Volume : XIX Issue : 1 January - March 2017 Independent Directors Institute of Chartered Secretaries of Bangladesh (ICSB) established under an Institute of Act of Parliament i.e. Chartered Secretaries Act 2010 is the only recognized professional body in Bangladesh to develop, promote and regulate the Chartered profession of Chartered / Company Secretaries in Bangladesh. Secretaries of The affairs of the Institute of Chartered Secretaries of Bangladesh (ICSB) are Bangladesh managed by a Council consisting of thirteen elected members and five (ICSB) nominees of the Government. The major contribution of a Chartered Secretary is in the corporate sector. Chartered Secretary is a requisite qualification to become a Company Secretary. Company Secretary is an important professional, aiding the efficient management of the corporate sector. Company Secretary is a Statutory Officer under the Companies Act 1994. According to Bangladesh Securities and Exchange Commission (BSEC) all the listed companies should have a Company Secretary. Company Secretary is the compliance officer of the company, who has to interact, coordinate, integrate and cooperate with various other functional heads in a company. Mohammad Sanaullah FCS : President THE COUNCIL Mohammad Bul Hassan FCS : Senior Vice President 2016-2019 Md. Selim Reza FCS : Vice President Nazmul Karim FCS : Treasurer Mohammad Asad Ullah FCS : Councilor Itrat Husain FCS : Councilor Md. Shahid Farooqui FCS : Councilor Safiar Rahman FCS : Councilor Md. Azizur Rahman FCS : Councilor A. K. M. Mushfiqur Rahman FCS : Councilor Gopal Chandra Debnath FCS : Councilor Md. Anwar Hossain Chowdhury FCS : Councilor Salim Ahmed FCS : Councilor Munshi Shafiul Haque, Additional Secretary (IIT), GoB : Councilor Md. Ekhlasur Rahman, Additional Secretary, GoB : Councilor Nasreen Begum, Additional Secretary, GoB : Councilor Prof. Md. Helal Uddin Nizami, Commissioner, BSEC : Councilor Md. Mosharraf Hossain, Registrar, RJSC, GoB : Councilor Editor EDITORIAL Prof. Dr. Feroz I. Faruque FCS Members BOARD Itrat Husain FCS Bazlur Rahman Sikder FCS Kazi Ashiqur Rahman FCS Subash Chandra Moulick FCS Mohammad Shahajahan FCS Md. Shiful Islam ACS For Students : per copy Tk. 100; per year Tk. 350 Subscription Others : per copy Tk. 150; per year Tk. 560 Rate Design & Print IN THIS ISSUE Editorial 3 Message from the President 4 Institute News 6 Glimpses of ICSB Picnic-2017 14 Standing and Sub Committees for 2016-2019 18 ARTICLES Independent Director and its Practice - Mohammad Sanaullah FCS 25 Independent Director-A Misnomer! - Prof. Dr. Feroz I. Faruque FCS 29 Corporate Governance and the Role of Independent Directors in Bangladesh - Mohammad Shahajahan FCS 32 The views and opinions expressed in the articles published in Company Secretary as Independent Director this Journal are those of the writers only. - Bipul Kumar Bhowmik FCS 38 Published by Institute of Chartered Secretaries of Bangladesh (ICSB) Independent Director- Bangladesh Context (Established under Chartered Secretaries Act 2010 (Act No. 25 of 2010) - 1Prodip Kumar Roy FCS & 2Gourav Roy 41 Administrative Ministry Ministry of Commerce Independent Director in Context of Bangladesh Government of the People’s Republic of Bangladesh - An Empirical Investigation - Iftekhar Shahab Uddin 45 Institute Office Padma Life Tower (8th Floor) 115 Kazi Nazrul Islam Avenue Independent Director-Bangladesh Perspective Bangla Motor, GPO Box No. 3100 - Md. Anisur Rahman 49 Dhaka-1000, Bangladesh Phone : +88 02 933 9957, 933 4878, 933 6972, 831 5338 +88 02 4934 9578, 933 6901 (Extn.-101-108) Independent Director-An Independent Review Fax : +88 02 933 9957 - Munshi Abu Naim 52 Mobile : 01708 030804 E-mail : [email protected], [email protected] Corporate Watchdog Web : www.icsb.edu.bd - Role of Independent Director in Bangladesh - Munshi Fahima Rahman 55 Campus Padma Life Tower (7th Floor) 115 Kazi Nazrul Islam Avenue Board Effectiveness -A Collective Effort of the Bangla Motor, GPO Box No. 3100 Independent Director and Company Secretary - Razia Sultana Lubna 58 Dhaka-1000, Bangladesh EDITORIAL How Independent are the this ‘Independent’ Directors! issue... n theory, a board of directors protects him or her left I the rights of shareholders. the board as a Independent directors are supposed to measure of how be just that ‘independent’-free to dissent that tie affects from a decision of the majority. The reality dissent. They is more complex. Directors are tied to one found that after another by business and social the chair left, connections, and their behavior often has board members as much to do with their relationships with were 58 one another. Scholars have studied how percent more boards work, but very little is known about likely to dissent than before. the decisions and performance of individual directors. Boards are black Generally the independent directors boxes, with debates going on behind appointed on the Boards are discoveries closed doors that rarely spill out into of the key person on the Board or the public. It is next to impossible to know promoters of the firm. This specially which board members are dissenting from applies to the private sector firms. These directors are brought on the platform to July-December 2016 the party line and which are following the Volume : XIX Issue : 3 majority. fulfill the regulatory requirement for Board composition, and more so to support the 6th Convocation 2016 Social ties can be difficult to measure. views of promoters for getting their 6th National Convention 2016 Traditionally, researchers have attempted proposal approved by the Board. This to get a handle on this subjective factor phenomenon defeats the very purpose of by noting connections such as directors system of independent directors. It is not 3rd Corporate Governance Excellence Award, 2015 who come from the same city or attended easy for an Independent Director to the same school. But that fails to capture survive on a Board for a long time when the richness of social relations that his/her views are contradictory to the transcend such formal connections. In views of promoters. place of those markers, researchers-Ma and Khanna used a different proxy of looking at which chair appoints a director, assuming that a social tie must exist between the two. Then they measured Prof. Dr. Feroz I. Faruque FCS how the voting behavior of that director Editor changed when the chair who appointed January - March 2017 3 MESSAGE FROM THE PRESIDENT 20th Anniversary of ICSB ear Professional Colleagues, I am pleased to inform you that the Council of the institute has decided to celebrate the 20th D Personally, I believe every cloud has its silver Anniversary of ICSB. I would like to recall the sweet lining. The term of the present council began on memories of 1997 when 13 likeminded professionals a difficult note. But we lived up to our values, realized the importance of the Chartered Secretary profession and establish an Institute. I was fortunate continued our efforts towards excellence and earned to be one of the founder members, a budding the right to grow. Thanks to Almighty Allah and the Company Secretary at that time. We started at the enthusiastic involvement and contribution of our office of Mr. Muzaffar Ahmed, the founder President Members who helped to overcome all the odds and and then moved to a small office at Eskaton and finally we stepped into the new year of 2017. I am subsequently at kakrail with a big dream to happy to recall that the last quarter of the year materialize. I solemnly remember the contribution of ending 2016 witnessed some luminous and two of our veteran Members Late M. S. Alam Mia FCS memorable activities that acted as good branding and Late Anwarul Afzal FCS. The visionary leadership of the Founder Members paved the path of today’s and heightened our image as a professional Institute. ICSB. It was not an easy journey, sometime tiring and full of negative opinions from different corners, Strategic Planning Admission of Students in January-June 2017 (BSEC) at his new office premises recently and shared however, we were on target and kept trying to Session a few issues relating to the development of the achieve something meaningful. Therefore, ICSB The Council in its meeting held on March 13, 2017 profession of Chartered/Company Secretaries in Council is going to celebrate the 20th Anniversary in More emphasis has been given by the present approved an action plan to prepare the strategic plan Bangladesh among which recognition for Secretarial a colourful manner inviting corporate leaders, policy Council to increase the enrollment of the number of for ICSB for the meaningful growth of the Institute Standards published by the Council of ICSB and also makers, intellectuals to showcase our achievements students. You will be happy to know that in and profession as well. With this thinking in mind to incorporate those Secretarial Standards in the and future plans. January-June 2017 Session, enrollment of students Council has made few changes in the Standing Securities Law and Corporate Governance has been increased by around 25 % in comparison Committees to run the Institute effectively and Arrangement of Different Events with the average admission of the previous year. Guidelines. efficiently. I do believe that the team spirit is one of Within the last few months, we have arranged the important factors for any success. As the Management Development Program Meeting with the Secretary, Ministry of different events like Annual Picnic, International President I have tried my level best to engage the Commerce Mother Language Day Celebration and One of the important objectives of the Institute is to right person in the right place. The strategic moves Independence Day Celebration. Different Sub during the last quarter will put us on the fast track to Recently, a delegation of ICSB Council Members met develop the corporate people working in the grass Committees had put their best efforts to make the delivering on our responsibility. Mr. Shubhashish Bose, the newly appointed root of the corporate management.