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Corporate Governance in Bangladesh

Table of Contents

Every company registered in Bangladesh must follow the primary framework for corporate compliance as provided in the Companies Act 1994. This framework outlines mandatory filings, meeting requirements, record-keeping obligations, and procedures for notifying changes within the company structure. Below, we discuss some of the key compliance requirements for companies operating in Bangladesh.

Mandatory Filings with RJSC
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Companies registered in Bangladesh are required to submit various returns and documents to the Registrar of Joint Stock Companies and Firms (RJSC) periodically and upon the occurrence of specific events. Key mandatory filings include:

  1. Annual Return: Must be filed within 21 days of the Annual General Meeting (AGM). It contains details about the company’s shareholders, directors, capital structure, and name of the auditor.
  2. Financial Statements: Audited financial statements (Balance Sheet, Profit and Loss Account) must be filed with the RJSC within 30 days of the AGM.
  3. Changes in Directorship: Any appointment, resignation, or removal of directors must be notified to the RJSC within 14 days of the change.
  4. Return of Allotment: When a company issues new shares, it must file this return with the RJSC within 60 days of the allotment, detailing the shares allotted and the allottees.
  5. Changes to Registered Office: Notification of any change in the company’s registered office address must be filed within 28 days.
  6. Special Resolutions: Copies of all special resolutions passed by the company must be filed with the RJSC within 15 days of passing.
  7. Alterations to Memorandum or Articles: Any changes to the company’s Memorandum of Association (MoA) or Articles of Association (AoA) must be filed after approval via special resolution.

Failure to comply with these filing requirements can result in penalties and legal repercussions for the company and its directors.

Audit Requirements
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  • Appointment of Auditor: Every company must appoint an auditor or auditors at each AGM to hold office until the conclusion of the next AGM. The first auditors should be appointed by the Board of Directors within 30 days of incorporation.
  • Auditor’s Report: The auditors are required to examine the company’s accounts and prepare a report for the shareholders, stating whether the financial statements give a true and fair view of the company’s state of affairs. This report must be attached to the balance sheet presented at the AGM.
  • Eligibility: Auditors must be qualified chartered accountants as per relevant regulations.

Annual General Meeting (AGM)
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  • Frequency: Every company must hold an AGM once every calendar year.
  • Timing: The gap between two AGMs should not exceed 15 months. The first AGM must be held within 18 months of incorporation.
  • Business: Ordinary business at an AGM includes considering the financial statements and reports of the Board and auditors, declaring dividends, appointing directors in place of those retiring, and appointing/fixing the remuneration of auditors.
  • Notice: A minimum of 21 clear days’ notice is required for an AGM, unless all members entitled to attend and vote agree to a shorter notice period.

Board Meetings
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  • Frequency: The Board of Directors must hold meetings to manage the company’s affairs. The laws require board meetings to be held at least once every quarter. Therefore, a minimum of four board meetings per year is the standard expectation for well-governed companies.
  • Quorum: Regulations specify the quorum required for a valid board meeting, which is typically one-third of the total number of directors or two directors, whichever is higher, unless the Articles of Association specify otherwise.
  • Minutes: Proper minutes of all board meetings must be recorded and maintained.

Maintaining Statutory Records
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Companies are obligated to maintain several statutory registers and records at their registered office, including:

  • Register of Members: Containing details of all shareholders.
  • Register of Directors, Managers, and Managing Agents: Including their consent to act.
  • Register of Mortgages and Charges: Detailing any charges created on the company’s assets.
  • Minutes Books: Recording proceedings of Board meetings and General meetings.
  • Books of Account: Reflecting all sums of money received and expended, sales and purchases of goods, and assets and liabilities.

These records must be kept up-to-date and available for inspection as required by law.

Requirements for Listed Companies
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Public companies listed on the Dhaka Stock Exchange (DSE) or Chittagong Stock Exchange (CSE) face additional corporate governance requirements mandated by the Bangladesh Securities and Exchange Commission (BSEC) through its Corporate Governance Code. Key aspects include:

  • Board Composition: Requirements regarding the number of independent directors.
  • Board Committees: Mandatory formation of Audit Committees and Nomination & Remuneration Committees with specific compositions and responsibilities.
  • Enhanced Disclosures: Stricter rules regarding the disclosure of financial information, price-sensitive information, and related party transactions.
  • Compliance Reporting: Submission of regular compliance reports on the Corporate Governance Code to BSEC, DSE, and CSE.

Adherence to these governance standards is essential for maintaining investor confidence and ensuring compliance with securities regulations.

Corporate Governance Code, 2018
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Issued by the Bangladesh Securities and Exchange Commission (BSEC), the Corporate Governance Code, 2018 (CGC 2018) establishes enhanced governance standards specifically for companies listed on the stock exchanges in Bangladesh. Compliance with this code is mandatory. It aims to improve transparency, accountability, and the protection of minority shareholders’ interests. Key areas addressed by the CGC 2018, supplementing general company law, include stricter requirements for board independence, the mandatory formation and functioning of board committees (such as the Audit Committee and the Nomination and Remuneration Committee), enhanced disclosure obligations, and formalised compliance reporting procedures to the BSEC and the stock exchanges. Adherence is crucial for maintaining market integrity and investor confidence.

Key Contact

For detailed guidance on corporate governance compliance and filings for your company in Bangladesh, please contact: