Some provisions of companies act still required to fine tune for improving ease of doing business in the country, say Experts at ICAB Webinar
Experts at a webinar on Thursday came up with a number of observations and recommendations on companies act for improving the performance of Bangladesh in ease of doing business global ranking.
They said, although in 2020 amendments have been made in the companies act 1994, some provisions of the act are still required to fine tune with the best practices adopted in Singapore and Hong Kong, the countries ranking 2 and 3 positions respectively in the ease of doing business global ranking race in 2020.
They said, companies should prepare their Financial Statements as required under the provision of Financial Reporting Council (FRC) at par with international financial reporting standards (IFRS) and the audit should be carried out as per International Standards on Auditing (ISA) as approved by FRC because international & local investors need to comply with IFRS and ISA.
For ensuring the 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 on the need to digitize all functions of RJSC.
Speakers forwarded some observations and recommendations on the companies act 1994 which could really contribute a lot to elevate the country in ease of doing business global ranking and boosting up both foreign and local investment.
The Institute of Chartered Accountants of Bangladesh (ICAB) organized the webinar on ease of doing business: perspective of companies act on Thursday, 24 June 2021 where Tapan Kanti Ghosh, Secretary, Ministry of Commerce, GoB was present as the Chief Guest.
As Panel Speakers 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), Barrister Nihad Kabir, President, MCCI, Dr. M. Masrur Reaz-Chairman of Policy Exchange of Bangladesh and Mohammad Enamul Huque, Managing Director & Head of Corporate, Commercial and Institutional Banking Standard Chartered Bank joined the programme. Md. Humayun Kabir FCA, Council Member and Past President, ICAB moderated the programme.
ICAB President Mahmudul Hasan Khusru FCA in his address of welcome said, ICAB felt necessity of the simplification & modernization of corporate laws to ensure a business-friendly atmosphere. The amendment to the Companies Act, 1994 is done; although we hope massive changes which were not happened.
Government should remove various impediments on the way of improving business environment and a balance company act would encourage both local and foreign investors to make more investment in the country, he further said.
Snehasish Barua FCA, Partner, Snehasish Mahmud & Co., Chartered Accountants and Mr. Tanjib-ul Alam, Barrister-at-Law (Lincoln’s Inn), Advocate, Appellate Division, Supreme Court of Bangladesh jointly presented the keynote paper and ICAB Vice President Sidhartha Barua FCA delivered closing remarks in the Webinar.
Amendments bought in companies act in 2020 allows foreign company to open a private limited company in Bangladesh having 100% ownership. It gives them opportunity to open a company in a short time. Similar practice is adopted in Hong Kong. Before 2020, in Bangladesh minimum two persons were required to open a company whereas under this new amendments, foreign company can also open a PLC or OPC.
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 our companies act 1994, they pointed out and added that it needs to be addressed soon.
Under the new amendments any foreign PLC or OPC 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 company with turnover of more than 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 so that more information is being held with RJSC and it could improve the corporate governance in the country.
In ease of doing business global ranking Bangladesh has slightly improved from 177 to 169 in 2020 well ahead in starting a business, dealing with construction, getting power connection, registration properties, getting credit, protecting minority investors, though the county could not make much progress in the sectors of paying tax, trading in boarder, enforcing contract and resolving insolvency.
Out of 10 sectors of global ranking, Bangladesh has improved in five sectors which pulled the country 8 notch up of the ranking in 2019. Experts attributed for such improvement to government’s initiatives though amendments of companies act in 2020 in regards of companies common seals not required and one-person company (OPC).