disclosure of related party transactions
The company in its normal course of business carried out a number of
transactions which comes under the defnition of related party transaction. The
said transactions comprising the names of related parties, nature of transactions,
opening balances, debits and credits during the period under report and the
closing balances at the end of fnancial year have been provided under Notes
32.00 of the audited fnancial statements.

corporate Governance position in bangladesh

19

F) Financial Statements, Books of Accounts, Accounting Policies and

Standards,
Internal
Control System, etc
a) The fnancial statements prepared by the management of the company
present fairly its state of affairs, the result of its operations, cash flows and
changes in equity.
b) Proper books of accounts of the company have been maintained.
c) Appropriate accounting policies have been consistently applied in preparation
of the fnancial statements and that the accounting estimates are based on
reasonable and prudent judgment.
d) International Accounting Standards (IAS), Bangladesh Accounting Standards
(BAS), International Financial Reporting Standard (IFRS), Bangladesh Financial
Reporting Standards (BFRS), as applicable in Bangladesh, have been followed
in preparation of the fnancial statements and any departure therefrom has
been adequately disclosed.
e) The system of internal control followed by the company is sound in design and
has been effectively implemented and monitored
G) Audit Committee and its Report
The Audit Committee of Olympic Industries Limited is a sub-committee of its
Board of Directors and the Committee reports on its activities to the Board of
Directors. The Audit Committee is composed of two Directors and one
Independent Director who acts as Chairman of the Committee. The members of
the Audit Committee are appointed by the Board of Directors. All members of the
Committee are fnancially literate and they have sound knowledge and experience.
In compliance to the BSECs Notifcation dated August 07, 2012, the Role of Audit
Committee has been determined comprising, among others, the following
functions:
i) To oversee the fnancial reporting process.
ii) To monitor choice of accounting policies and principles.
iii) To monitor Internal Control Risk management process.
iv) To oversee hiring and performance of external auditors.
v) To review along with the management, the annual fnancial statements
before submission to the board for approval
H) Subsidiary company
Olympic Industries Limited has no subsidiary company.

4.1.6 Apex Food Ltd

Status of compliance with the conditions imposed by the Bangladesh Securities and Exchange
Commissions Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012
issued under section 2CC of the Securities and Exchange Ordinance 1969.
Condition
No.

Title

Compliance
Status

1.1

Boards Size: Board

members should
not be less than 5 (Five)
and more than
20 (Twenty).

Complied

Explanation for non

compliance with the
condition

corporate Governance position in bangladesh

1.2

1.2 (i)

1.2 (ii)a)
1.2 (ii)b)
1.2 (ii)c)
1.2 (ii)d)

1.2 (ii)e)

1.2 (ii)f)

1.2 (ii)g)

1.2 (ii)h)

1.2 (ii)i)
1.2 (iii)

1.2 (iv)

1.2 (v)
1.2 (vi)
1.3
1.3 (i)

1.3 (ii)

Independent Directors
Independent Director: At
least 1/5th
(We have four Directors and
One
Independent Director)
Less than 1% Shares
Not a Sponsor of The
Company
Does not have other
relationship
Not a Member, Director or
Officer of any
Stock Exchange.
Not a Shareholder, Director
or Officer of
any Stock Exchange or an
intermediary
of the capital market.
Not a Partner or an
Executive or was
not a partner or an
Executive during the
preceding 3 (Three) years of
the
concerned Companys
statutory audit
firm.
Not an Independent Director
more than
three listed Companies.
Not Convicted by a court of
competent
jurisdiction as a defaulter in
payment of
any loan to a Bank or a
Non-Bank
Financial Institution (NBFI)
Not convicted for a Criminal
offence
Appointment by the Board
and
approved in AGM.
Post can not remain vacant
more than
90 days
Lay down a code of conduct
and annual
compliance.
Tenure of the Independent
Director.
Qualification of
Independent Director (ID)
Independent Director shall
be
knowledgeable
Should be a Corporate
Leader/Business
Leader

20

Complied

Complied
Complied
Complied
Complied

Complied

Complied

Complied

Complied

Complied
Complied

Complied

Complied
Complied

Complied

Complied

corporate Governance position in bangladesh

1.3 (iii)

1.4

1.5

1.5 (i)

1.5 (ii)
1.5 (iii)

1.5 (iv)

1.5 (v)

1.5 (vi)

1.5 (vii)

1.5 (viii)

1.5 (ix)

21

Special cases for relaxation

of
qualifications.
Chairman of the Board
and Chief
Executive Officer:
Individual Chairman of the
Board, Chief
Executive Officer and clearly
defined
roles and responsibilities.
The Directors Report to
Shareholders
Industry outlook and
possible future
developments in the
industry
Segment-wise or productwise
performance
Risks and concerns
A discussion on Cost of
Goods sold,
Gross Profit Margin and Net
Profit
Margin.
Discussion on continuity of
any Extra
Ordinary gain or loss.
Basis for related party
transactions- a
statement of all related party
transactions.
Utilization of proceeds from
public
issues, rights issues and/or
through any
others instruments
An explanation if the financial
results
deteriorate after the company
goes for
Initial Public Offering (IPO),
Repeat
Public Offering (RPO), Rights
Offer,
Direct Listing, etc
If significant variance occurs
between
Quarterly Financial
performance and
Annual Financial Statements
the
management shall explain
about the
variance on their Annual
Report.

Not Applicable

Complied

Complied

Complied
Complied

Complied

Not applicable

Complied

Not applicable

There was no such event during the

year.

Not applicable

There was no such event during the

year.

Complied

corporate Governance position in bangladesh

1.5 (x)

1.5 (xi)

1.5 (xii)

1.5 (xiii)

1.5 (xiv)

1.5 (xv)

1.5 (xvi)

1.5 (xvii)

Remuneration to directors
including
independent directors.
The financial statements
prepared by
the management of the issuer
company
present fairly its state of affairs,
the
result of its operations, cash
flows and
changes in equity
Proper books of account of the
issuer
company have been
maintained.
Appropriate accounting policies
have
been consistently applied in
preparation
of the financial statements and
that the
accounting estimates are based
on
reasonable and prudent
judgment
IAS/BAS/IFRS/BFRS, as
applicable in
Bangladesh, have been
followed in
preparation of the financial
statements
and any departure there-from
has been
adequately disclosed.
The system of internal control is
sound
in design and has been
effectively
implemented and monitored
There are no significant doubts
upon
the issuer company's ability to
continue
as a going concern. If the issuer
company is not considered to
be a
going concern, the fact along
with
reasons thereof should be
disclosed.
Significant deviations from the
last
years operating results of the
issuer
company shall be highlighted
and the
reasons thereof should be
explained.

22

Complied

Complied

Complied

Complied

Complied

Complied

Complied

Complied

corporate Governance position in bangladesh

1.5 (xviii)

1.5 (xix)

1.5 (xx)

1.5 (xxi)a)

1.5 (xxi)b)

1.5 (xxi)c)

1.5 (xxi)d)

1.5 (xxii)a)
1.5 (xxii)b)

1.5 (xxii)c)

2.1

2.2

Key operating and financial

data of at
least preceding 5 (five) years
shall be
summarized.
If the issuer company has not
declared
dividend (cash or stock) for the
year,
the reasons thereof shall be
given.
The number of Board meetings
held
during the year and attendance
by each
director shall be disclosed.
Parent/Subsidiary/Associated
Companies and other related
parties
(name wise details);
Directors, Chief Executive
Officer,
Company Secretary, Chief
Financial
Officer, Head of Internal Audit
and their
spouses and minor children
(name
wise details);
Executives;
Shareholders holding ten
percent (10%)
or more voting interest in the
company
(name wise details).
A brief resume of the director;
Nature of his/her expertise in
specific
functional areas;
Names of companies in which
the
person also holds the
directorship and
the membership of committees
of the
board.

23

Complied

Not applicable

Complied

Complied

Complied

Complied

1.5 (xxi)c)

Complied

1.5 (xxi)d)

Complied

1.5 (xxii)a)

Complied

1.5 (xxii)b)

Complied

1.5 (xxii)c)

CHIEF FINANCIAL OFFICER

(CFO), HEAD OF INTERNAL
AUDIT AND COMPANY
SECRETARY (CS):

Appointment of CFO, Head of

Internal
Audit and Company Secretary
and
defining of their respective
roles,
responsibilities and duties.
Attendance of CFO and the
Company

Complied

2.1

Complied

2.2

corporate Governance position in bangladesh

3 (i)

3 (ii)

1.5 (xxi)c)

3 (iii)

3.1
3.1(i)

3.1(ii)

3.1(iii)

3.1(iv)

3.1(v)
3.1(vi)

Secretary at Board of Directors

meeting.
AUDIT COMMITTEE:
The company shall have an
Audit
Committee as a sub-committee
of the
Board of Directors.
The Audit Committee shall
assist the
Board of Directors in ensuring
that the
financial statements reflect true
and fair
view of the state of affairs of the
company and in ensuring a
good
monitoring system within the
business
Executives;
The Audit Committee shall be
responsible to the Board of
Directors.
The duties of the Audit
Committee shall
be clearly set forth in writing.
Constitution of the Audit
Committee
The Audit Committee shall be
composed of at least 3 (three)
members
The Board of Directors shall
appoint
members of the Audit
Committee who
shall be directors of the
company and
shall include at least 1 (one)
independent director.
All members of the audit
committee
should be financially literate
and at
least 1(one) member shall have
accounting or related financial
management experience.
When the term of service of the
Committee members expires or
there is
any circumstance causing any
Committee member to be
unable to
hold office until expiration of the
term of
service.
The company secretary shall
act as the
secretary of the Committee
The quorum of the Audit

24

Complied

3 (i)

Complied

3 (ii)

Complied

1.5 (xxi)c)

Complied

Complied

Complied

Complied

Not applicable

Complied
Complied

corporate Governance position in bangladesh

3.2

3.2(i)

3 (iii)

3.2(ii)

3.3
3.3(i)
3.3(ii)
3.3(iii)
3.3(iv)

3.3(v)

3.3(vi)

3.3(vii)

3.3(viii)

3.3(ix)

Committee
meeting shall not constitute
without at
least 1(one) independent
director
Chairman of the Audit
Committee
The Board of Directors shall
select 1
(one) member of the Audit
Committee
to be Chairman of the Audit
Committee,
who shall be an independent
director.
The Audit Committee shall be
responsible to the Board of
Directors.
The duties of the Audit
Committee shall
be clearly set forth in writing.
Chairman of the audit
committee shall
remain present in the Annual
General
Meeting (AGM).
Role of Audit Committee
Oversee the financial reporting
process
Monitor choice of accounting
policies
and principles.
Monitor Internal Control Risk
management process.
Oversee hiring and
performance of
external auditors
Review along with the
management, the
annual financial statements
before
submission to the board for
approval.
Review along with the
management, the
quarterly and half yearly
financial
statements before submission
to the
board for approval.
Review the adequacy of
internal audit
function.
Review statement of significant
related
party transactions submitted by
the
management
Review Management Letters/

25

Complied

Complied

Complied

Complied
Complied
Complied
Complied

Complied

Complied

Complied

Complied

Complied

Was present in the AGM of 2013-14.

corporate Governance position in bangladesh

3.3(x)

3.4

3.4.1(i)

3.4.1(ii)a)

3.4.1(ii)b)

3.4.1(ii)c)

3.4.1(ii)d)

3.4.2

3.5
4
4 (i)

4 (ii)

Letter of
Internal Control weakness
issued by
Statutory auditors.
When money is raised through
Initial
Public Offering (IPO)/Repeat
Public
Offering (RPO)/Rights Issue the
company shall disclose to the
Audit
Committee, on a quarterly basis
and
annual basis.
Reporting of the Audit
Committee
The Audit Committee shall
report on its
activities to the Board of
Directors

26

Not applicable

Complied

report on conflicts of interests;

Suspected or presumed fraud
or
irregularity or material defect in
the
internal control system;
Suspected infringement of laws,
including securities related
laws, rules
and regulations;
Any other matter which shall be
disclosed to the Board of
Directors
Immediately.
Reporting to the Authorities
Reporting to the Shareholders
and
General Investors
EXTERNAL/STATUTORY
AUDITORS:
Appraisal or valuation services
or
fairness opinions.
Financial information systems
design
and implementation

Not applicable

There was no such

event to
report

Not applicable

There was no such

event to
report

Not applicable

There was no such

event to
report

Not applicable

There was no such

event to
report

Not applicable

Not applicable

Complied

Complied

There was no such

event to
report
There was no such
event to
report

corporate Governance position in bangladesh

4 (iii)

4 (iv)
4 (v)
4 (vi)
4 (vii)

4 (viii)

4 (ix)

5 (i)

5 (ii)

5 (iii)

5 (iv)

Book-keeping or other services

related
to the accounting records or
financial
statements
Broker-dealer services
Actuarial services.
Internal audit services.
Any other service that the Audit
Committee determines.
No partner or employees of the
external
audit firms shall possess any
share of
the company they audit at least
during
the tenure of their audit
assignment of
that company.
Audit/Certification services on
Compliance of Corporate
Governance
as required under clause (i) of
condition
No. 7.
SUBSIDIARY COMPANY:
Provisions relating to the
composition of
the Board of Directors of the
holding
Company shall be made
applicable to
the composition of the Board of
Directors of the subsidiary
company.
At least 1 (one) independent
director on
the Board of Directors of the
holding
Company shall be a director on
the
Board of Directors of the
subsidiary
company.
The minutes of the Board
meeting of
the subsidiary company shall
be placed
for review at the following
Board
meeting of the holding
company.
The minutes of the respective
Board
meeting of the holding
company shall
state that they have reviewed

27

Complied

Complied
Complied
Complied
Complied

Complied

Complied

Not applicable

Not applicable

Not applicable

Not applicable

corporate Governance position in bangladesh

5 (v)

6.(i)

6 (i)a)

6 (i)b)

6 (ii)

7
7 (i)

the affairs
of the subsidiary company
also.
The Audit Committee of the
holding
company shall also review the
financial
statements, in particular the
investments made by the
subsidiary
company.
DUTIES OF CHIEF
EXECUTIVE OFFICER (CEO)
AND CHIEF FINANCIAL
OFFICER (CFO):
They have reviewed financial
statements for the year and
that to the
best of their knowledge and
belief:
These statements do not
contain any
materially untrue statement or
omit any
material fact or contain
statements that
might be misleading;
These statements together
present a
true and fair view of the
companys
affairs and are in compliance
with
existing accounting standards
and
applicable laws.
There are, to the best of
knowledge and
belief, no transactions entered
into by
the company during the year
which are
fraudulent, illegal or violation of
the
companys code of conduct.
REPORTING AND
COMPLIANCE OF
CORPORATE
GOVERNANCE:
The company shall obtain a
certificate
from a Professional
Accountant/
Secretary (Chartered
Accountant/Cost
& Management
Accountant/Chartered
Secretary) regarding
compliance of

28

Not applicable

Complied

Complied

Complied

Complied

Complied

corporate Governance position in bangladesh

7(ii)

29

conditions of Corporate
Governance
Guidelines.
The directors of the company
shall
state, in accordance with the
Annexure
attached, in the directors'
report
regarding compliance

Conclusion

At present the need for strengthening the corporate governance in Bangladesh arises with
a global demand for a sound and transparent corporate world system. Corporate
governance was viewed as the total system or control mechanisms, external or internal,
that provided an effective means of good corporate behavioral process. This process
ensures accountability of those who matter most in the process and maximizes the value
for the shareholders in a fully transparent manner. Failure in institutions, legal enforcement
and market behavior resulted in weak corporate governance in Bangladesh. A large number
of companies listed in the stock exchange in Bangladesh pay inadequate attention to follow
the rules of businesses and full disclosure of information and demonstrate lack of
corporate norms and responsibility. But this is hopeful that there is no serious scandal in
respect of corporate governance in Bangladesh. It is seen that in many areas, system did
not provide adequate incentives and motivations in terms of legal, institutional or economic,
for the shareholders to encourage and enforce good corporate governance. As a result,
they added, there were hardly any rewards for the companies that instituted good corporate
governance practices and no penalties for failing to do so. Dhaka Stock Exchange is going
to incorporate corporate governance principles in the list of the stock exchange to ensure a
competitive atmosphere in the capital market. However, the Securities and Exchange
Commission notified certain further conditions for the public listed companies with any stock
exchange in Bangladesh, on mandatory basis, in order to improve corporate governance in
the interest of investors and the capital market.To conclude, government cannot legislate
the personal integrity of key players and no amount of legislation can substitute trust, faith
and confidence necessary for good corporate governance practice. But as the lead
regulatory body overseeing corporate accounting and reporting, the SEC has a critical role
to ensure that public company boards are properly structured and organized and have the
resources to accomplish the objectives of adding value to shareholders, minimize risk of

corporate Governance position in bangladesh

30

key shareholders and hold management responsible for corporate results. Ruthless
monitoring of compliance and severe punishment of transgressors can ensure good
corporate governance. But Bangladesh has to wait a lot to ensure enforcement of any
corrective measures properly.

corporate Governance position in bangladesh

31

References
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