‘Companies Act needs reforms to attract investment’

Financial sector experts said that the current Companies Act has to be made a suitable and time-befitting law to foster investment, businesses, and modern financing instruments.

According to them, the reformation of the Companies Act 1994 is now a demand of time.

The experts also recommended incorporating full-fledged automation and maximum flexibility to use technology within the framework, provision of Alternate Dispute Resolution (ADR) for speedy dispute resolution, and provision of Intellectual Property Rights (IPR).

They came up with the remarks at a seminar on “Reform of Companies Act 1994”, organised by Dhaka Chamber of Commerce and Industry (DCCI) at its auditorium in the capital on Saturday.

Bangladesh was ranked 176th out of 190 countries in the ease of doing business report prepared by the World Bank in 2020.

In the panel discussion, Country Manager of International Finance Corporation (IFC) Bangladesh Martin Holtmann said that the existing law is not fit for modern financing instruments.

“First of all we need to reduce the risks. We need to formalise the informal sector outside the data. In the recent past Bangladesh did a tremendous improvement in terms of economy. If Bangladesh can make radical changes in the Companies Act, it will bring enough confidence to businesses,” he said.

Holtman emphasised the law needs to be reformed for ensuring a better business environment in the country. 

Presenting the keynote paper, Barrister Rashna Imam, Advocate of the Supreme Court of Bangladesh, highlighted a few reform proposals like the need for a robust legal framework for merger and acquisition to fill the legislative vacuum.

She said currently winding up procedures for a company is a lengthy and expensive process. Barrister Rashna Imam recommended making it much easier and pleaded for a mandatory ADR or mediation to be inserted in the new law.

She said that the “Independent Director” should be mandatory for the publicly unlisted companies for better transparency.  

DCCI President Md Sameer Sattar said that the reform of the Companies Act is now “a pressing demand of time” to create wider business confidence in the country as well as to attract foreign direct investment (FDI).

“In order to foster a pro-business environment with corporate governance in Bangladesh, formulation of relevant policies including Companies Act is instrumental,” he added.

The DCCI president stressed the need for increasing the capacity of the Registrar of Joint Stock Companies (RJSC) to better monitor and enforce company law compliance and governance.

RJSC will be in place by December this year

Senior Secretary of the Ministry of Commerce Tapan Kanti Ghosh was present as the chief guest. He informed that the revised law is now at the commerce ministry after necessary vetting and scrutiny from the Ministry of Law.

“Soon it will be sent to the Cabinet Division to appraise it to the Jatiya Sangsad.”

Regarding automation of the RJSC, he said that the software of RJSC will be in place by December this year.

Former ICAB president Md. Shahadat Hossain said timely execution of Annual General Meeting (AGM) is very important for compliance.

President of ICMAB Md. Abdur Rahman Khan said the company law should be amended every two to three years to make it more subjective with the businesses.

Md. Abdus Samad Al Azad, Registrar (joint Secretary) of RJSC, said that automation will make the RJSC a more efficient institution.  

Chairman and Managing Director of Unilever Bangladesh Zaved Akhter emphasised integration and compliance of the Companies Act. He also underscored the need for implementing the ADR for any business dispute settlement.