AKM Asaduzzaman Patwary,
Additional Secretary(R&D), DCCI.
Bangladesh is going through immense structural economic reform and transformation. And, this phase of economy is critical as we have some long-term visions to graduate into a Middle income country by 2031 and developed economy by 2041. This journey of long-term graduation is not very easy to realize as our economy has engulfed various challenges and issues. Private sector has long been considered as the lifeline our growing economy. Private sector trade and industries have enabled our economy to get to current position. The economic progression has been largely backed by the trade and industrial growth. Private sector investment and concentration since long has supported this on-going economic journey. The export, private investment, manufacturing sector development and capital market development have improved to the large extent due to relentless private sector and effort and growth. Our economy went through many informal and formal development in a scattered manner. We had broad based development but the development was not consistently focused and aligned. Private sector has the support but it has grown through a challenging, inconsistent and unpredictable policy regime. Despite huge policy unpredictability, private sector has overcome the challenge and sustained their growth in earlier occasion. But, the current economic trend in the changing geo-economic and geopolitical context strongly requires a predictable and substantive policy era to facilitate the trade and economic growth of a country. In order to achieve higher growth and more investment into the economy, extensive focus need to be given on Policy Reforms, Investment and taxation system, Infrastructural challenges, Reducing cost of business, Skills development and Research and Innovation. Our private sector investment remains stagnant to 23% to GDP over the past years and this stagnation needs to be improved.
It has been inevitable that Private sector needs sustainable ambiance support to grow featured by the sound and relevant regulations and policies. Government for the economic management and operation often initiates new policies and regulations and reform some conventional policies to make effective for its users and beneficiaries. In the current trade and business context, the companies act is very important. And, our Companies act 1994 needs massive reform and further development to make it more business friendly and timely to address the current global economic context. Along with bureaucratic laziness, the diverse opinions and thoughts have extremely delayed the process and process of accommodation of different valid thoughts also hamper the implementation of the act.
In the current economic context, Doing business index improvement of Bangladesh is very crucial and many avenues and clauses in the act which need reform and many new avenues need insertion in the given act to make the act effectual and timely.
Here highlighted some critical agenda and points which need attention and inclusion in the given act to make the Companies act feasible and useful to enable our businesses to grow and doing business context of Bangladesh to improve in the years to come.
A well-balanced Companies Act is important to not only to unlock the full potential of private sector but also to build the confidence of private sector.
- One Person Company (OPC) needs to be addressed in the proposed law while the authority, operation of the one person company should not be like the limited company and capital limit and operation mechanism need to be fixed.
- For improvement in starting business criteria in Doing Business Index, the provision of stamp seal on certified Memorandum of Article and Article of Association for bank account opening needs to be repealed.
- AGM Notification period should be enhanced to 21 days to ensure the better and greater presence of the members.
- For enabling Speedy Dispute Resolution Mechanisms, there should be Promotion of the use of Alternate Dispute Resolution (ADR). Provision on alternate dispute resolution should be included in the Amendment Act as ADR act has been enacted in Bangladesh.
- Provisions for the use of technology specially for e-voting and postal balloting to facilitate members to vote for resolutions in the general meeting, Board/Committee/General Meetings through video conferencing and/or any other audio visual means as well as EGM.
- Personal guarantee executed by a director of a company to secure a loan and imposing liability debts of a company on Personal guarantee provided by director should be omitted as it creates an extra liability towards the debts of a company.
- There should be a limit and clear instruction on which issue a company needs to go to Court. The object Clause of the company needs to be dealt at the (RJSC) not by the court for process easiness.
- Related Party Transactions (RPTs) should be allowed for a company to take loan, deposits, investments, sale of assets, and acquisition of assets, purchase and sale of goods from its subsidiary companies and related parties to generate profits of the company for satisfying needs.
- Dissolution process of Companies is time consuming while there is no specific provision of restructuring the company instead of liquidation. And, this process needs to be simple to improve enforcing contract and resolving insolvency criteria.
- There should be a clear provisions on Mergers, takeover, and Acquisitions containing the specific provision for all the companies.
- Enabling speedy dispute resolution mechanisms through Speedy Tribunal or Separate Bench and case settlement timeline need to be added.
- Bankruptcy act should be well tuned to support company act and dissolution issues.
- Finance company act should have provision to cater the friendly business environment and overlapping issues should be removed.
- Corporate governance regulations enforced by BERC should have more changes aiming and coordinating doing business criteria supporting minority interest, resolving insolvency and contract enforcement criteria and bankruptcy and insolvency issues must be eased through required amendments.
- Minority shareholders provision to protect the minority shareholders need inclusion.
- The buyback process of treasury share of public listed company need to be included.
- Provision of CIB report and all utility companies like gas, mobile and electricity can be brought under the CIB network for securing good creditors and having more information of them and risk reduction of banks.
Bangladesh will hold a huge economy by 2050 and to achieve this, the Companies Act, echoed as the mother law, has to be reformed as a pro business one. Delayed reform-processes are creating not only difficulty in business environment but also affecting our overall competitiveness. The aforesaid reforms need to prevail for us to accelerate the growth trajectory and sustain the process of Doing Business rank improvement within 100 by 2021 envisioned by Government. For the greater interest of the businesses and the economy, this Companies Act needs to be amended for entrepreneurship development and FDI boost in Bangladesh. We feel the simplification of company law will help improvement in ease of doing business index steering desired investment and trade growth in the years to come.