Putting good corporate governance in place
A recent workshop on corporate government (CG) in Dhaka brought to the fore the need for wide-ranging reforms for ensuring transparency, accountability and fairness in all corporate bodies – public and private. The discussants and participants in the workshop that was organised by the Institute of Chartered Accountants of Bangladesh (ICAB) and the International Finance Corporation (IFC), highlighted the need for proper harmoinisation of the CG guidelines in various relevant areas. Such areas, as noted by them, include the Companies Act 1994, the Bangladesh Securities and Exchange Commission (BSEC) rules, the Bank Company Act 1991 and the Bangladesh Bank (BB) circulars and guidelines. [EXPAND Read more]
Corporate governance is nothing but good governance in its true meaning. Its absence leads to distortions that finally defeat the very objectives for which a corporate body like a company is established. As Bangladesh lacks in proper corporate governance guidelines and their effective enforcement, scams like the Hallmark, the Destiny and the stock market collapse occurred recently. This was mainly because corporate governance was glaringly absent in these bodies, making a few powerful enough to go out of the way in deciding the fate of thousands of their clients. There was no accountability nor was there any transparency in the state of affairs in the Hallmark group, the Destiny as well as a good number of companies listed on the stock exchanges. The result was a joy-ride on public money worth billions of takas and that too, with impunity. Citing an example, a senior Bangladesh Bank official regretted at the workshop that many directors of financial institutions do not even know how their institutions are run. Financial institutions have multi-dimensional risks but directors on the boards are not properly aware of them, he said while calling for their proper orientation, knowledge and training.
Corporate governance is a mechanism through which boards of directors as well as management functionaries at different levels are able to direct, monitor and supervise the conduct and operations of a company and its management. It must ensure appropriate levels of authority, proper delegation of responsibilities, meticulous exercise of due diligence, compliance with the needs for accountability and providing effective stewardship, leadership, direction and control. All these are purported to delivering the goods properly, effectively and efficiently at the end of the day. It ensures a company’s growth and stability, balancing economic and social goals by aligning the interests of all stakeholders: employees, customers, suppliers, and communities. Then, the shareholders will get higher return on their investment and companies will enjoy more robust growth, having better access to capital and enjoy the right kind of resilience to meet any crisis, alongwith higher market capitalisation.
Good corporate governance is more about articulating what are recognised as standardised practices, whether proper practices are followed in the board room and also whether due diligence is exercised at the levels of management personnel, committees and sub-committees. Sustained long-term economic growth of Bangladesh can be fuelled mainly by more investments, employment generation and use of proper technology. Good corporate governance can help sustain this growth process. In this context, the point that good corporate governance requires a polity in which good governance is embedded and institutionalised, must, in no way, be missed. [/EXPAND]