Amend Companies Act to improve ease of doing business: Speakers

To improve Bangladesh’s position in ease of doing business global ranking, experts have come up with a number of observations and recommendations.

They said, although in 2020 amendments were brought to the companies act 1994, some provisions of the act still require changes with the best practices adopted in Singapore and Hong Kong.

They said, companies should prepare their Financial Statements as required under the provision of Financial Reporting Council (FRC) as par with international financial reporting standards (IFRS) and the audit should be carried out as per International Standards on Auditing (ISA) because international & local investors need to comply with IFRS and ISA.

For ensuring compliance the auditors should be paid as per prescribed minimum audit fees fixed by ICAB or higher accepted by the company, they said. They also stressed the need to digitise all functions of the Registrar of Joint Stock Companies.

Speakers forwarded some observations and recommendations on the companies act 1994 which can contribute to country’s progress in ease of doing business global ranking and also boost up both foreign and local investment.

The Institute of Chartered Accountants of Bangladesh (ICAB) organised the webinar on ease of doing business: perspective of companies act on Thursday, 24 June 2021 where Commerce ministry secretary Tapan Kanti Ghosh was present as the Chief Guest.

AHM Ahsan, in charge, Registrar, Office of the Registrar of Joint Stock Companies & Firms (RJSC), Jibon Krishna Saha Roy, Director, Bangladesh Investment Development Authority (BIDA) among others joined the webinar as panel speakers.

Council member and former president of ICAB, Md Humayun Kabir FCA, moderated the programme.

ICAB President Mahmudul Hasan Khusru FCA in his address of welcome said, ICAB felt necessity of the simplification & modernisation of corporate laws to ensure a business-friendly atmosphere.”

“The government should remove various impediments on the way of improving business environment and a balanced company act would encourage both local and foreign investors to make more investment in the country,” he further said.

Amendments bought in companies act in 2020 allows foreign company to open a private limited company in Bangladesh having 100 per cent ownership. It gives them opportunity to open a company in a short time. Similar practice is adopted in Hong Kong. Before 2020, minimum two persons were required to open a company in Bangladesh whereas under this new amendments, foreign company can also open a PLC or OPC, speakers said.

Merger & acquisition of companies should be bought in two ways -merger by adoption and merger by formation in line with the practice adopted in India & UK. However, no such provisions allowed in the companies act 1994, speakers pointed out.

Under the new amendments any foreign Public Limited Company and One Person Company must appoint a professional in practice as company secretary (external or internally hired) and his signature is mandatory in regulatory documents. Similar practice is adopted in Singapore and Hong Kong, they observed.

They also said, all private limited companies with turnover of more than Tk 100 crore need to issue a report by the directors and it also needs to be reviewed by auditor under ISA. This director’s report along with the audited FS containing comment must be submitted to RJSC.

In ease of doing business global ranking, Bangladesh made slight improvement and stood 169 in 2020. Bangladesh was well ahead in starting a business, dealing with construction, getting power connection, registration properties, getting credit, protecting minority investors in the ranking. The county could not make much progress in the areas of paying tax, trading in boarder, enforcing contract and resolving insolvency.