Corporate governance is the system by which companies are directed and controlled.

Boards of
directors are responsible for the governance of their companies. The shareholders’ role in
governance is to appoint the directors and the auditors and to satisfy themselves that an
appropriate governance structure is in place.

 Corporate governance

 refers to the relationship among the board of directors, top management and
shareholders in determining the direction and performance of the corporation

Among the Board’s core responsibilities are to:

 Select individuals for Board membership and evaluate the performance

of the Board, Board committees and individual directors.
 Select, monitor, evaluate and compensate senior management.
 Assure that management succession planning is adequate.
 Review and approve significant corporate actions.
 Review and monitor implementation of management’s strategic plans.
 Review and approve the Company’s annual operating plans and
budgets.
 Monitor corporate performance and evaluate results compared to the
strategic plans and other long-range goals.
 Review the Company’s financial controls and reporting systems.
 Review and approve the Company’s financial statements and financial
reporting.
 Review the Company’s ethical standards and legal compliance
programs and procedures.
 Oversee the Company’s management of enterprise risk.
 Monitor relations with shareholders, employees, and the communities in
which the Company operates.

This empirical study examines the current CSR practices of Telecom organizations in Bangladesh such as
Grameenphone Ltd, Banglalink, and Teletalk Bangladesh Ltd.
It documents the common people’s perception and evaluation about the CSR practices of telecom
industries in Bangladesh. By focusing on the current boom of mobile operators and their ever increasing
subscribers in Bangladesh, this paper further analyzes what has currently been practiced as part of CSR
activities and what ordinary people think and evaluate these practices.
Such analysis will reveal the rhetoric vs. realities of CSR practices of the booming telecom industries in
Bangladesh with millions of subscribers and billion-dollar revenue earnings each year.
Although CSR practices have been considered as part of a major business ethics globally, this paper
documents a very glaring picture of such practices in Bangladesh. Many common people just believe that
CSR practices are just cosmetic, rhetoric, and in paper only without any substantial impact in real life.
This paper highlights some expectations of the common people from the telecom organizations in
Bangladesh, thereby suggesting some propositions for further strengthening their CSR activities.
Methodologically, this study has incorporated views from different stakeholders and beneficiaries of
telecom industries in Bangladesh.
A mixed method, using both qualitative and quantitative techniques has been adopted to have desirable
outcomes. This study suggests that a real sharing of revenue earned from telecom industries through CSR
activities may contribute towards a more livable, sustainable and equitable society.

Agency Costs
Agency costs are internal costs incurred from asymmetric information or conflicts of interest
between principals and agents in an organization.

In a corporation, the principals would be the shareholders and the agents would be the managers.
The shareholders want the managers to run the company in a way that
maximizes shareholder value. The managers, on the other hand, may want to run the company in
a way that maximizes the managers’ own personal power or wealth, even if it lowers the market
value of the company. These divergent interests can result in agency costs. There are three
common types of agency costs: monitoring, bonding, and residual loss.
Types of Agency Costs

Monitoring costs are incurred when the principals attempt to monitor or restrict the actions of
agents. For example, the board of directors at a company acts on behalf of shareholders to
monitor and restrict the activities of management to ensure behavior that maximizes shareholder
value. The cost of having a board of directors is therefore, at least to some extent, considered an
agency monitoring cost. Costs associated with issuing financial statements and employee stock
options are also monitoring costs.
Bonding costs are incurred by the agent. Furthermore, an agent may commit to contractual
obligations that limit or restrict the agent’s activity. For example, a manager may agree to stay
with a company even if the company is acquired. The manager must forego other potential
employment opportunities. That implicit cost would be considered an agency bonding cost.
Residual losses are the costs incurred from divergent principal and agent interests despite the use
of monitoring and bonding.
7. 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 attests the accuracy of information
provided by management to investors. An ideal control system should regulate both motivation
and ability.
7.1. 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

 Internal control procedures and internal auditors
 Balance of power
 Remuneration

7.2. 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 labour market.
 Media pressure.
 Takeovers.

8. Financial reporting and the independent auditor:

The board of directors has primary responsibility for the corporation's external financial
reporting functions. The CEO and CFO are crucial participants and boards usually have a high
degree of reliance on them for the integrity and supply of accounting information. They oversee
the internal accounting systems, and are dependent on the corporation's accountants and internal
auditors. Current accounting rules under International Accounting standards and U.S.GAAP
allow managers some choice in determining the methods of measurement and criteria for
recognition of various financial reporting elements. Similar provisions are in place under clause
49 of Standard Listing Agreement in India.
9. Systemic problems of corporate governance:

 Demand for information

 Monitoring costs
 Supply of accounting information

10. Executive remuneration/compensation:

Research on the relationship between firm performance and executive compensation does not
identify consistent and significant relationships between executives' remuneration and firm
performance. Not all firms experience the same levels of agency conflict, and external and
internal monitoring devices may be more effective for some than for others.

Some researchers have found that the largest CEO performance incentives came from ownership
of the firm's shares, while other researchers found that the relationship between share ownership
and firm performance was dependent on the level of ownership. The results suggest that
increases in ownership above 20% cause management to become more entrenched, and less
interested in the welfare of their shareholders.

Some argue that firm performance is positively associated with share option plans and that these
plans direct managers' energies and extend their decision horizons toward the long-term, rather
than the short-term, performance of the company. However, that point of view came under
substantial criticism circa in the wake of various security scandals including mutual fund timing
episodes and, in particular, the backdating of option grants as documented by University of Iowa
academic Erik Lie and reported by James Blander and Charles Forelle of the Wall Street Journal.

11. Ten ways for a CEO to improve corporate governance:

 Schedule regular meetings of the non-executive board members from which you and the
other executives are excluded.
 Explain fully how discretion has been exercised in compiling the earnings and profit
figures.
 Initiate a risk-appetite review among non-executives.
 Check that non-executive directors are independent.
 Audit non-executives’ performance and that of the board.
 Broaden and deepen disclosure on corporate websites and in annual reports.
 Lead by example, reining in a company culture that excuses cheating.
 Find a place for the grey and cautious employee alongside the youthful and visionary
one.
 Make compensation committees independent.
 Don’t avoid risk.
According to Prof. Gower,
“Winding up of a company is the process whereby its life is ended and its property is
administered for the benefit of its creditors and members. And an administrator, called a
 liquidator, is appointed and he takes control of the company, collects its assets, pays its
debts and finally distributes any surplus among the members in accordance with their
rights”.
Winding Up by Court
Sec. 241 of the Companies Act, 1994 speaks about ‘winding up by court’. As per Sec.
241, a company may be wound up by the court;
 if the company has, by a special resolution, resolved that the company may be wound up
by the court; or
 if default is made in filing the statutory report or in holding the statutory meeting; or
 if the company does not commence its business within a year from its incorporation or
suspends its business for a whole year; or
 if the number of members is reduced, in case of a private company below 2, or, in case of
a public company below 7; or
 if the company is unable to pay its debts; or
 if the court is of the opinion that it is just and equitable that the company should be
wound up.

Voluntary Winding Up
Voluntary winding up means the winding up by the members or creditors themselves
without any intervention of the court.  Sec 286 of the Companies Act, 1994 deals with the
cases in which the company may be voluntarily wound up.
Members’ Voluntary Winding Up
The term ‘members’ voluntary winding up’ refers to the winding up in which a
‘declaration of solvency’ is made and delivered to the Registrar (for registration) as per
the provisions of the Companies Act. [Sec. 290 of the Companies Act, 1994]. The
‘declaration of solvency’ means the declaration in which the directors of the company
states that the company has no debts, or that it will be in a position to pay its debts in
full. [Sec 290 (1)]
Creditors’ Voluntary Winding Up
The term ‘creditors’ voluntary winding up’ refers to the winding up in which no
‘declaration of solvency’ is made and the company is in a position that it is unable to pay
its debts in full. As in such a situation, the interest of the creditors is involved, they are
given the powers to control and supervise the winding up of the company.
Debenture
 Sec. 2 (1) (e) of the Companies Act, 1994 says,
“Debenture includes debenture stock, bonds and any other securities of a company,
whether constituting a charge on the assets of company or not.”
According to Topham:
“Debenture the holder usually arising out of a loan and most commonly secured by
charge.”
In short, debenture is a certificate of loan issued by the company which creates or
acknowledges a debt due from the company.
Fixed Charge
A charge is said to be fixed when it attaches to any specific property. Thus, the company
is not allowed to dispose of that specific property without the assent of the holders of the
charge.
 Floating Charge
 A charge is said to be floating when it is floating, i.e. which does not attach to any
definite or specific property. Thus, the company can dispose of its property without the
consent of the holders of the charge as if no charge were created on that property.
Rights of debenture holders:-
Rights and remedies of unsecured debenture holder:-
(i)   They can file a suit against the company for the principal as well as for the interest.
(ii)   They can file an application to the court regarding compulsory dissolution of the company.
(iii)          If the company is under the process of winding up, they can claim their principal.
Rights and remedies of secured debenture holder:-
(i)    They can file a suit against the company for the principal as well as for the interest.
(ii)  They can file an application to the court regarding compulsory dissolution of the company.
(iii) If the company is under the process of winding up, the can claim their principal.
(iv  These debenture holders can file a suit against the companies for its compulsory dissolution
through the debenture trustee.
(v) They can file a suit against the company for the sale of property.
(vi)  It can get injunction from the court to restrict the right of the company to sell its property for
redemption of the debenture.
(vii)        If the trustee is so authorized, the debenture holder may appoint liquidator, through the
trustee and get the charge sold for the purpose of repayment.

What Is Equity Capital?

Equity financing refers to funds generated by the sale of stock. The main benefit of equity financing is
that funds need not be repaid. However, equity financing is not the no-strings-attached solution it may
seem.

Shareholders purchase stock with the understanding that they then own a small stake in the business. The
business is then beholden to shareholders and must generate consistent profits in order to maintain a
healthy stock valuation and pay dividends. Since equity financing is a greater risk to the investor than
debt financing is to the lender, the cost of equity is often higher than the cost of debt.

ANTU MANUFACTURING COMPANY LTD.

Reg. Office: 32, Dilkusha, Dhaka

Date-.18-12-2004

Ref.   No.

NOTICE

NOTICE is hereby given that pursuant to the Companies Act 1994 (as requisition deposited by some shareholders
of this company on “31.06.04), an Extra-ordinary General Meeting of the company shall be held at its registered
office on the 10th July 2004 at 3 P.M. for considering and if found suitable, passing the following resolution as a
special resolution with or without modifications:

1. That subject to the approval, of the Central Government under of the Companies Act. 1994, the name of
the Company will be changed from Auto Manufacturing Company Ltd.” to “Agrani Manufacturers Ltd.”
2. Articles of Association of the company be substituted by the following Article, the number of Directors
shall not be less than three nor more than five.
3. That the capital of the company be reduced from 10,000 equity shares of Tk. 100 each fully paid to
10,000 equity shares of Tk. 60 each fully paid.
4. All members are requested to kindly attend the meeting.

By Order of the Board

MD. Kamal Sheikh.
Secretary

Note

1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy and vote instead of
himself and the proxy need not be a member of the company.
2. Explanatory Statement.
3. The resolution to change the name of the company is intended because of the diversification of the
activities of the company.
4. The resolution for the alteration of Article 17 is intended to fix up the number of Director of the company.
5. The resolution for reduction of capital is intended because the company is  incurring losses  during
the  1st three  years  and  there  is   an accumulated debit balance of Tk. 2,00,000 and value
of goodwill amounts Tk. 1,00,000 and the market value of the assets is Tk. 50,000 less than the book
value.

What Is Debt Capital?

Debt financing is capital acquired through the borrowing of funds to be repaid at a later date. Common
types of debt are loans and credit. The benefit of debt financing is that it allows a business to  leverage a
small amount of money into a much larger sum, enabling more rapid growth than might otherwise be
possible.

In addition, payments on debt are generally tax-deductible. The downside of debt financing is that lenders
require the payment of interest, meaning the total amount repaid exceeds the initial sum. Also, payments
on debt must be made regardless of business revenue. For smaller or newer businesses, this can be
especially dangerous.