ICSB Journal (July-September 2015)

Volume : XVIII

Issue : 3

Chartered Secretary as a Profession

July-September 2015

Institute of Chartered Secretaries of Bangladesh (ICSB)

THE COUNCIL 2013-2016

EDITORIAL BOARD

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Institute of Chartered Secretaries of Bangladesh (ICSB), established under an Act of Parliament i.e. Chartered Secretaries Act 2010, is the only recognized professional body in Bangladesh to develop, promote and regulate the profession of Chartered / Company Secretaries in Bangladesh.

The affairs of the Institute of Chartered Secretaries of Bangladesh (ICSB) are managed by a Council consisting of thirteen elected members and five 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 Asad Ullah FCS M. Naseemul Hye FCS Md. Monirul Alam FCS Mohammad Bul Hassan FCS Mohammad Sanaullah FCS Itrat Husain FCS N.G. Chakraborty FCS Md. Shahid Farooqui FCS Md. Azizur Rahman FCS Md. Selim Reza FCS M. Nurul Alam FCS Hossain Sadat FCS A.T.M. Tahmiduzzaman ACS Md. Shawkat Ali Waresi Additional Secretary, GoB Md. Ekhlasur Rahman Additional Secretary, GoB Nasreen Begum Additional Secretary, GoB Prof. Md. Helal Uddin Nizami Commissioner, BSEC Bijon Kumar Baishya Registrar, RJSC, GoB Editor Itrat Husain FCS Members Mohammad Sanaullah FCS Md. Shahid Farooqui FCS Prof. Dr. Feroz Iqbal Faruque FCS Kazi Ashiqur Rahman FCS Md. Shiful Islam ACS For Students : per copy Tk. 100; per year Tk. 350 Others : per copy Tk. 150; per year Tk. 560

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President Senior Vice President Vice President Treasurer Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor Councilor

IN THIS ISSUE

The Council 2013-2016

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Editorial

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Message from the President

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Institute News

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ARTICLES Changing role of Company / Chartered Secretary - Mohammad Sanaullah FCS

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The Emerging role of the Company Secretary -Prof. Dr. Feroz I. Faruque FCS

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Salient changes made in the Dhaka Stock Exchange (Listing) Regulations, 2015 -Mohammad Shafiqul Islam Bhuiyan

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Chartered Secretary as a Profession - Bipul Kumar Bhowmik FCA, FCS

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Secretarial Audit: A Timely Advent to the Audit Tribe -Md. Shiful Islam ACS

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(Established under Chartered Secretaries Act 2010 (Act No. 25 of 2010)

Chartered Secretary in Practice: Bangladesh Perspective - Mohammad Khasru Noman ACS

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Administrative Ministry Ministry of Commerce Government of the People’s Republic of Bangladesh

Corporate Social Responsibility: A Significant Role of the Company Secretary -Md. Lipon Hossain

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The Chartered Secretary: An Evolution as a Profession -Md. Nazrul Islam Chowdhury

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Earnings Management ‘the Numbers Game’: The Role of a Company Secretary -Razia Sultana (Lubna)

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Notification

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The views and opinions expressed in the articles published in this Journal are those of the writers only.

Published by Institute of Chartered Secretaries of Bangladesh (ICSB)

Office Padma Life Tower (8th Floor) 115 Kazi Nazrul Islam Avenue Bangla Motor, GPO Box No. 3100 Dhaka-1000, Bangladesh Phone Fax E-mail Web

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+880 2 933 9957, 933 4878, 935 6972, 831 5338 +880 2 933 9957 secretary@icsb.edu.bd, icsb@icsb.edu.bd www.icsb.edu.bd

Campus Padma Life Tower (7th Floor) 115 Kazi Nazrul Islam Avenue Bangla Motor, GPO Box No. 3100 Dhaka-1000, Bangladesh

THE COUNCIL 2013-2016

July - September 2015

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EDITORIAL this issue...

Chartered Secretary

- A Governance Professional

W

ho is a Company Secretary? If this question is asked to an ordinary layman he would not be able to answer correctly; but it would not be his fault. The role of the Company Secretary has changed significantly in the last decade.

In today’s corporate driven world, Chartered Secretary is the requisite qualification to become a Company Secretary. Company secretary assists the Board of Directors in discharging their responsibilities.

In the past the Company Secretary was merely responsible for taking notes and preparing the minutes of the Board Meeting.

It is now recognized that the Company Secretary is a very important officials of an organization, specially the Listed Companies. He is now the Compliance Officer of an organization and the Adviser to the Board, he assists the Chairman in holding effective Board Meetings. He also maintains liaises with Non Executive and Independent Directors and updates them so that they can actively participate in the Board and Committee meetings in decision making process.

It is very much common that boards are reluctant to impose corporate governance.

Except few exceptions, companies are mostly unwilling of being governed.

Company Secretary assists the Board of Director on governance issue and ensures governance culture within the organization.

The external stakeholders hold him in high esteem as he communicates with them regularly answering their queries. In this role he is the PR man of the organization.

In Bangladesh the profession has come a long way after the establishment of the Institute of Chartered Secretaries of Bangladesh, which was originally set up as the Institute of Chartered Secretaries and Managers of Bangladesh in 1997. Due to the increasing number of compliance and regulations and need of operational transparency, organizations are increasingly appointing chartered secretaries as Company Secretary. In compliance with the

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requirement of Corporate Governance Guideline issued by the Bangladesh Securities and Exchange Commission every listed company should have a company Secretary. In this respect the Institute of chartered secretaries of Bangladesh (ICSB) has been playing an important role to produce qualified chartered Secretaries in the market. However more publicity is desirable to ensure that more people are familiar with the objectives and achievements of ICSB. Chartered Secretaries can now set up their own private practice as well by obtaining a licence from the Institute instead of working as Company Secretaries. This is also an effective way of promotion of the Chartered Secretaries and the profession. It is the duty of each Member to act as ambassadors of ICSB and inform the people about the profession and the role of the Chartered Secretary.

Now a day, degree of formality is much expanded. It is a growing profession and the need of the Chartered Secretaries is increasing in the complex business situations. It is therefore expected that the Institute will be able to provide quality professionals as per the requirement of the market.

This issue contains many articles which spell out the roles of Chartered Secretaries and the avenues open to them. I am sure that the readers will find these articles useful.

Itrat Husain FCMA, FCS Editor

July - September 2015

MESSAGE FROM THE PRESIDENT The Way Forward

D

ear Professional Colleagues,

Assalamualaikum-wa-Rahmatullahe-wa-Barkatuhu At the outset, I would like to extend my heartiest felicitation to all the Members of our beloved profession on the occasion of holy Eid-ul-Adha. I also express my deepest sympathy and condolence to the Bangladeshi Muslims who embraced a shocking death due to stampede at Mina near Holy Macca while performing Hajj this year.

Eventful Third Quarter As you know that the trust and confidence reposed by you on me as the President has necessitated the acceptance of additional responsibility towards the corporate society and obviously to the ICSB. I, as the President of the Council, am trying my utmost to face the challenges along the way with highest sincerity and dedication. We are making every effort from the Council to enhance the image of the Institute as well as creating better academic atmosphere for students and taking steps for continuous professional development of Members. The third quarter of 2015 was quite eventful and witnessed significant progress.

The Council among others approved the result of different levels of Chartered Secretary Course for January-June Session, 2015 and also approved the Financial Statement for 2nd quarter ended on June 30, 2015. The Council also had a meeting with Senior Secretary, Ministry of Commerce and briefed him on the ensuing ICSB National Award for Corporate Governance Excellence 2014 to be held on November 10, 2015 and invited him to be the Special Guest. Mr. Abul Maal Abdul Muhith, MP, Hon’ble Minister, Ministry of Finance, GoB has already consented to be the Chief Guest on the occasion.

The Council also had discussion meeting with Dhaka Stock Exchange (DSE) on Listing Regulations 2015 at DSE board room focusing on different aspects of the Regulation that will directly effect the job of Company Secretary. Our suggestions were heartily accepted by the Management of Dhaka Stock Exchange Ltd. for future amendment.

July - September 2015

More CPD Programmes As you are aware that we are putting maximum stress on CPD programmes that will update and as well as develop the professional knowledge of the Members.

We are now holding CPD programme in every month on topics of professional interest. We arranged CPD programme on “Chartered Secretary as a profession”, “The Finance Act 2015” and “DSE Listing Regulations 2015” recently. More CPD programmes are in the offing. You may also suggest topic of professional interest to the Chairman of Professional Development Sub Committee, so as to make the CPDs more successful.

The theme of this issue is Chartered Secretary as a Profession. I am happy to note that a successful CPD Program was also held at the Institute that created a lot of interest among the Members and there were free and frank exchange of ideas on this issue of top most interest to our Members. As it is now evident that a public limited company must appoint a suitably qualified individual to the role of Company Secretary and the fact remains that passed out Chartered Secretaries from this Institute are appropriately qualified for the job. So Chartered Secretary as a profession is on growing demand in the country and ICSB takes pride in producing a good number of Qualified Chartered Secretaries annually in the corporate job market.

Growing Significance of Chartered Secretary It is imperative that company Secretary is a key member of the executive team appointed by the

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« board and has specific responsibility for advising the board through the chair on all governance matters. He is also responsible for ensuring good information flows within the board and its Committees and between session management and non-executive director. He needs to have knowledge of the legal, regulatory and administrative framework in which the company operates. Company Secretary should report to the Chairman on all matters relating to corporate governance and other duties and responsibility which concern the whole. These all epitomize the importance of Charter/Company Secretary as a profession and we from the Council are making every effort to ensure a better standard academic pursuit for students as well as professional skill for our Members.

ICSB National Award for Corporate Governance Excellence 2014 As you know that the first ever ICSB National Award for Corporate Governance Excellence 2013 was successfully held by us on December 04, 2014 at Celebrity Hall of Bangabandhu International Conference Center (BICC), Dhaka wherein Mr. Abul Maal A. Muhith MP, Honorable Minister, Ministry of Finance attended as Chief Guest and distributed Awards to 15 listed companies for their Excellent Governance in 5 categories. You will be happy to note that this year also ICSB National Award for Corporate Governance 2014 will be awarded in a befitting manner on November 10, 2015 at Hotel Sonargaon, Dhaka wherein the Honorable Finance Minister will remain as Chief Guest in presence of Professor Dr. M. Khairul Hossain, Chairman, Bangladesh Securities and Exchange Commission (BSEC) and Mr. Hedayetullah Al Mamoon ndc, Senior Secretary, Ministry of Commerce as Special Guests.

A Charter for Corporate Governance Excellence Award has been approved by the Council and the same adopted by Jury Board. The Participant Companies have been grouped into 10 (ten) different categories and there will be 3 (three) Awards in each category of Companies. On this grand occasion of “ICSB National Award for Corporate Governance Excellence 2014”, I have the pleasure to invite you all to participate in this ceremony in order to make it a grand success.

Message from the President

with our utmost sincerity. We have already succeeded in increasing Government yearly allocation to Tk. 1.25 crore from the last year’s Tk. 75 lakh. We have purchased a land at Aftab Nagar for having our own campus and now we are trying to get Government allocation for building state-of-the art academic –cum commercial complex there. Our academic syllabus is now world standard and Qualified Chartered Secretaries passing from the Institute are in high demand in the corporate job market. Introduction of our National Award for Corporate Governance Excellence has already received wide applause from both home and abroad and this regular annual event has added to our positive branding also. We are going to publish two more Secretarial Standards in addition to the existing ones and discussions are underway with Bangladesh Securities and Exchange Commission to have them accepted officially.

Conclusion Dear Professional Colleagues, With the rapid development of trade and industry in the country our corporate sector is also getting more vibrant. A vast opportunity exists for our members to get hold of newer opportunities in the job market. Let me emphasize once again that corporate society expects from the Chartered /Company Secretaries a high level of expertise and professional knowledge.

This will require the profession to be equipped with the highest standard of education and training so that the profession can earn respect of the corporate society for their ethics, integrity and trustworthiness. I am confident that the Members of our Institute will take note of this.

Let me conclude by inviting you all to contribute to the Institute through your innovative ideas, viewpoints and suggestions to improve the Institute to a level so that it can be adjudged as the world class professional Institute of the country. I pray to the Almighty to bless us in our sincerest endeavors.

I wish you all a happy and prosperous future.

Allah Hafez

Task Ahead You will be happy to note that the present Council has taken every effort to enhance the image of the Institute through various activities. As Rome was not built in a day, so is in the case of ICSB. We are trying

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Mohammad Asad Ullah FCS President

July - September 2015

INSTITUTE NEWS July - September 2015

T

he 3rd quarter (July – September) of the year 2015 was quite significant for the Institute.

MEETINGS- INTERNAL Council Meeting During the 3rd quarter, the Council met on August 24, 2015 in which following major decisions were taken: • Approved the CS examination result of different Levels of the Institute for January-June Session 2015 • Formed an Organizing Committee to organize “National Award for Corporate Governance Excellence 2014” • Approved Faculty Selection Policy of the Institute • Approved the Charter of Technical Committees for the upcoming “ICSB National Award for Corporate Governance Excellence 2014”

• Reviewed the Financial Statements for the 2nd quarter ended on June 30, 2015 Meetings The following Standing Committee Meetings were held during the 3rd quarter: • Disciplinary Committee met on July 7, 2015 • The Executive Committee met on July 29, 2015 • The Education Committee met on July 25, 2015 • Audit Committee met on August 4, 2015 • Examination Committee met on August 24, 2015 • Membership & Registration Committee met on August 24, 2015 • Corporate Governance Award Committee met on July 29 & August 23, 2015

Meetings of Sub Committees (under Executive Committee) The following Sub-Committee Meetings were also held during the quarter: • Professional Development Sub Committee met on July 11, 2015 • Secretarial Practice Sub Committee met on August 12, 2015 • Journal & Publication Sub Committee met on September 2, 2015

MEETINGS-EXTERNAL Meeting with Honorable Senior Commerce Secretary The Council Members of the Institute led by its President, Mohammad Asad Ullah FCS called on Hedayetullah Al Mamoon, Senior Secretary, Ministry of Commerce, Government of Bangladesh on August 25, 2015. The President apprised the Senior Secretary about the various initiatives that ICSB has

Sr. Commerce Secretary Hedayetullah Al Mamoon with the President of the Institute

July - September 2015

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INSTITUTE NEWS

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Professor Dr. Swapan Kumar Bala FCMA, Managing Director of Dhaka Stock Exchange Limited with the Members of ICSB Council recently undertaken for the development of the Institute and its Members. The President also briefed the Senior Secretary about the upcoming ICSB National Award for Corporate Governance Excellence 2014 to be held on November 10, 2015 and invited him to be the Special Guest on this occasion to which the Senior Secretary gave his kind consent.

Commerce Secretary appreciated the potential role of ICSB in promoting governing excellence and skilled professionals as well. He assured that Ministry of Commerce will be always beside ICSB towards development of this profession.

The Council Members thanked the Secretary for giving valuable time and for assurance of continued support and guidance which will help the Institute to move forward to achieve its objectives.

Discussion Meeting with Dhaka Stock Exchange Limited on (Listing) Regulations The delegates of ICSB led by its President Mohammad Asad Ullah

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FCS attended a discussion session of Dhaka Stock Exchange Limited on (listing) regulations, 2015 held on Sunday, August 9, 2015 at the DSE Board Room. At the very beginning of the meeting, Professor Dr. Swapan Kumar Bala FCMA, Managing Director of Dhaka Stock Exchange Limited gave a brief outline of the proclamation of Listing Regulation, 2015. In his welcome speech he stated that this is the first step of exchange of views with the real stakeholders by DSE. DSE has also requested ICAB to have an exchange of idea as there are certain changes in the Auditor’s function but ICSB is the focal point as it deals corporate governance matter directly, he pointed out. He requested for suggestions from ICSB for incorporating them as per the revised Listing Rules 2015.

Mohammad Asad Ullah FCS, President of the Institute thanked Dr. Swapan Kumar Bala FCMA for inviting ICSB at the meeting. He highlighted some inconsistencies in the paras of submission of the half yearly Report, authentication of Financial Statements, holding Annual General Meeting and some

changes made in the (Listing) Regulations, 2015. He also requested DSE to focus their activities in International forum also. Hossain Sadat FCS, Council Member of the Institute discussed on fixation of record date as per Regulation 23 and Website as per Regulation 44 regarding contact number (Fax, email & telephone) of the officials of Investors’ Relation Department.

Mohammad Sanaullah FCS Immediate Past President & Council member of ICSB appreciated the authority for updating Listing Rules in line with the corporate world. He also suggested to make some amendments on the following issues: 1. Declaration of interim dividend from interim period profits only, not from past profits.

2. Advance notification about Board Meeting under Regulation 19(1) should be 3 workings days instead of 7 days.

3. Authentication of Financial Statements should be in line with Companies Act 1994.

July - September 2015

INSTITUTE NEWS

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From the Left- Mustafa Mohiuddin, Secretary, Mohammad Bul Hassan FCS, Treasurer, Mohammad Asad Ullah FCS, President, M. Naseemul Hye FCS, Senior Vice President, Md. Monirul Alam FCS, Vice President of the Institute.

4. Submission of Annual Report to the shareholders should be through soft copy like CD or email instead of hard copy.

5. Fixation of Record date should be 7 market days (as before) instead of 30 market days.

5th AGM of Institute of Chartered Secretaries of Bangladesh (ICSB) held The 5th Annual General Meeting of the Institute of Chartered Secretaries of Bangladesh (ICSB) was held on Thursday, July 9, 2015, at ICSB, Padma Life Tower (7th Floor) 115, Kazi Nazrul Islam Avenue, Bangla Motor, Dhaka.

The Meeting was chaired by the President of the Institute Mohammad Asad Ullah FCS. The President in his address tabled the Council Report of 2014 featuring remarkable achievements for the Institute. He highlighted on taking some initiatives for arranging adequate fund from the Government for the development activities of the Institute. He also mentioned about successfully July - September 2015

holding of ICSB National Award for Corporate Governance Excellence2013 on December 4, 2014 wherein Hon’ble Finance Minister Mr. A.M.A Muhith MP graced as Chief Guest and 15 listed Companies were awarded for the successful accomplishment of Corporate Governance structure in their respective Companies. The President declared that this year also ICSB National Award of Corporate Governance Excellence -2014 shall be held with due grandeur sometime in last quarter of the year and this will be an annual event of ICSB. Besides, ICSB also successfully held 5th National Convention and Convocation 2014 wherein Hon’ble Commerce Minister Mr. Tofail Ahmed MP and former Commerce Secretary & former Chairman, Bangladesh Securities and Exchange Commission, Mr. Faruq Ahmad Siddiqi remained as Chief Guests respectively. He disclosed that comprehensive proposal has been sent to the Ministry of Commerce for inclusion in the new Company Act.

He also mentioned about the initiative taken by the Institute for constructing a state-of-the art campus-cum-commercial complex at the purchased land at Aftab Nagar with Government’s assistances. The President in his report also highlighted on having more CPD Programs for professional development and ensuring state-of-the art service to the students for academic pursuit.

At the AGM, after the President’s Report of the Council for 2014, Mohammad Bul Hassan FCS, Treasurer, placed a power point presentation on the Audited Accounts of the Institute for the year ended December 31, 2014. The members approved the Council Report and the Audited Accounts of the Institute.

A large number of members present in the meeting highly appreciated the performance of the Institute, and congratulated the Council for working successfully. They also put their valuable suggestions towards the development of the Institute.

The Annual General Meeting was followed by a Doa-Mahfil and Iftar.

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INSTITUTE NEWS

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Members at the 5th Annual General Meeting

CONTINUING PROFESSIONAL DEVELOPMENT (CPD) PROGRAM

Premises at Padma Life Tower (7th Floor) 115 Kazi Nazrul Islam Avenue, Bangla Motor, Dhaka-1000. A large number of Members of ICSB participated in this programme.

(i) The Finance Act-2015:

Sadhan Chandra Das, FCA, FCS, Partner, Sadhan Das & Co. Chartered Accountants presented the Keynote Paper. Mohammad Sanaullah FCS Immediate Past President and Chairman, Professional Development Committee of ICSB was the session chairman.

Institute of Chartered Secretaries of Bangladesh (ICSB) has organized a Continuing Professional Development (CPD) Program on “The Finance Act-2015” on Thursday, July 30, 2015 at the Institute

Mohammad Asad Ullah FCS, President of the Institute was also present.

Mr. Das in his presentation highlighted on the major features of the “The Finance Act-2015” that includes changes in Income Tax Ordinance, 1984 such as individual tax rate, re-structure in the slab of wealth for imposing surcharge on individual tax payers, basic salary and bonus received by Govt. employees as well as the insertion of two new

From left: Sadhan Chandra Das, FCA, FCS, Keynote Presenter, Mohammad Sanaullah FCS, Session Chairman, Mohammad Asad Ullah FCS, President of ICSB

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July - September 2015

INSTITUTE NEWS

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Members present at the CPD Programme sections: prosecution punishment for submitting fake audit report, punishment for unauthorized employment of foreign nationals.

Mohammad Asad Ullah FCS, the President of the Institute shared views on the keynote presentation and also discussed on various aspects of “The Finance Act-2015”.

He highly appreciated the Institute for arranging such a timely important workshop for the development of its members.

July - September 2015

Thereafter qualitative and fruitful discussion were held during a question-answer session between the participating Members of the Institute and the Keynote Presenter.

Mohammad Sanaullah FCS, as Session Chairman moderated and summed up the whole session.

The programme concluded with a vote of thanks by khalid Mohammad sharif ACS, Member Secretary Professional Development Committee that organized the CPD Programme.

(ii) Dhaka Stock Exchange (Listing) Regulations, 2015 Institute of Chartered Secretaries of Bangladesh (ICSB) has organized a Continuing Professional Development (CPD) Program on “Dhaka Stock Exchange (Listing) Regulations, 2015” on Thursday, August 27, 2015 at the Institute Premises at Padma Life Tower (7th Floor) 115 Kazi Nazrul Islam Avenue, Bangla Motor, Dhaka-1000.

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INSTITUTE NEWS

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Members at the CPD Programme Professor Dr. Swapan Kumar Bala FCMA, Managing Director, Dhaka Stock Exchange Limited presented the Keynote Paper and gave a brief outline of the new regulations for listing companies of Bangladesh.

Mohammad Sanaullah FCS, Director and Company Secretary, Singer Bangladesh Limited and also the Immediate Past President and Chairman, Professional Development Committee of ICSB was the session chairman.

Mohammad Asad Ullah FCS, President of the Institute was also present at the program.

and also discussed on various aspects of “Dhaka Stock Exchange (Listing) Regulations, 2015”. He highly appreciated the Institute for arranging such a timely important workshop for the development of its members.

Dr. Bala in his presentation highlighted on the major features of the listing regulations, 2015 of Dhaka Stock Exchange that includes Listing of Securities, Undertakings, Direct Listing, Post Listing, Continuous Compliances, Listing And Annual Fees, Halt, Suspension And De-Listing, Inspection and Miscellaneous issues of the new listing regulations, 2015.

The programme was well attended

by ICSB Members who represent the large section of listed companies, the main stakeholders of the Dhaka Stock Exchange Regulations.

Mohammad Asad Ullah FCS, the President of the Institute shared his views on the keynote presentation

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Thereafter qualitative and fruitful discussions were held during a question-answer session between the participating Members of the Institute and the Keynote Presenter.

Mohammad Sanaullah FCS, as Session Chairman moderated and summed up the whole session.

INAUGURATION OF CHARTERED SECRETARY 36TH BATCH OF STUDENTS The Orientation programme was arranged for the 36th Batch of Chartered Secretary students of ICSB on August 8, 2015 at the Institute. As many as 148 students

have been enrolled in the regular course of Chartered Secretary for the Session July–December 2015. A large number of newly enrolled students participated in the inauguration programme. The programme began with recitation from the Holy Qur’an.

Welcoming the newly admitted students with his blessings Mohammad Asad Ullah FCS, President of ICSB, inaugurated the programme. He emphasized that the Profession of Chartered Secretary is now a challenging and rewarding profession, with a global demand. He also urged them to strive for academic excellence, personal dignity, ethical values and social concerns. The President mentioned about the mission and vision of the Institute and also advised the students to pursue their studies seriously and follow the code of conduct of the institute to build up their career as a Chartered Secretary.

Among others, Md. Shahid Farooqui FCS, Chairman, Education Committee, Mohammad Sanaullah FCS, Immediate Past President &

July - September 2015

INSTITUTE NEWS

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Chairman, Examination Committee and M. Naseemul Hye FCS, Senior Vice President of the Institute spoke in the occasion. They discussed about the significance of Company Secretaries to establish Corporate Governance and also corporate expectations from the new generation of management personnel.

Terming ICSB’s academic syllabus as one of global standard, they also advised the students to be regular and attentive in classes.

Maintenance of corporate principles in adverse situations, need of teamwork in management have been the major advice to the students at the orientation programme.

On the very first day the students got the basic guidelines for adapting to challenging corporate sector and on the measures to achieve excellence through both academic pursuit and corporate experience.

The function was conducted by Mustafa Mohiuddin, Secretary of the Institute.

Students of 36th Batch in the Orientation Programme

July - September 2015

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ÂŤ RESULT OF THE CHARTERED SECRETARY (C.S.) EXAMINATION The Council of the Institute of Chartered Secretaries of Bangladesh (ICSB) has announced the results of the Chartered Secretary January-June Session-2015 examination held in July, 2015.

C.S. Executive Level-I: Roll Nos. 004, 005, 008, 009, 010, 011, 012, 013, 020, 021, 024, 026, 028, 029 032, 033, 035, 037, 039, 045, 046, 049, 050, 051, 057, 059, 060, 061, 064, 065, 075, 081, 082, 083, 084, 085, 089, 090, 093, 098, 100, 103, 104, 110, 114, 115, 118, 119, 120, 124, 126, 133, 135, 136, 137, 138, 139, 142, 144, 148, 149, 155, 156 and 157 Total- 64 (Sixty Four) Only C.S. Executive Level-II: Roll Nos. 165, 166, 167, 171, 172, 174, 178, 179, 180, 181, 183, 185, 186, 187, 188, 191, 193, 194, 195, 201, 203, 205, 206, 207, 208, 209, 210, 211, 212, 214, 215, 216, 218, 219, 221, 224, 225, 226, 228, 229, 231, 233, 234, 236, 237, 238, 239, 240, 242, 243, 245, 246, 247, 248 and 249 Total- 55 (Fifty Five) Only

INSTITUTE NEWS

C.S. Executive Level-III:Roll Nos. 251, 252, 253, 257, 258, 260, 262, 271, 272, 277, 280, 285, 288, 290, 292, 295, 296, 309 and 313 Total- 19 (Nineteen) Only C.S. Professional-I: Roll Nos. P-01, P-05, P-07, P-09, P-10, P-11, P-12, P-13 and P-14 Total- 09 (Nine) Only C.S. Final Group I: Roll Nos. F-02, F-03, F-05, F-06, F-10, F-12, F-17, F-21, F-23, F-26, F-34, F-35, F-36, F-37, F-38, F-40, F-41, F-43, F-45, F-46, F-49, F-52, F-53, F-54, F-56, F-58, F-63, F-64, F-66, F-67, F-76, F-77, F-79, F-81, F-82, F-84, F-87, F-90, F-91, F-93, F-94, F-95 and F-96 Total - 43 (Forty Three) Only Roll Nos. of the successful candidates are as follows: Roll Name of the Students F-98 Md. Jaber Parvez F-99 Krishna Kumar Sarma F-101 Mamunur Rashid F-102 Partha Kumar Saha F-105 Md. Jamilur Rahman F-106 Anupom Kumer Ghosh F-109 Md. Rakibul Hasan

F-111 Hasan Tarek F-113 Md. Tahidul Amin Mojumder F-115 Syed Abu Taher F-123 Md. Warisur Rahman F-124 A.B.M. Lutful Karim F-131 Kazi Hasan Mahamud F-132 Tofael Ahmed Mazumder F-136 Zannat Afza Usha F-139 SM Rubayet Hossain F-141 Mithun Chandra Singha F-142 Md. Nazrul Islam Chowdhury F-144 Abu Jafar Ali F-149 M.M. Sajedul Islam Total - 20 (Twenty) Only

MEETING WITH SUCCESSFUL & UNSUCCESSFUL CANDIDATES The Examination Committee had a meeting with the students who passed the Group II Final Examination at ICSB campus on August 31, 2015. The meeting was chaired by Chairman Examination Committee Mohammad Sanaullah, FCS while the Chairman of Education Committee Md. Shahid Farooqui FCS, was also present.

Meeting with the Successful Students

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July - September 2015

INSTITUTE NEWS

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Mustafa Mohiuddin, Secretary of the Institute with the successful students of C. S Examination for January-June Session-2015.

Meeting with the Unsuccessful Students In this session, passed students were congratulated and greeted by the Chairman of Examination Committee and Chairman of Education Committee because of their rewarding achievement of this milestone in the academic part of the course.

Md. Shahid Faruque FCS, Council Member and Chairman of Education Committee advised them to be more professional in every steps of life. He also stressed on the importance of ethical standard and to be a true professional.

Mohammad Sanaullah FCS, Immediate Past President and Chairman Examination Committee advised that the qualified students can seek any guidance and

consultation from the Council Members in relation to decision making of Internship placement which needs to be completed by December 15 so that they can apply for associate membership in 2016.He then added that they would be professional thorough their career where CPD is must.

He also advised that the Career opportunity for them should be their inspiring force. He directed them to be involved with public limited companies or public company for a better careers opportunity.

Chairman, Examination Committee and Immediate Past President Mohammad Sanaullah FCS, Chairman, Education Committee Md. Shahid Faruque FCS, and

The Examination Committee also had a meeting with the students who failed in the different level of examinations at ICSB campus on August 31, 2015.The meeting was chaired by Mohammad Sanaullah FCS, Immediate Past President and Chairman Examination Committee while Md. Shahid Farooqui FCS, Council Member and Chairman of Education Committee, Itrat Husain FCS, Past President and Member of the Examination Committee and Md. Monirul Alam FCS, Vice President and Member of Education Committee were also present. They had an elaborate discussion with the students and tried to dig out the reasons of their failure. They encouraged them and assured them to discuss this matter with the faculties of the concern subjects.

From the lef: Md. Monirul Alam FCS, Vice President and Member of Education Committee, Chairman, Examination Committee and Immediate Past President Mohammad Sanaullah FCS, Past President and Member of the Examination Committee and Prof.

Dr. Feroz Iqbal Faruque FCS in the Meeting with the failed students.

SUCCESS GREETINGS F- 0095

Mr. Mohammad Nurul Alam, FCS has recently been promoted as ‘’Country Compliance Officer” in Banglalink Digital Communications Ltd. Mohammad Nurul Alam has been working in Banglalink Digital Communications Ltd. as company secretary from November, 2007. Subsequently he was assigned with the additional responsibilities of head of internal audit and internal control in 2010.

In July, 2015 he has been promoted to lead the compliance function of the company as the Country Compliance Officer direct reporting to the group chief compliance officer of Vimpelcom Ltd. Prior to joining Banglalink, he worked as the Deputy Company Secretary of GlaxoSmithKline Bangladesh Limited, a renowned multinational pharmaceutical manufacturing and marketing company. He has over 33 years of job experience in different multinational companies.

Mr. Alam is a professional chartered secretary with master of commerce in accounting and he is also a member of institute of internal auditors, Bangladesh chapter and society of corporate compliance and ethics, USA.

July - September 2015

15

INSTITUTE NEWS

ÂŤ

NEWLY ELEVATED FELLOW MEMBERS

The Council has elevated 14 Associate Members to Fellow Members The newly elevated Fellow Members are: F-0155 Sheikh Khaled Zahir FCS Company Secretary Fareast Finance & Investment Limited

F-0156 A T M Tahmiduzzaman FCS Company Secretary United Commercial Bank Limited

F-0157 S. M. Mahabub Islam FCS CFO & Company Secretary JANCO BANGLADESH LTD.

F-0158 Saiful Alam DAIBB, FCS Vice President & Company Secretary (C.C.) Mercantile Bank Limited

F-0159 Mohammad Monirul Islam FCS Company Secretary Babylon Group

F-0160 Md. Munirul Hoque FCS Deputy Company Secretary ACI Limited

F-0161 Santanu Saha FIAT, CFC, MIFC, FCA, FCMA, FCS Cheif Executive Officer (CEO) Fareast Finance & Investment Limited

16

F-0162 Mohammad Zubair Uddin Bhuiyan FCS Deputy Director (CMRRCD) Bangladesh Securities & Exchange Commission (BSEC)

F-0163 Md. Zasim Uddin FCS CFO & Company Secretary Infrastructure Investment Facilitation Company (IIFC)

F-0164 Md. Abedur Rahman FCS Assistant Company Secretary Premier Leasing & Finance Limited

F-0165 Mohammad Ruhan Miah FCS Company Secretary Transcom Group

F-0166 Md. Mizanur Rahman FCS Deputy Company Secretary Trust Bank Limited

F-0167 Md. Mizanur Rahman FCS Company Secretary Boishakhi Media Limited

F-0168 Lorens Shamol Mollick FCS Head of HR & Admin Jadoo Media (Concern of Mohammadi Group)

July - September 2015

INSTITUTE NEWS

ÂŤ

NEW ASSOCIATE MEMBERS

The following Chartered Secretaries were admitted as Associate Members of the Institute

A-0343

A-0349

Md. Mehadi Hasan Mazumder ACS Senior Principal Officer National Bank Limited

A-0344

Nayamul Hoque ACS Senior Executive Officer & Assistant Company Secretary UCB Capital Management Limited

A-0350

Md. Shamibur Rahman ACS Additional Director (A & F) Institute of Chartered Secretaries of Bangladesh (ICSB)

A-0345

Santush Chandra Sarker ACS Senior Officer Investment Division First Security Islami Bank Limited

A-0351

Md. Rashedul Azim ACS Director (A & F) Bangladesh University

Md. Mijanur Rahman ACS AVP & In charge, Re-Insurance Section Fareast Islami Life Insurance Co. Ltd.

A-0346

A-0352

Malik Montasir Reza ACS Executive Vice President & Group Company Secretary Mutual Trust Bank Limited

Forhad Hossain Khandaker ACS Assistant Vice President Dhaka Bank Ltd.

A-0347

A-0353

Uttam Kumar Dey ACS

Md. Ismail Hossain ACS First Assistant Vice President Mutual Trust Bank Ltd.

A-0348

A-0354

Bimal Chandra Roy ACS Manager, Human Resources The ACME Laboratories Ltd.

F. R. M. Rashedul Hasan ACS First Assistant Vice President Mutual Trust Bank Limited

A-0355 Asadullah Mahmud ACS Assistant Manager Company Affairs & Tax Runner Group

July - September 2015

17

INSTITUTE NEWS

ÂŤ

C.S. Final Qualified

During January-June Session-2015 the following students were qualified as Chartered Secretary

CS-2379 Md. Jaber Parvez

CS-2607 Krishna Kumar Sarma

CS-1638 Mamunur Rashid

CS-2786 Partha Kumar Saha

CS-2719 Md. Jamilur Rahman

CS-2731 Anupom Kumer Ghosh

CS-2788 Md. Rakibul Hasan

CS-2610 Hasan Tarek

CS-2412 Md. Tahidul Amin Mojumder

CS-2802 Syed Abu Taher

CS-2783 Md. Warisur Rahman

CS-2595 A.B.M. Lutful Karim

CS-1396 Kazi Hasan Mahamud

CS-2878 Tofael Ahmed Mazumder

CS-2138 Zannat Afza Usha

CS-2738 SM Rubayet Hossain

CS-1660 Mithun Chandra Singha

CS-2520 Md. Nazrul Islam Chowdhury

CS-2434 Abu Jafar Ali

CS-1572 M.M. Sajedul Islam

18

July - September 2015

ARTICLES

Institute of Chartered Secretaries of Bangladesh

ARTICLE

«

CHANGING ROLE OF COMPANY / CHARTERED SECRETARY - Mohammad Sanaullah FCS

I

ntroduction

A Chartered Secretary is qualified in company law, securities law, banking, insurance, finance, investment, taxation, corporate governance, human resources, company secretarial practice, management and administration.

They are trained to chart a course through regulation, legislation and best practice to deliver effective operations.

Company Secretary is giving more concentration and focus in governance issues rather than administrative functions. Due to his wide range of professional competencies and experience a company secretary today has taken much boarder role in the corporate management .as Board advisor and having responsibility for the company’s corporate governance,

The Board

In corporate management whether in public or private or non-profitable organizations – it is essential to have people who acquainted themselves with adequate knowledge about the legislation, regulation and best practice; people who are authoritative, capable to identify the problems, understand the issues and have the expertise to provide the right solutions; people who maintain the organization in a right direction and help it prosper and develop.

These people are globally known as Company Secretaries. Professionally they are called Chartered Secretaries.

The Board of Directors particularly the Chairman and non-executive directors relies on the Company Secretary, to advise them not only statutory duties under the law, disclosure obligations and listing rule requirements but also giving more concentration on corporate governance requirements and practices to maintain the board effectively. The most important role of the Company Secretary in a public listed companies as one of the key governance professionals within the organizations.

Chartered Secretary as a Profession Chartered Secretary is a challenging and rewarding profession in Corporate Management. Chartered Secretary is the requisite qualification to become a Company Secretary.

According to Companies Act, 1994 a Company Secretary means “any individual possessing the prescribed qualifications appointed to perform the duties which may be performed by a Secretary under the Companies Act and any other ministerial and administrative duties”.

The roles of Company Secretary has been changing very sharply from Statutory Officer or Compliance officer to Board advisor. Currently

From the above definition it is clear that a Company Secretary is one who is an individual or a natural person with prescribed qualifications. It is

July-September 2015

Statutory Responsibilities

assumed that the person appointed to this position (Company Secretary) should have the requisite knowledge and experience to carry out the duties of a Company Secretary of a public company. The duties are both extremely broad in scope and onerous.

Company Secretary’s roles and duties are mostly constituted by the Companies Act. That is why this position is also called the constitutional position. Globally most of the commonwealth countries company law makes mandatory to appoint Company Secretary both in private and public Companies with an objective to ensure that the Board and Directors fulfil their statutory requirements and to meet the demanding standards of corporate governance in Companies.

London Stock Exchange is recognised the Company Secretary is an officer with a central role in the governance and administration of Company affairs. Principles of Good governance and Code of Best practices (the combined code) U.K. mentioned that“ all directors should have access to the advice and services of the Company Secretary, who is responsible to the board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. Any question of the removal of the Company Secretary should be a matter for the board as a whole”.

21

« If we review the above, it is also clear that Company Secretary plays an important role in corporate management. The Company Secretary has a wide-ranging responsibility as a Senior Corporate Executive serving on the focal point for the communications with Board, the Company and the Stakeholders.

The Company Secretary is also playing a key role in the administration of important counsellors to the Board of Directors, CEO and Management team.

Roles towards Stakeholders

Broadly the Company Secretary’s role can be divided into three major areas:

The Indian Companies Act, 2013 has considerably enhanced the role and responsibilities of Company Secretaries both in employment and in practice. Company Secretary is a key managerial person in a company, responsible to ensure the effective

 To make an adequate communications with the stakeholders of the company with an objective to ensure due regards and returns are paid to their interests

Indian New Companies Act: A new dimension in the Corporate world

(1) The Board of Directors (2) The Company (3) The Stakeholders.

Role towards the Board of Directors  To advise and assist the Board members/ Directors with respect to their duties and responsibilities as Directors and compliance with their obligations under the Companies Act 1994, Securities and Exchange Commissions Rules, Listing Rules and Issues on Corporate Governance.

Role towards the Company  To ensure that the Board decisions are properly executed and communicated by assisting in the implementation of corporate strategies and policies.

22

with the requirements of the stated laws. The objective behind the introduction of secretarial audit is to improve corporate governance and compliance.

According to Section 204 of the Companies Act 2013, it is the duty of the Company Secretary in practice to perform secretarial audit of every listed company and any such other class of prescribed companies. The Central Government has prescribed the such other class of prescribed companies as Every public company with a paid-up share capital of Rs. 50 Crore or more.  Every public company with a turnover of Rs. 250 Crore or more.

THE ROLES OF COMPANY SECRETARY HAS BEEN CHANGING VERY SHARPLY FROM STATUTORY OFFICER OR COMPLIANCE OFFICER TO BOARD ADVISOR.

 To act as channel of communication and information to executive and non-executive Directors.

 To ensure proper compliance with all relevant statutory and regulatory requirements.

the

and efficient administration of the company and certifying the company’s compliance with the provision of the Act. The new Companies Act has strengthened the role of Company Secretaries. Some of the key areas that have directly impact the role of company secretaries in employment or in practice due to this Act are as follows:

Introduction of secretarial audit Secretarial Audit is the process to check whether the company is adhering to the legal and procedural requirements and a process to monitor the company’s compliance

ARTICLE

Secretarial standards

The objective behind the formulation of secretarial standards is to integrate, harmonize and standardization of diverse secretarial practices.

The Companies Act, 2013 under Section 118 has made the compliance of Secretarial Standards compulsory on meeting of the Board of Directors and on general meetings.

Annual return The new Companies Act, 2013 under Section 92 has widened this requirement by providing that annual returns of companies having such paid up capital and turnover to be signed and certified by the company secretaries in practice.

Appointment of whole-time key managerial personnel Under Section 203 of the new Companies Act, 2013, the companies has to compulsorily appoint the whole time Key Managerial Personnel

July-September 2015

ARTICLE

«

in respect of certain class of companies as prescribed by the Central Government to ensure good corporate governance and regulation. The company shall have the following whole-time Key Managerial Personnel (KMP):  Managing Director, or Chief Executive Officer or manager and in their absence, a whole-time director.  Company Secretary.  Chief Financial Officer.

So this made the appointment of whole-time Company Secretary mandatory for better efficiency.

Functions secretary

of

company

According to Section 205 of the Indian Companies Act, 2013 the Company Secretary shall discharge following functions and duties, this is the first time that the duties of the Company Secretary have been specified in the company law: •

To report to the Board about the compliance with the provisions of this Act.

•

To ensure that the company complies with the applicable secretarial standards.

•

To provide to the directors of the company the guidance they require in discharging their duties, responsibilities and powers.

•

To facilitate the convening of meetings and attend Board, committee and general meetings

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If a company fails to appoint a whole-time Company Secretary, Companies Act 2013 imposes a • To obtain approvals from the heavy penalty both on company as Board, general meeting, the well as its directors and every officer government and such other who is in default. The company shall authorities as required under the be punishable with fine which shall provisions of the Act. not be less than one lakh rupees but • To assist the Board in the conduct which may extend to Rs 5 lakh. And every director and key managerial of the affairs of the company. personnel of the company who is in • To assist and advise the Board in default shall be punishable with fine ensuring good corporate which may extend to Rs. 50,000 and governance and in complying with where the contravention is the corporate governance continuing one, with a further fine requirements and best practices. which may extend to Rs. 1,000 for every day after the first during which New company law relating the contravention continues. and maintain the minutes of these meetings.

to the issue of compliance certificate by Company Secretary

The new Companies Act, 2013 has enhanced the role of company secretaries in practice by providing with the opportunities such as promotion, formation and incorporation of companies, secretarial audit and certification services, signing of annual return, appointment of company liquidator, assistance to company liquidator, and many more.

Law relating to the issue of employment of Company Secretary According to Section 203 of the Companies Act 2013, every listed company and any other company including the public companies has the obligation to appoint a whole-time company secretary having a paid-up capital of Rs 10 Crore or more.

Conclusion The need and the role of the Company Secretaries have been increasing day by day. There is tremendous growth opportunity in this profession along with excellent remuneration. Chartered /Company secretary is a coveted position and rapidly gaining popularity amongst youngsters who want to make it big in the corporate world.

Since the roles and responsibilities associated with this position are highly accountable and visible, there is constant pressure to deliver results.

The Chartered Secretary is becoming a challenging and rewarding profession with the growth in the corporate world. » About the Author Fellow Member of the Institute

23

ARTICLE

« THE EMERGING ROLE OF THE COMPANY SECRETARY - Prof. Dr. Feroz I. Faruque FCS

I

ntroduction

As the importance of effective Corporate Governance continues to be critical in today’s environment, not least due to the global financial crisis, there has been increased focus on the role of the Company Secretary globally.

Most notably, the Companies Act 1994 and the draft Companies Act 2013 as well as the Security and Exchange Rule 2012 emphasized the need for a Company Secretary in public companies.

The responsibilities of the modern day Company Secretary have evolved from that of a “note taker” at Board Meetings or “Administrative Servant of the Board” to one which encompasses a much broader role of acting as “Board Advisor” and having responsibility for the organization’s Corporate Governance.

The Board, particularly the Chairman, relies on the Company Secretary to advise them not only on Directors’ statutory duties under the law, disclosure obligations and listing rule requirements but also in respect of corporate governance requirements and practices and effective board processes. This specialized role of the modern Company Secretary has emerged to position them as one of the key governance professionals within the organization.

24

Statutory responsibilities The retention of this requirement demonstrates the importance of the role of the company secretary in the eyes of the legislature and in fact the proposals go a step further by placing the responsibility on the Board of Directors to ensure that the Secretary has the requisite knowledge and experience to discharge the functions of Secretary

necessary filings with the Registrar of Joint Stock Companies and Firms such as annual returns, financial statements and certain forms with respect to changes to share capital etc.

Corporate Governance

In practice, the role of the Company Secretary has developed into much more than the basic statutory requirements outlined above. Most notably, the responsibility for developing and implementing THE DYNAMICS OF THE processes to promote and BOARDROOM ARE CHANGING AND sustain good Corporate CHAIRMEN AND DIRECTORS ARE REALIZING THE NEED OF Governance has fallen largely SPECIALIST SKILLS AND within the remit of the TECHNICAL KNOWLEDGE IN THIS Company Secretary. Although AREA AND THEY ARE LOOKING TO the various guidelines apply COMPANY SECRETARIES TO to listed companies, the PROVIDE THIS EXPERTISE. standards of Corporate Governance should be adopted by other companies in so of the Company and to maintain the far as they are considered records as required by the act and appropriate to the nature and scale regulators.

Furthermore, the of the organization.

Company Secretary will be required to sign a declaration acknowledging The dynamics of the boardroom are the existence of the Secretary’s changing and Chairmen and Directors are realizing that they need duties on appointment. specialist skills and technical If one were to examine the role and knowledge in this area and they are duties of the Company Secretary as looking to Company Secretaries to currently outlined in the Act it would provide this expertise. There are a appear to be quite restrictive and number of responsibilities, some of mainly administrative in nature. which have been explicitly Principally, the Company Secretary referenced to in the above guidance, ensures the company complies with where the company secretary can the Company Law, maintains certain assist and add value: statutory registers and makes the

July-September 2015

ARTICLE

«

Organizational Governance of meetings. This should enable the It is important that robust governance arrangements are in place, are clearly documented and communicated to the organization.

The position of the company secretary enables them to have a holistic view of the governance framework and as a result they are generally tasked with the responsibility of ensuring that this framework and any supporting policies and procedures are clearly documented. This should include ensuring that the formal documentation required under the UK Code of Corporate Governance, such as schedule of matters reserved for the Board, is in place.

Directors to contribute fully in board discussions and debate and to enhance the capability of the Board for good decision making. Following meetings the Company Secretary should pursue and manage follow up actions and report on matters arising.

Board development

All Directors should have access to the advice and services of the Company Secretary. The Company Secretary should build effective working relationships with all Board Members, offering impartial advice and acting in the best interests of the Company. In promoting Board development the Company Secretary should assist the Chairman Supporting the Chairman with all development processes The Company Secretary has a duty including Board evaluation, induction to advise the Board, through the and training. This should involve Chairman, on all governance matters. implementing a rigorous annual Together they should periodically Board Committee and individual review whether the Board and the Director Assessment. Further, the company’s other governance Company Secretary should take the processes are fit for purpose, and lead in developing tailored induction consider any improvements or plans for new Directors and devising initiatives that could strengthen the a training plan for individual Directors governance of the company. The and the Board. Although these tasks relationship between the Company are ultimately the responsibility of Secretary and the Chairman is the Chairman, the Company central to creating an efficient Board. Secretary can add value by fulfilling or procuring the fulfillment of these Board and Committee best practice governance requirements on behalf of the processes Chairman.

The Company Secretary plays a leading role in Good Governance by Communication with helping the Board and its committees stakeholders to function effectively and in accordance with their terms of The Company Secretary is a unique reference and best practice. interface between the Board and Providing support goes beyond Management and as such they act scheduling meetings to proactively as an important link between the managing the agenda and ensuring Board and the business. Through the presentation of high quality effective communication they can up-to-date information in advance coach management to understand

July-September 2015

the expectations of and value brought by the Board. The Company Secretary also has an important role in communicating with external stakeholders, such as investors, and is often the first point of contact for queries. The Company Secretary should work closely with the Chairman and the Board to ensure that effective shareholder relations are maintained.

Disclosure and reporting In recent years there has been increased emphasis in the quality of Corporate Governance reporting and calls for increased transparency. The Company Secretary usually has responsibility for drafting the governance section of the Company’s Annual Report and ensuring that all reports are made available to shareholders according to the relevant regulatory or listing requirements.

Increased burden of regulation In the light of economic developments in recent years stakeholders of companies, particularly in the financial services sector, are increasingly concerned with the conduct of the affairs of the company and therefore it is essential that best practice is adhered to at all times and evidence is available to demonstrate the same.

The requirement for higher standards in this sector can be further evidenced by the introduction of the Central Bank of a series of corporate governance codes including fitness and probity standards for certain pre-approval controlled functions or persons who perform controlled functions. Controlled functions include “ensuring, controlling or monitoring compliance by a

25

« regulated financial service provider with its relevant obligations”.

While the monitoring of compliance in the financial services sector has traditionally been outsourced with the introduction of these new standards there is more caution in the provision of such services which are more likely in the future to be laid at the feet of the Company Secretary.

It is true to say that the role of the Company Secretary also includes keeping the Board informed of new legislation(s) and those which are applicable to them. With this increased focus on Corporate

26

Governance, the role of the Company Secretary has been extended such that the Secretary is now seen as the guardian of the company’s compliance with legislative requirements and best practices.

Conclusion The focus of the Company Secretary’s responsibilities will differ depending on the type of company and also depending on the industry.

No matter what the organization however, the role has expanded beyond simply ensuring statutory

ARTICLE

compliance to become a pivotal one where the skills of the company secretary can have a direct impact on the effectiveness of the Board and organization.

Company Secretaries can add real value to their role and increase their impact by bringing commercial acumen, strategic understanding and softer people skills in addition to their already much sought after legal and governance knowledge. » About the Author Fellow Member of the Institute

July-September 2015

ARTICLE

«

SALIENT CHANGES MADE IN THE DHAKA STOCK EXCHANGE (LISTING) REGULATIONS, 2015 - Mohammad Shafiqul Islam Bhuiyan

L

isting regulation is one of the major securities related laws which have to be adhered by all the listed securities. This is basically a continuing compliance manual for the listed securities and also contains guidelines for the prospective issuers.

Bangladesh Securities and Exchange Commission (BSEC) in its 545th meeting held on May 27, 2015 approved the Dhaka Stock Exchange (Listing) Regulations, 2015 under provision of section 34 of The Securities and Exchange Ordinance, 1969 and section 23 of the G·‡P‡ÄmwW wgDPz¨qvjvB‡Rkb AvBb, 2013 and forwarded the same to DSE vide their letter No.SEC/SRMIC/2011/1241/250 dated June 30, 2015. The Dhaka Stock Exchange (Listing) Regulations, 2015 was published in government gazette on July 12, 2015 and has become effective from the date of publication of gazette i.e., July 12, 2015.

It is mentionable that DSE vide its letter No. DSE/BA/DEM/2013/13729 dated July 29, 2013 forwarded the proposal to BSEC for amendment of the existing listing regulations.

Earlier this regulation was also forwarded for amendment during the years 2008 and 2010. The previous listing regulations namely “Listing Regulations of the Dhaka Stock Exchange Limited” was firstly promulgated on April 8, 1996 and gazzetted on February 18, 1997.

The listing regulation has been

July-September 2015

updated to cope with the present scenario of the capital market vis-à-vis to be compatible with the other existing securities laws.

Different applicable securities laws scattered in many places have been compiledin a single place. Secretarial tasks will be much easier for the new listing regulations:

Recommendation of Exchange on Public Offerings

The major changes made in the new listing regulations have been presented below:

 The Exchange can ask clarifications from issuer or its directors, officers, issue manager(s), auditors, valuer(s) with intimation to the Commission.

Application of this regulation The Listing Regulations shall apply to all companies, entities and securities including units of the mutual funds or collective investment schemes (CIS) applying for listing and those listed with the Exchange. That indicates that applicability of the regulations has been widened i.e., mutual funds or collective investment schemes (CIS) has been brought under purview of Listing Regulations. [Regulation 1(3)]

 The Exchange shall submit its primary recommendation along with checklist to the Commission within 20 days of receipt of public offer document.

 The Exchange shall submit its final recommendation along with a declaration within seven days of receiving clarifications. Regulation 3

Approval for Listing

Definitions

 Maximum limit for completion of listing procedures has come down to 30 (thirty) working days from closure of subscription list instead of 75 (Seventy five) days.Regulation5

Some issues have been defined in very clear manner like:

Information and Documents for Listing

 Company Secretary  Compliance Officer  Direct Listing

 Separate requirements for furnishing Information and Documents for Listing of the following securities has been introduced:

 Material Change/Information



Equity Securities

 Sponsor



Mutual Fund

(Regulation 2)



Debt Securities

27

« Earlier it was common for all types of securities. Regulation 6

preceding 3 (three) accounting/financial years; (viii) comply with the provisions of Corporate Governance Guidelines

Undertaking Every issuer shall provide an undertaking under a common seal and signature by MD/CEO/Authorized Person to abide by these regulations at the time of listing. Regulation 7

ix) any of its sponsors/directors is not a bank defaulter; Regulation 9

Restriction to Sponsors/Directors

Direct Listing/Re-listing Dhaka Stock Exchange (Direct Listing) Regulations, 2006 has been repealedby this regulation and a new chapter has been incorporated in this regulation to provide another avenue of listing with the Exchange namely direct listing/re-listing facilities. Direct listing also includes re-listing of any de-listed securities including the securities traded in the Over-the-Counter (OTC) market. Price discovery will be through secondary market directly instead of book building method. Other than state owned companies can also be eligible for direct listing subject to compliance of certain criteria: Regulation 8-13

The sponsors or directors shall be restricted from buying shares for 1 (one) year from the date of direct listing.Regulation 13

Preparation of Financial Statements The financial statements (annual/quarterly) of the issuer of listed security shall be prepared in

Direct Listing / Re-Listing Criteria (i) Minimum paid up capital of Taka 300 (three hundred) million; (ii) no accumulated loss; (iii) in commercial operation for at least immediate last 5 (five) years;

Auditing of Financial Statements

(iv)profit in 3 (three) years out of the immediate last 5 (five) completed accounting/financial years with steady growth pattern;

Financial statements shall be audited by any firm of chartered accountants which is in the panel of the Commission.

(v) is regular in holding of annual general meeting (AGM); (vi) positive net current assets preceding 3 years; (vii) net positive cash flows from its operating activities for immediate

28

Audit report shall be prepared in accordance with the International International Standards on Auditing applicable in Bangladesh ensuring the provisions of the †Kv¤úvbx AvBb, 1994 (1994 m‡bi 18 bsAvBb), securities laws and other relevant laws.

Financial statements shall not be audited by any firm of chartered accountants or auditor which or who is convicted for any securities or exchange or financial related offence.

Regulation 15

Adoption of Quarterly Financial Statements Board meeting The company/fund shall notify the Exchange and the Commission in advance the date and time of its board of directors‘/trustees meeting before 3 (three) working days.

THE LISTING REGULATIONS SHALL APPLY TO ALL COMPANIES, ENTITIES AND SECURITIES INCLUDING UNITS OF THE MUTUAL FUNDS OR COLLECTIVE INVESTMENT SCHEMES (CIS) APPLYING FOR LISTING AND THOSE LISTED WITH THE EXCHANGE. accordance with the Securities and Exchange Rules, 1987 as well as the provisions of IFRS/IAS as adopted in Bangladesh, as the case may be, unless otherwise any specifications specified. Regulation 14

The issuer of listed securities shall not appoint any firm of chartered accountants as a statutory auditor for a consecutive period exceeding three years.

ARTICLE

Interim dividend No stock/bonus entitlement shall be declared as interim dividend.

In the same board meeting, the company shall disclose comparative NAV, EPS and NOCFPS and decisions with regard to recommending interim dividend. Regulation 16

Submission of Quarterly Financial Statements The issuer of listed securities excepting the life insurance company shall, within 45 (forty five) days of the first quarter submit first quarterly financial statements (audited/ un-audited) to the Exchange and the Commission, [Life insurance company 90 (ninety) days] and Second quarter (Q2)/third quarter (Q3) shall be submitted within one month of the respective period end; and

July-September 2015

ARTICLE

«

Publish the quarterly financial statements in at least two widely circulated national dailies, one in Bangla and the other in English.

Regulation 17

Penalty for delayed submission of Quarterly Financial Statements The issuer of listed securities shall pay penalty of Taka 5,000.00 (five thousand) per day to the Exchange in the event of default. Regulation 17

Submission of Annual Financial Statements and other reports Annual financial statements of a listed securities except mutual fund shall be audited within one hundred and twenty days from the date on which the issuer’s financial year ends and a copy ofsuch audited financial statements shall be submitted to the Commission and the Stock Exchange within fourteen days thereof….; The issuer of listed securities shall pay penalty of Taka 5,000.00 (five thousand) per day to the Exchange in the event of default. Regulation 18

Adoption of Annual Audited Financial Statements Notify the Exchange and the Commission in advance the date and time of its board of directors/trustees meeting before 7 (seven) days.

No divided shall be paid other than out of profits of the year or any other undistributed profits. Regulation 19

Authentication of Financial Statements Any un-audited financial statements shall be authenticated by

July-September 2015

The Chief Executive Officer/Managing Director, at least two Directors including Chairman, Chief Financial Officer/Head of Finance & Accounts and the Company Secretary/ Compliance Officer.

Any audited financial statements of the issuer of listed securities shall be authenticated as per the provisions of the †Kv¤úvbx AvBb, 1994 (1994 m‡bi 18 bs AvBb), and requirement of the Commission as well as requirement of primary regulator of the issuer, if any. Regulation20

Posting of Financial Statements in the Website The issuer of listedsecurities shall make available the detailed financial statements (annual/quarterly) in its website as well as to make available the same in thewebsite of the Exchange through link arrangement.

Regulation21

Submission of Annual Report The issuer of listed securities shall furnish 30 (thirty) copies of Annual Report to the Exchange and to the Commission. Regulation 22 (1). Earlier it was 50 (fifty) copies.

Fine for non-submission of Annual Report Penalty of Taka 500.00 (five hundred) per day to the Exchange.

Regulation 22 (2)

Fixation of Record Date Record date shall be minimum 14 (fourteen) and maximum 30 (thirty) market days from Board of Directors meeting/Trustees meeting.

It shall be a market day of the Exchange.

Itshall not be changed in any circumstances.

If it falls in any public holiday, the first market /trading day subsequent to such holiday. Regulation 23

Annual General Meeting AGM shall be hold within 45 (forty five) working days from the record date; To hold AGM in each year of the Gregorian Calendar; No benefit in cash or kind other than dividend shall be paid to the holder of equity securities; and Venue of the AGM shall be within the city, town or locality of the registered office. Regulation 24

Notice of General Meeting Notice shall be sent at least 14 (fourteen) days prior to AGM and 21 (twenty one days) prior to EGM. Any resolutions taken therein shall be sent to the Exchange within halfan hour if such resolutions contain any price sensitive information.

Regulation 25

Audio Visual Recording Uninterrupted audio visual recording of AGM/EGM and furnish a copy not later than three working days to the Exchange and to the Commission.

Regulation 26

Attendance, Minutes and Filings Furnish copies of attendance and minutes of AGM/EGM to the Exchange and to the Commission within 14 days of holding of such general meeting. Regulation 27. Earlier it was 60 days.

Payment of Dividend Within 30 (thirty) days of declaration or approval dividend must be paid/credited.Regulation 28

29

ARTICLE

« Default in payment of Dividend

 Plan (with schedule) for utilization of the undistributed profit

Commission and Exchange within tenth day of each month.

In case of default in payment of Dividend, respective director/officer shall be jointly and severally liable to pay to the Exchange apenalty of Taka 5,000.00 (five thousand) only for every day during the default continues.

The aforesaid condition shall not apply who declared at least 10% dividend. Regulation 31

Sponsor/Director/foreigner/institutio n… and 5% or more as well as Free-float holding shall be submitted within seventh day of each month.

Regulation 35

The Exchange shall notify the fact of such default and the name of defaulting issuer by notice or through online news of the Exchange Regulation 28

Dividend Compliance Report Submit a compliance report to the Exchange and to the Commission within 7 (seven) working days.

Regulation 29

Dividend Excluding Sponsors and/or Directors Comply with the following issues Declare as price sensitive information the following:  The quantity of securities held by the said sponsors and/or directors.  The amount payable to the general securities holders.

Sponsor/Director shall be barred from disposing off their securities from the board of directors meeting to the date of general meeting.

Regulation 30

Disclosure on Partial or Non-distribution of Profit The issuer of listed securities shall, among others, specifically and clearly mention the following in its resolutions of every annual generalmeeting:  The reasons for partial or non-distribution of profit,

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Pending Annual General Meeting (AGM) In case of any litigation with regard to the pending AGM(s), the issuer of equity securities shall not declare any dividend or rights offer until resolved by the competent Court.

Regulation 32

Disclosure of Price Sensitive Information (PSI)

Compliance of Corporate Governance Shall comply with all the provisions of Corporate Governance Guidelines; Shall include the compliance certificate on compliance of conditions of Corporate Governance Guidelines in the Annual Report; and

PSI shall be sent to the Commission and the Exchange within 30 minutes; Shall state in the directors’ report whether they complied. Regulation PSIshall be signed by the Chairman 36 or Managing Director /Chief Executive Submission of Officer or Company Secretary;

information/documents

PSI can be sent through electronic communication; and Board meeting in connection with PSI shall be hold after trade hour or public holiday. Regulation 33

Directors, officers, auditors or authorized persons shall furnish documents, information, clarification or explanation to Exchange as per requirement. Regulation 37

Declaration of Sponsors or Directors

Material Change/ Information

Every sponsor or director of listed securities shall simultaneously submit a written report to the Exchange and to the Commission about his intension to buy or sell or otherwise dispose of the securities;

Every issuer of listed securities shall notify the Exchange and the Commission about any material change/information. Regulation 38

Every placement holder shall report for sell or dispose off not for buy.

Regulation 34 Monthly Shareholding Position and Free Float Reporting: Shareholding of Sponsor/Director and shareholders who hold 10% or more shall be submitted to

Face/Par Value of Equity Securities Unless otherwise prescribed by the Commission, face value of any equity securities and mutual funds shall be Taka 10.00 (ten) only. Regulation 39

Categorization of Securities No issuer of listed securities shall

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create any category/classification whatsoever on fully paid securities…

demand drafts issued in favor of "Dhaka Stock Exchange Limited"

No issuer of the securities shall have Website the authority to impose any restriction on transferability on its The issuer shall have an official fully paid up securities. Regulation 40 website linked with the website of the Exchange containing, among others,

e-Filing of Information/ Documents

The information/documents, etc. are required to submit/file in electronic format to the Commission and to the Exchange as and when required.

Regulation41

 Affairs of its business;  Profile of Board of Directors, top management;  Detailed information on quarterly financial statements and annual audited financial statements;

Initial Listing and Annual Fees

 The latest Directors’ Report;

Initial Listing fee for securities based on paid-up capital

 Details of shareholding;

 Up to Taka 10 crore@0.25%  Above Taka 10 crore@0.15% Minimum of Taka 50,000 and maximum of Taka 10,000,000.

Regulation 42(1)

Annual Fees Annual Listing fee for securities:  Up to Taka 100 crore@0.05%  Above Taka 100 crore@0.02% Minimum of Taka 50,000 and maximum of Taka 6,00,000.

Regulation 42(2)

Fees of draft prospectus An issuer shall pay Taka 50,000.00 (fifty thousand) as draft prospectus scrutiny fee. Regulation 42(5)

Fees of name change An issuer of listed securities shall pay Taka 50,000.00 (fifty thousand) as name change fee. Regulation 42(6)

Mode of Payment of Fees BEFTN or payment orders or July-September 2015

 All price sensitive information;

 Status of compliance with the corporate governance guidelines; and  Contact number (Fax, e-mail & telephone) of the officials of Investors’ Relation Department.

Regulation 44

False and Misleading information No issuer…. shall furnish any information which is false or incorrect or misleading or motivated in any material particular. Regulation 45

Membership Certificate with Bangladesh Association of Publicly Listed Companies (BAPLC) The issuer of listed securities shallsubmit a copy of membership certificate of Bangladesh Association of Publicly Listed Companies (BAPLC) to the Exchange; The issuer shall also submit such certificate withrenewal thereof to the Exchange in every year along with the AnnualReport.Regulation 46

Transfer of Listed Securities Transaction of all securities listed with the Exchange shall be made through the trading system of the Exchange The Exchange may approve the transfer of securities outside trading system in the following cases: Transfer of securities by way of gift; Court order; acquisition of securities through other than cash and confiscation/loan default etc.

The Exchange shall approve the transfer within 15 (fifteen) working days.

Service charge @ 0.05% on the closing price or Taka 50.00 (fifty) whichever is higher.Regulation 47

Response to Queries of the Exchange The issuer of listed securities shall response to the queries of the Exchange on unusual movement in price and volume of such securities as the Exchange may require, at any time, by request in writing with intimation to the Commission.

Regulation 48

Suspensions of Trading Notify publicly through the trading system and website of the Exchange within 5 (five) minutes.

It shall remain in force for a period of thirty days which the Exchange may extend for further periods not exceeding fifteen days at any time.

Regulation 50

De-listing of Securities Most of the reasons remain as like previous one. If any issuer fails to pay the annual listing fees or any other dues payable to the Exchange for a period of 3 years, it will be eligible for de-listing earlier it was 2 years.

Regulation 51

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« Voluntary De-listing Apply for voluntary de-listing when fulfills any of the following criteria: No trade during last one year; or Shareholdings of the sponsors and directors exceeds 90% of the total paid-up capital; or If any non-listed company acquires/ holds more than 90% of paid-up capital of the issuer of listed securities. Regulation 52

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Contravention

De-listing of Fixed Term Securities All fixed term securities, e.g., close-end mutual funds, debentures, bonds etc. shall be de-listed from the Exchange on its maturity. Regulation 53

Inspection The Exchange may conduct an inspection of listed securities with prior approval of the Commission and report to the Commission within fifteen days. Regulation 54

Contravention of any of the provisions of these Regulations shall attract the relevant provisions of the Securities and Exchange Ordinance, 1969, evsjv‡`k wmwKDwiwUR A¨vÛ G·‡PÄ Kwgkb AvBb, 1993 and G·‡P‡ÄmwW wgDPz¨qvjvB‡Rkb AvBb, 2013. Regulation 56 » About the Author Assistant General Manager and Head of Listing Affairs, Dhaka Stock Exchange Limited

C.S. ADMISSION NOTICE

JANUARY-JUNE, 2016 SESSION If you are willing to prepare yourself for a Challenging and Rewarding Profession ‘Chartered Secretary’ (CS) is the right choice for YOU. The Chartered Secretary is the global requisite qualification to become a Company Secretary.

Admission in Foundation Level

Application in prescribed forms are invited from Graduates other than business background and business graduates with less than 6 points for undertaking a Foundation Course for (Six) months for July-December, 2015 Session. After passing they will be automatically eligible for enrollment in Executive Level-I course in the subsequent semester.

Admission in CS Executive Level-I

Applications in prescribed forms are invited from the business graduates or MBA who are interested to pursue the CS Course for enrollment in its Executive Level-I of July-December, 2015 Session.

DATE OF APPLICATION & ADMISSION TEST MINIMUM ELIGIBILITY

Application form is available till - December 15, 2015 Last date of submission of application - December 15, 2015 (Original Certificate must be shown) - December 18, 2015 Admission Test (Friday) University Graduate with 6 points (1st Div.=3, 2nd Div.=2, 3rd Div.=1) or equivalent CGPA. A-Level qualified may also apply.

FEES FOR EXECUTIVE LEVEL-I

Application Form and Students’ Handbook Tk. 1,000

FEES FOR FOUNDATION LEVEL

Application Form and Students’ Handbook Tk. 1,000

CLASS TIMINGS FOR EXECUTIVE LEVEL COURSE DURATION

Tuition fees for Executive Level - I

Tk.20,650

Tuition fees for Foundation Level

Tk.22,500

Day Shift: 8.30am to 5.00pm (Friday & Saturday) Evening: 6.30pm to 9.30pm (4 Days in a week) Total 5 Semesters (excluding Foundation Course) of 6 months each.

for further information th Please Contact: ICSB Office, Padma Life Tower (8 Floor) 115, Kazi Nazrul Islam Avenue, Bangla Motor, Dhaka-1000 Tel: 880-2-934 9578, 933 6901/101 & 105 E-mail: education@icsb.edu.bd, secretary@icsb.edu.bd, www. icsb.edu.bd

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CHARTERED SECRETARY AS A PROFESSION - Bipul Kumar Bhowmik FCS

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hartered Secretary in Bangladesh is the professional term for the members of the Institute of Chartered Secretaries of Bangladesh (ICSB) - a prestigious Institute of executive administrators and advisors in corporate matters.

Chartered Secretaries are experienced professionals who are skilled in many areas. The knowledge and experience of Chartered Secretaries enables them to serve in a unique role in an organization providing expertise in governance, corporate law, management, risk, finance and corporate secretarial practices.

ICSB in Bangladesh is the formal professional Institute for promoting of Corporate Governance and Company Secretary-ship as well as the expert commentator and thought leader on governance matters. It is the professional qualifying body for Chartered Secretaries offering a qualification that is well recognised in the country. The career-long programme of study comprises attainment of professional qualifications and requires continuing professional development (CPD), which ensures that members remain on the cutting edge of developments.

It is the chartered membership and qualifying body for people working in company secretary-ship, governance, risk, and compliance.

To become a Chartered Secretary, it requires completing a rigorous study programme that covers the areas of governance, corporate

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finance, corporate law, corporate secretarial practice and strategy. This kind of broad-based professional qualification enables achievement of skills needed to confidently serve in a variety of leadership roles.

Successfully completing the Chartered Secretary qualification process opens the door to versatile and challenging career opportunities.

The Chartered Secretary qualification enables to work in leadership positions in the private, public or not-for-profit sectors or

the depth of knowledge and experience that allows him to serve in a unique role in an organization’s management team and duties and responsibilities often cut across all departments. They are qualified to serve as main point of contact for Board of Directors and shareholders, ensuring effective communication within the board and its committees and between senior management and non-executive directors. There is no doubt whatsoever that Chartered Secretaries are in demand in Bangladesh and abroad. It is viewed that – A CHARTERED SECRETARY HAS THE DEPTH OF KNOWLEDGE AND  The market demand for this EXPERIENCE THAT ALLOWS HIM TO career is on the upswing.

SERVE IN A UNIQUE ROLE IN AN ORGANIZATION’S MANAGEMENT TEAM  There is tremendous AND DUTIES AND RESPONSIBILITIES growth opportunity in this OFTEN CUT ACROSS ALL profession along with DEPARTMENTS. excellent remuneration. establish own business offering professional services. Almost every kind of organizations whose affairs are conducted by the Boards, Councils or Association, finds it useful to appoint a person who holds the qualification of Chartered Secretaries in key administrative position. Qualified Chartered Secretaries having long experience in corporate management have the option to go for Private Practice as per Chartered Secretaries Act 2010.

The scope of responsibility handled

by Chartered Secretaries varies from organization to organization. Key areas include corporate governance, finance, compliance and regulatory matters. A Chartered Secretary has

 This is a coveted position and rapidly gaining popularity amongst youngsters who want to make it big in the corporate world.

It is needless to mention that Chartered Secretaries like other professional in this century have to accept and positively respond to the complex challenges of the fast changing business world. Learning from various corporate debacles beside doubtful role in some cases of the professionals is cause of concern of today. Perhaps the future business shall have to be a combination of law and ethics.

Professionals have to remain more accountable to the regulators and to the public, and chartered secretaries are no exception.

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ÂŤ A future Company Secretary has to get institutional support (from ICSB) to deal with knowledge development beside advises on issues like conflicts in board composition, executive compensation, analysis of expectation of the stakeholders and certain myths and facts arising out of such expectations. This is necessary for ICSB to develop a path-finding platform, not only for its members but also for the stakeholders of various corporate.

Chartered Secretaries with updated knowledge base will have to perform on a continuous basis to keep the quality high of the profession. All these process perhaps should start from the fountain of thoughts of ICSB and at ICSB we should perhaps gradually pay attention to chalk out our future course of action to keep the profession strong, vibrant and alive.

Chartered secretaries (either in practice or service) should act for total compliance of all applicable legislation and advise Directors to govern their companies in the best possible manner to protect the interest of the stakeholders and the function of CS should be treated as

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a management tool. To ensure effective functioning of this management tool and to upgrade knowledge on a continuous basis (adopt changes in professional work area), it is better to introduce a reorientation course (in addition to CPD) mandatorily for the members irrespective of their status whether employed or in practice. ICSB through update knowledge of its members can do knowledge support to governments and regulators for proper governance. ICSB may consider floating an informationsharing platform through software about companies with on line linkage with various companies, ROC etc. As a part of continual development, periodic check ensures effectiveness and ICSB may think of introducing periodic checks of the effectiveness with benchmarking for professional up-gradation extensively.

In the backdrop of various corporate debacles in recent past and misconduct of professionals around us, it is immensely important for us to blend law and ethics with business and ICSB (ethics with the profession) has a role to play. We at ICSB can learn a lot from the experiences of other countries which have done, in

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different ways, better than we have.

The effective change is required in thought process which is not achievable only by removing restraints or plugging the loop-holes by making piecemeal amendments in corporate legislation.

The roles and responsibilities associated with this profession are highly accountable and visible. There is constant pressure to deliver results.

Scope of CS is becoming very broad with the growth in the corporate world. Since inception (if we say prior its formation, it will not be said wrong!), ICSB is working with untiring efforts to add value to every corner of needs to ensure and promote governance excellence. In doing so, members are playing the vital roles under the leadership of the Council with the Government and other stakeholders are also contributing a lot to this journey. To be a part of this esteemed journey, one can choose Chartered Secretary as a better profession and an organization can also choose a Chartered Secretary to take it to the next level. Âť About the Author Fellow Member of the Institute

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SECRETARIAL AUDIT: A TIMELY ADVENT TO THE AUDIT TRIBE - Md. Shiful Islam ACS

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ecretarial Audit (l Compliance Audit) checks on the implementation of written manuals, procedures and work instructions. The compliance audit evolved in the 20th century as business practices became more complex. The first use of compliance auditing appeared in financial transactions, because tax collectors and bank examiners needed assurance that the financial data were correct. This concept of verifying compliance was picked up by the quality profession in the 1960s and applied to the military and the nuclear power industry. Compliance Audits are still used in high-risk activities; where there is a desire to verify that the activities are being performed in strict compliance to approved requirements.

Let us have a look on the nature and scope of Secretarial Audit. In the journey of Secretarial Audit Companies Act 2013 of India, passed in the parliament laid down a historical jump.

‘Secretarial Audit’ has been introduced by recently enacted Companies Act, 2013 in India. It is a process to check compliances made by the Company under Corporate Law & other laws, rules, regulations, procedures etc. It is a mechanism to monitor compliance with the requirements of stated laws and processes. Periodically examination of work is necessary to point out errors & mistakes and to make a robust compliance mechanism system in an organization.

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Every company needs to comply with hundreds of Laws, rules, regulations. These laws are complex and non-compliances would attract major risk to a company. Periodically inspecting the records of a company gives exact information whether, and if so, to what extent a Company has complied with the laws applicable to the Company.

Secretarial Audit gives comfort to the regulators, stakeholders and management that the company has

turnover of Two Hundred Fifty Crore Rupees or more.

“Turnover” means the aggregate value of the realisation of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year.

[Section 2(91)] Secretarial Audit is also mandatory for a private company which is a subsidiary of a public company, and which falls under the prescribed class of companies.

EVERY COMPANY NEEDS TO COMPLY WITH HUNDREDS OF LAWS, RULES, REGULATIONS. THESE LAWS ARE COMPLEX AND NON-COMPLIANCES WOULD ATTRACT MAJOR RISK TO A COMPANY. a disciplined approach to evaluate and improve effectiveness of risk management, control, and governance processes.

The section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, following companies are required to obtain “Secretarial Audit Report” form independent practicing company secretary for (1) Every listed company (2) Every public company having a paid-up share capital of Fifty Crore Rupees or more; or (3) Every public company having a

The ideal audit scope of secretarial audit as per Indian perspective goes to check compliances by the company under the following laws and rules made there-under;

i. The Companies Act, 2013 (the Act) and the rules made there-under; ii. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made there-under; iii. The Depositories Act, 1996 and the Regulations and Bye-laws framed there-under; iv. Foreign Exchange Management Act, 1999 and the rules and regulations made there-under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings; v. The following Regulations and Guidelines prescribed under the

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« Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-

viii. Other laws as may be applicable specifically to the company

a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

Thus the scope of Secretarial audit is not limited to the corporate laws applicable to company but it extents to all laws applicable to a Company.

b. The Securities and Exchange Atul H Mehta FCA FCS, Past President Board of India (Prohibition of of The Institute of Company Insider Trading) Regulations, 1992; Secretaries of India (ICSI) rightly opined that “Secretarial Audit will c. The Securities and Exchange definitely lead to better Corporate Board of India (Issue of Capital Governance as the scope of it and Disclosure Requirements) includes examining the board Regulations, 2009; processes and practices, as also reporting on compliances. The new d. The Securities and Exchange Company Act 2013 with the focus Board of India (Employee Stock on transparency entails extensive Option Scheme and Employee and detailed disclosures. Secretarial Stock Purchase Scheme) audit validates such disclosures”.

Guidelines, 1999; There are many first happenings in e. The Securities and Exchange India in terms of the Companies Act Board of India (Issue and Listing 2013 such as mandatory CSR, of Debt Securities) Regulations, mandatory observance of secretarial 2008; standards, mandatory secretarial audit. f. The Securities and Exchange Board of India (Registrars to an Today’s business is extremely coined Issue and Share Transfer Agents) with the numerous challenges such Regulations, 1993 regarding the as uncertainty, globalization, Companies Act and dealing with innovation, government policy and client; regulation, technology, diversity, higher return, complexity, information g. The Securities and Exchange overload, supply chain management Board of India (Delisting of Equity etc. On the other side, to cope with Shares) Regulations, 2009; and the challenges as created by the globalization and other recent h. The Securities and Exchange phenomena and to ensure Board of India (Buyback of maximum profitability and value Securities) Regulations, 1998; addition to its valued stakeholders, businesses are practicing very timely, vi. Secretarial Standards issued by eye-catching and proven The Institute of Company management tools such as Secretaries of India.

Management by Objectives, One minutes manager, In search for vii. The Listing Agreements entered excellence, etc. Most of these tools into by the Company with Stock claim to ensure participation of all Exchange(s), if applicable; employees in objective and

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commitment to the accomplishment. The above mentioned circumstances give the company very little room to pay due time to exercise a control system for confirming that the company has completely complied with all laws, rules and regulations. Therefore company wants someone else on whom it can rely ensuring the compliance and the company itself focuses with more concentration on the business particularly to achieve the challenging objective. This role can be played by a qualified Chartered Secretary.

So a country like Bangladesh which is in a developing stage and doing well in most of the financial indices rapidly should start the Secretarial Audit soon paying due consideration on the scope and importance of it which will attract foreign investment both in backward and forward link age industries, ensure Corporate Good Governance. This will make our business competitive and long lasting, to widen the market of our own product and resources specially the human resources.

Our regulators can look at the “Indian Experience”.

The Chartered Secretary can play a vital role in the formulation of various relevant policies and also their subsequent implementation. a. Journal of The Institute of Company Secretaries of India b. Porter, B., Simon, J. & Hatherly, D. (2005). Principles of external auditing. John Wiley & Sons, Ltd c. Internet. » About the Author Associate Member of the Institute

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CHARTERED SECRETARY IN PRACTICE: BANGLADESH PERSPECTIVE - Mohammad Khasru Noman ACS

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hartered Secretary

In Chartered Secretaries Act 2010, Chartered Secretary is defined as a member whose name is included in member’s register of the Institute of the Chartered Secretaries of Bangladesh (ICSB). A Chartered Secretary has to qualify company laws, securities laws, banking, insurance, finance, investment, taxation, corporate governance, human resources, company secretarial practice, management and administration. They are trained to chart a course through regulation, legislation and best practice to deliver effective operations.

In corporate management irrespective of public or private or non-profitable organizations, -it is essential to have people who acquainted themselves with adequate knowledge about the legislation, regulation and best practice; people who are authoritative, capable to identify the problems, understand the issues and have the expertise to provide the right solutions; people who maintain the organization in a right direction and help it prosper and develop. These people are globally known as Company Secretaries and professionally they are called Chartered Secretaries.

Chartered Secretary in Practice As per the Chartered Secretaries Act 2010 and Chartered Secretaries Regulations 2011, a member of the July-September 2015

Institute of the Chartered Secretaries of Bangladesh (ICSB) may perform private practice after obtaining a Private Practice Certificate from the Institute and such member shall be deemed as a ‘Chartered Secretary in Practice’. A Chartered Secretary engaged in whole-time employment in any organization shall not be allowed to perform private practice or a Chartered Secretary in Practice shall not be allowed to engage himself in a whole time employment in any organization, at the same time.

Secretaries under sub-section (8) of section 19 of Chartered Secretaries Act 2010 include: To work in consideration of remuneration, either individually or in partnership firm’s of any other member’s engaged in the profession of chartered secretaries or of member(s) of any other profession recognized by the Council;

 To render or to provide assistance to render professional services relating to the CHARTERED SECRETARIES ARE profession of chartered secretaries, to any TRAINED TO CHART A COURSE company without being THROUGH REGULATION, engaged in whole time LEGISLATION AND BEST employment therein;

PRACTICE TO DELIVER EFFECTIVE OPERATIONS. A member of the ICSB shall be deemed to be a Chartered Secretary in Practice, if he individually or in partnership with, or in a firm of, one or more of the chartered secretaries in practice or of members of such other professions as may be prescribed by the Council, engages himself in private practice of the profession of chartered secretaries in consideration of remuneration received or to be received, without being engaged in any whole-time employment in any organization (ICSB 2013).

 To perform or to offer to perform the services relating to promotion/formation/ constitution, incorporation, reconstitution/reorganization, merger or dissolution of any company;  To provide, or to offer to provide, on behalf of a company, any of the services regarding-

(i) filing, registration, attestation or certification/authentication of any document(s) including form(s), application(s) and return(s) to the Registrar of Joint Stock Companies and Firms or any other Authority(ies) for a Area/Scope of Private Practice of the company as its authorized Chartered Secretaries in Bangladesh representative, ICSB 2013 states that, the scope of Private Practice of the Chartered

(ii) transfer or transmission of securities,

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« (iii) issuing securities or bonds, (iv)brokerage of shares or stocks, (v) perform as an advisor to operate any company under the Company Laws, the Securities Laws or the Foreign Exchange Regulation Act 1947 (Act No. VII of 1947) for the time being in force, (vi)issuing certificate(s) on behalf of, or for fulfillment of any purpose of, a company, or (vii) secretarial audit or performance as a consultant;  To render professional services or assistance with respect to the practice of the profession of chartered secretaries; or  To render such other services as, in the opinion of the council, are or may be rendered by a Chartered Secretary in practice.

ICSB 2013 states that, as per regulation 16 of Chartered Secretaries Regulation 2011, the Chartered Secretary in Practice can also render the following services:-

 To provide the services regarding Supervision of Corporate Accounting, Compilation of Financial Statements and Authentication of Statutory Accounts;  To perform the responsibilities as the Secretary of Audit Committee;  To provide the services of Working Capital & Liquidity Management, Determining Optimum Capital Structure, Preparation & Evaluation of Project Proposals, Analyses of Investment Proposals, Performing Feasibility Studies, Budgetary Control etc;  To provide to various companies organizations the services relating to Tax Management and Tax Planning under the Laws on Income Tax and Customs, Excise and Value Added Tax, and to provide the services of preparation, scrutinizing and submission of various returns under the said laws and to represent the company or organization concerned appearing before the competent authority (ies);

 To act as an authorized representative to appear before  To maintain liaison with different any Government, National and International Semi-government, Autonomous commercial or business and Private institution(s), organizations and to provide the organizations(s) or authority(ies); advisory services regarding international business;  To provide necessary services regarding Arbitration, Negotiations and Conciliation for resolving commercial disputes or disputes relating to industrial or labor relations;

 To provide conciliation services in various quasi-judicial bodies and arbitration tribunals;  To provide the services relating to Protection, Management, Valuation and Auditing of Intellectual Property Rights;

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 To provide to various companies and organizations all or any of the advisory services relating to Strategic Management, Public Relations, Human Resource Management & Development, Compliance of Industrial & Labor Laws, Utilization of Computer and Information Technology in Management etc;  To be appointed as, and to perform the responsibilities of, an

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Independent Director of a company;  To allow the interested members and registered students for engagement as Apprentice(s).  To allow the person(s) qualified in the final examination of the course of Chartered Secretaries as Interns to undergo the compulsory internship.

Scope given by the BSEC to the Practicing Chartered Secretary In Bangladesh, the concept Chartered Secretary in Practice is quite new. There is no provision of Practicing Chartered Secretary or Secretarial Audit in the Companies Act 1994. However, Bangladesh Securities and Exchange Commission (BSEC) issued Corporate Governance guidelines vide notification no.

SEC/CMRRCD/2006-158/134/Admin /44 dated 07 August 2012. A condition is kept in that notification which states that the companies listed with any stock exchange in Bangladesh shall obtain a certificate from a practicing Professional Accountant/Secretary (Chartered Accountant/Cost and Management Accountant/Chartered Secretary) regarding compliance of conditions of Corporate Governance Guidelines of the Commission and send the same to the shareholders along with the Annual Report on a yearly basis.

The said notification of BSEC opens a new horizon giving the professional recognition to the Practicing Chartered Secretary in Bangladesh.

Professional Misconduct by the Chartered Secretary in Practice ICSB 2013 states that, as per section 20 of the Chartered Secretaries Act 2010, a Chartered Secretary in July-September 2015

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Practice shall be deemed to have committed the professional misconduct, if he permits any other person to perform the practices as a Chartered Secretary in his name;  gives, permits to give or consents to give, directly or indirectly to a person who is not a member, a portion of the fees earned by him in course of his professional services as share, commission, remuneration or brokerage;  obtains any professional assignment, through such a person who has no qualification to be a partner of professional assignment, or in such a way which is not decent for a Chartered Secretary;  tries to attract clients or to acquire professional job through any circular, advertisement or any other similar means;  mentions any degree which has no legality or which is not approved by the Council, in any document, visiting card, letter head pad or sign board, for the purpose of publicity regarding professional success;  undertakes any professional responsibility which was previously undertaken by any other Chartered Secretary, without informing the aforesaid Chartered Secretary in writing;  engages himself in any business or activity which is not approved by the Council and which is not related with the profession of Chartered Secretaries;  permits any person, who is engaged in private practice but not a member, to attest or certify on his behalf such documents which are to be attested or

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certified by only a Chartered Secretary;  discloses any secret information, which he came to know in course of his employment or performing his duties, without being permitted under any law in force or by his employer;  discloses any information, which he came to know in course of performing his duties, without having consent from his appointing authority;  performs attestation of any report, without performing any scrutiny, under private practice;  provides, to business entity, such statement or opinion in which it or its firm or any partner of its firm has interest but it is not mentioned in the report;  helps to conceal any fact, statement or opinion which he knows, though it was necessary to disclose them for making the statement or opinion concerned free from ambiguity;  fails to state any information which he knows and with which he was concerned by virtue of his professional power;  neglects to perform his professional duties severely;  fails to deposit his client’s money in a separate account or to spend the said money in such purposes for which it was to do.

Conclusion The concept of the practicing Chartered Secretary commenced through the enactment of the Chartered Secretaries Act 2010 (Act no. 25 of 2010) and the Chartered Secretaries Regulation 2011. The Institute of the Chartered Secretaries

of Bangladesh (ICSB) has published the ‘Private Practice Guidelines’ in the light of Chartered Secretaries Act and Regulation for the practicing member of the Institute. Bangladesh Securities and Exchange Commission (BSEC) also recognized to the private practice of Chartered Secretaries in the Corporate Governance guidelines, SEC/ CMRRCD/2006-158/134/Admin/44 dated 07 August 2012. But there is no provision/scope of Practicing Chartered Secretary or Secretarial Audit in the Companies Act 1994.

If the scope of Practicing Chartered Secretary or the Secretarial Audit is introduced in the new Companies Act, it will play the vital role for the development of sound corporate culture and good governance.

Government should take initiative immediately to introduce the scope of Practicing Chartered Secretary or Secretarial Audit in the new Companies Act which is under the process of enactment.

References Anon 2010, Chartered Secretaries Act 2010 (Act no. 25 of 2010).

Bangladesh Gazette, Additional number, June 16, 2010. 6129-6146 pp.

Anon 2011, Chartered Secretaries Regulation 2011. Bangladesh Gazette, Additional number, September 12, 2011. 13557-13592 pp.

ICSB 2013. Private Practice Guidelines. Dhaka, Bangladesh. 40P. Sanaullah M. 2015. Career as a Chartered Secretary. In: The Chartered Secretary. Institute of Chartered Secretaries of Bangladesh (ICSB), Dhaka, Bangladesh. 14-17 pp. » About the Author Associate Member of the Institute

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CORPORATE SOCIAL RESPONSIBILITY: A SIGNIFICANT ROLE OF THE COMPANY SECRETARY - Md. Lipon Hossain

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orporate Social Responsibility, often abbreviated ‘CSR,’ is a corporation’s initiatives to assess and take responsibility for the effects of an organization’s activities on environmental and social wellbeing. CSR may also be referred to as ‘Corporate Citizenship’ and can involve incurring short-term costs that do not provide an immediate financial benefit to the company, but instead promote positive social and environmental change. Simply paying back to the society where it operates.

CSR is defined by the European Commission as: “A concept where by companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”.

CSR policy functions as a self-regulatory mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards and national or international norms. CSR aims to embrace responsibility for corporate actions and to encourage a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others. It has become a moral obligation of a corporate to pay back something to the society, nurturing and preserving

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resources of the planet, being sensitive and participative in solving problems of the society as it earns profits, makes money by operating and utilizing resources, infrastructure and environment belonging to the society.

A Company Secretary is the Chief Compliance Officer of the company, responsible along with the directors

A COMPANY SECRETARY IS THE DIRECT LINK TO THE BOARD OF DIRECTORS, AND IS THEREFORE POSITIONED TO PLAY A SIGNIFICANT ROLE IN CSR FORMULATION AND IMPLEMENTATION. for certain tasks under the Companies Act. He is empowered to enter into certain contracts on company’s behalf, and may also have additional duties defined in his contract of employment. Company Secretaries are responsible for ensuring that an organisation complies with standard financial and legal practice and maintains high standards of corporate governance.

Although they are not strictly required to provide legal advice, Company Secretaries must have a thorough understanding of the laws that affect their areas of work. Company Secretaries hold a strategic position

at the heart of governance operations within an organisation and act as a point of communication between the board of directors and company shareholders, reporting in a timely and accurate manner on company procedures and developments. They can also provide an important link between the board of directors and an organisation's executive management.

Public listed companies are legally required to employ a Company Secretary and many private companies are also doing the same. Positions can be found across all sectors, in the public and not-for-profit sectors as well.

Alternative job titles may include ‘Head of Governance’ or ‘Head of Democratic Services’. Though the role and importance of Company Secretary in the corporate world and Corporate Governance is very well established, Company Secretary in the field of CSR. Company Secretary can play an important role in CSR formulation and implementation. For this a Company Secretary must have a feeling, a desire from the bottom of the heart to do something good for the society, to participate in the welfare of the underprivileged section of the society. Only then one can cultivate such feeling and

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effectively lead others for CSR. A Company Secretary should inculcate the sense and influence of CSR activities since they have the direct nexus to the Board of Directors. Once CSR is desired and initiated at the top level of the pyramid it will be automatically followed down the line in the hierarchy. This depends on leadership quality, organizational culture, vision and mission, dynamics of the entity, quality and effectiveness of corporate governance practices, etc. For transforming the CSR policies into action one must have a clear structure of organization, clear vision and mission, optimum manpower, financial resources etc. Institute of Chartered Secretaries of Bangladesh (ICSB) can also play a major role by framing a module, guidance note and later Secretarial Standard on CSR and by conducting Study Circles and Seminars can enlighten Members, Students, Promoters, Directors and CEOs from the corporate sector.

Students undergoing CS course as well as members may be made to voluntarily, involve themselves for a few days as part of a training in social welfare activities. Visit to NGOs, working sites for CSR projects can prove to be very useful.

Institute of Chartered Secretaries and Administrators (ICSA) of UK guidelines state that “The company secretary should share responsibility with relevant specialist functions for ensuring that the board is aware of current guidelines in this area and that it identifies and takes account of the significance of corporate responsibility issues in its stewardship and oversight of the company”.

A Company Secretary is the direct link to the board of directors, and is therefore positioned to play a significant role in CSR formulation and implementation. An effective July-September 2015

CSR program is implemented and supported by corporate levels, oversight mechanisms, training programs and accountability measures. Being a vital employee, a Company Secretary can play a very important role here through the concept of trust, reflecting the confidentiality of the certain attempts and its eventual advantages for country and its population which must also bring the ultimate wellbeing of the company.

Many companies of Bangladesh acknowledge responsibility for the social impact they have on communities and this is reflected by paying something back. These companies supporting a variety of charitable and social organizations each year. The Company Secretary can help the management in implementing these activities.

Stakeholders i.e. shareholders, employees, communities and public officials, who all expect companies to manage, mitigate or prevent social and environmental impacts that may be associated with the company’s activities. CSR is about managing these relationships to produce an overall positive impact on society, whilst still having a successful enterprise. The Company Secretary can also contribute positively for achieving these.

It is the role of the Company Secretary to ensure close review of all legislative, regulatory and Corporate Governance developments. The application of best practice includes best practice towards the interests of stakeholders.

A Company Secretary is a key figure in the application of best practice in Corporate Governance, which is increasingly critical to an organisation’s reputation and success. CSR programs help

companies ensure that they take note and are responsive to stakeholder concerns.

Unethical behaviors can damage a company's credibility, causing the business to lose customers and ultimately shut down. The Company Secretary is often described as the ‘conscience of the company’.

Shareholders expect the Board of Directors to manage the board in their best interests as a primary responsibility.

The Company Secretary has a duty to act on behalf of the stakeholders for avoidance of any unethical behaviour. Failure to address stakeholder concerns effectively can expose companies to a range of risks, resulting in both short-term and long-term consequences. These risks can include loss of access to finance, low employee morale, community opposition and heightened exposure to regulatory fines. Ineffective CSR programs can result in ultimate damage to the reputation of a company, a long-term consequence which is not easily mended.

The Company Secretary can play a significant role in CSR formulation and implementation by taking an independent view in identifying trends and preferences from stakeholders and consumers. In addition they can identify future stakeholder expectations with regard to social and environmental performance. Understanding these key elements can help ensure that companies have the capacity to respond to stakeholder concerns that arise. This emphasises the need for companies to have a proactive rather than reactive approach.

CSR experts stress that the most important underlying principle is to understand how to successfully integrate CSR strategies. Companies

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« need to take a strategic approach that is clearly communicated both internally and externally. Companies are continuing to implement CSR strategies; they are focused on building a long-term commitment to CSR and are learning new ways of implementing these values through the company secretary.

A child should, at a very early stage of life, be inculcated with a sensible feeling towards the well-being of a society, community and should be encouraged to develop the same and nurtured through schooling environment which they carry over to the corporate world. It is important for each one of the citizens to pay

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something to the society in some form or other. Social responsibility needs to be deeply ingrained in the minds of every one right from childhood. To break the tradition of ignoring social responsibility there needs to be a radical change in the incentive structure in the educational system, admission and hiring system.

Marks, grades should also be awarded based on the effective performance towards discharging social responsibility, leadership role leading to positive societal impact.

As observed by Peter Drucker – “Profitability is crucial – for the society even more than the business. But it is not the purpose of business, but

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a limiting factor. It is not the explanation, cause or rationale of business behavior or decisions but the test of its validity”. CSR should not be mistaken as socialism but, should be perceived as an effective tool for the well balanced growth and development of a nation and a Company Secretary is the key person to accomplish this noble job as he acts as a bridge between the Board of Directors and Stakeholders including shareholders, employees, communities and public officials.

» About the Author Assistant Secretary, ICSB

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THE CHARTERED SECRETARY: AN EVOLUTION AS A PROFESSION - Md. Nazrul Islam Chowdhury

A

bstract

Though the term “Chartered Secretary (CS)” is a modern terminology, its analogical predecessors are much older. The role and responsibilities of a company secretary has developed through periods of change and been adapted to the respective contemporary economic and legal situations. Acknowledging the importance of good governance, Governments of many countries recognized this profession a long ago. This profession got higher pace after major scams in financial sector and in some highly renowned companies including Enron, an American energy company.

The evolution of corporate governance influenced the functions as well as the profession of chartered / company secretary over the last decades.

Introduction The meaning of the word ‘secretary’ varies depending on the type of organization. Its definition and range of roles also varies depending on industry, commerce, public bodies and government. The term ‘Chartered Secretary’ denotes a person with the sound professional knowledge, experience and charismatic personal qualities for corporate-level management. He is an effective driver and key player as

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well as the controller of the functions of an organization. A chartered secretary professional can be an efficient person if he possesses multi-disciplinary understanding of every organizational process from information systems and data security to company law, accountancy, finance, human resources, corporate governance, taxation, personnel work and the behavioral sciences. S/he usually promotes corporate governance

professionals responded the demand as the globally recognized governance professional.

Short History and the Development of Company Secretary

Mr. Aydin Filiz from Turkey in his dissertation paper to the University of St. Gallen, School of management, economics, law, social sciences and international affairs analyzed the historical development of company secretary concept. The steps of evolution of corporate A CHARTERED SECRETARY HAS THE governance and functions of DEPTH OF KNOWLEDGE AND company secretary are EXPERIENCE THAT ALLOWS HIM TO discussed in the later part of SERVE IN A UNIQUE ROLE IN AN ORGANIZATION’S MANAGEMENT TEAM this paper. Now in light with Mr. Filiz’s analysis, a summary of AND DUTIES AND RESPONSIBILITIES OFTEN CUT ACROSS ALL the development of the DEPARTMENTS. concept is mentioned below: which in the globalised world a burning issue. The fall of Enron in USA made the world remind again the importance of corporate governance practice. Corporate governance first came into vogue in the 1970s in the United States. Since then corporate governance had become the subject of debate worldwide by academics, regulators, executives and investors.

Over the last decades major scams in financial sector as well as in renowned corporations put the corporate governance issue on the public agenda which basically increase the demand of qualified governance professionals in all sectors.

Chartered secretary

 Company secretary concept reveals an early appearance in English law case reports from 1841 onwards. It is legally recognized since 1845 according to the Hubner & Ebke (1999, p. 461).  In this particular jurisprudence, the law case Pontifex v Bignold ((1841) 3 Man & G 63; 133 ER 1058.) describes the concept of the company secretary as being the ‘secretary of the society’ and the reported company secretary is equipped with the features expected of a contemporary company secretary, such as advising directors and attending meetings.

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«  Mr. Aydin Filiz claimed that no legal evolution of company secretary is clearly traceable before 1841 but some hints about the professions origin. He however mentioned that company secretary’s profession got remarkable changes from Sir Adrian Cadbury’s report in 1992 on Financial Aspects of Corporate Governance.

Mr. Aydin Filiz identified and described the company secretary’s evolution and roles in colonial period through the “The English Levant Company, The English East India Company and The Dutch East India Company. After the collapse of the Levant and East India Companies, company secretary lost their dual power on combined affairs of state and corporation. Mr. Filiz wrote in his paper that since the losing combined power, the role of company secretary has developed through periods of change and been adapted to the respective contemporary economic

Name

and legal situations. These changing and adapting periods are characterized and outlined as:  The definition and specialization phase.  The duty and responsibility phase; and  The law and regulation phase.

Recognition of the CS Profession and Institution Today ‘company secretary’ term came a long way and got some statutory power and obligations to ensure the corporate governance properly. Now legislations of many countries recognized the profession of chartered secretary.

In Bangladesh, the Companies Act, 1994 reads the company secretary as the Statutory Officer. Bangladesh Securities and Exchange Commission (BSEC) termed the company secretary as the Compliance Officer and issued a

ICSA ICSA South Africa ICSA Australia Society of Corporate secretaries and Governance professional ICSA Canada ICSA Hong Kong MAICSA ICSI ICSP ICSB ICSAN

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notification that every listed company should have a company secretary who has to interact, coordinate, integrate and co-operate with various other functional heads in a company. Indian government first recognized the chartered secretary profession in October, 1968. Later in 1980 by converting ICSI into a statutory body under the Company Secretaries Act, 1980.

Government of Malaysia acknowledged MAICSA as a prescribed body under Section 139(A) of the Companies Act 1965.

Nigerian govt. recognized ICSAN in 1991 and in Britain; the Companies Act of 1980 contained the first formal acknowledgement of the need for properly qualified men and women to take the role of company secretary.

However, with the passage of time, chartered secretary institute and the profession have grown enormously.

A picture of CS institution around the world is given below:

Established 1891 1909 1914 1946

Recognition 1980; First formal recognition. data not found data not found data not found

1920 1949 1959

data not found 1994 In September 1992, the Ministry of Domestic Trade and Consumer Affairs 1980

By CGG in 2012 1991

1968 1973 2010 -

*CGG-Corporate governance Guideline, BSEC

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Chartered Secretary Worldwide In discussion of global chartered secretary profession, the name ICSA comes with pride and rich history in our mind. It was 1891 when this institute was established. It gained royal charter in 1902. The first of the colonial branches was established in South Africa in 1909, followed by an Australian branch in 1914. Due to the First World War, further expansion was delayed. In 1920, ICSA Canada chapter was established in 1920. The ICSA has a worldwide membership of 45,000. In India, ICSI was first promoted by the government in 1968 and later as statutory body in 1980 which produced as on date single largest governance professionals of more than 35000. ICSB is the statutory body for governance professionals with a growing membership of 355 persons in Bangladesh.

This profession got higher pace after some major scams in renowned companies, particularly when the protection measures taken against these crises including COSO issued Internal Control– Integrated Framework in 1992, Sarbanes Oxley Act in 2002 and The Dodd-Frank Wall Street Reform and Consumer Protection Act, 2010. Now, we are experiencing the growth in the number of governance professionals worldwide. Below chart shows a comparative picture of growing governance professional among the comparable countries:

Country

No. of Members 6,134 615* 5,828 4,360 897* 1,296 2,329 2,110 35158 750 355

Australia Canada China (inc. Hong Kong) Malaysia New Zealand Singapore Southern Africa Zimbabwe India Pakistan Bangladesh

Source: ICSA Annual Report 2014-15, ICSI, ICSB, ICSP (For ICSA chapters’ data at June 30, 2014 including graduates) *Are also members of ICSA

Number of Members 40000

35158

35000 30000 25000 20000 15000 10000

4,360

5000

1,296

750

355

0

Though Indian figure is the biggest one here as well as the single biggest across the world, the other Asian counties are doing fine in producing governance professionals in the recent days. But the number of the practicing chartered secretaries is not increasing satisfactorily. Here I tried to draw a comparative picture with other Asian countriesCountry India Malaysia Singapore Pakistan Bangladesh

Total member Practicing CS (PCS) 35158 4,360 1,296 750 355

6670 752 110 55 6

PCS as % of Total members 18.97 17.25 8.49 7.33 1.69

Source: ICSI,ICSA,ICSP,ICSB

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« Chartered Secretary’s Functions Influenced by the Evolution of Corporate Governance Codes Evolution of corporate governance influence the Company/chartered Secretary’s function. The evolution process of corporate governance basically boasted up the need and functions of chartered secretary. One can understand it clearly by a detail look on the following country cases: In USA;  In 1977, The Foreign Corrupt Practices Act provides specific provisions regarding establishment, maintenance and review of systems of internal control.  In 1979, US Securities Exchange Commission prescribed mandatory reporting on internal financial controls.  On the basis of Treadway commission’s report, the Committee of Sponsoring Organizations (COSO) formed.  In 1992, COSO issued Internal Control – Integrated Framework.

financial reporting and controls, role of auditors and rights & responsibilities of shareholders.  In 1995 by Greenbury’s report which highlighted director’s remuneration policy.  In 1998; The Hampel Report and its recommendations which later converted into Combined Code on Corporate Governance. – The original combined Code.  Turnbull committee in 1999 published Internal Control Guidance for Directors on Combined Code.  In 2008; Combined Code on Corporate Governance published which was mandatory for the companies incorporated in UK and listed in London Stock Exchange.  And finally by the UK Stewardship Code (Revised), 2012 In India;  The first institutional initiative was taken by Confederation of Indian Industry (CII). CII released report named “Desirable Corporate Governance: A Code” in 1998.

 By Sarbanes – Oxley Act in 2002

 Then by Kumar Mangalam Birla Committee in 2000

 By The Dodd-Frank Wall Street Reform and Consumer Protection Act, 2010.

 In 2000; Task Force On Corporate Excellence Through Governance

In UK;

 Naresh Chandra Committee in 2002

 In 1992 by Sir Adrian Cadbury’s report on The Financial Aspects on Corporate Governance highlighting role of board of directors, non-executive directors, executive directors,

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 In 2003; N.R. Narayana Murthy Committee  By Dr. J J Irani Expert Committee On Company Law in 2005.

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 Through Corporate Governance Voluntary Guidelines 2009.

In Bangladesh Bangladesh Securities and Exchange Commission (BSEC) issued a notification on August 07, 2012 which is known as corporate governance guideline. Conditions of the guideline are imposed on 'comply' basis for the listed companies in any stock exchanges of Bangladesh. This is a major initiative towards good corporate governance in this country.

Besides, Government of Bangladesh, acknowledging the importance of good governance passed the Chartered Secretaries Act in 2010 which is also a milestone for the corporate governance practice.

Corporate Governance and Chartered Secretary In the era of global village, fund for capital move beyond the borders.

The only consideration for such capital movement is trust- trust in governance structure, financial disclosure, integrity, transparency and fairness. After some financial scams and with the introduction of Sarbanes- Oxley act, 2002, corporate governance practices have been fundamentally altered. Chartered secretaries as the governance professional work for the issues essential for ensuring good corporate governance and they can bring the investors trust by ensuring compliance of laws, transparency, accountability, responsibility and fairness. By maintaining compliance continuously for long term can benefit the major stakeholders including shareholder, vendor, customer, government, society and employees to keep trust on financial disclosures as well as strengths of July-September 2015

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the company. S/He can ensure good corporate governance by  Ensuring role and power of the board.  Performing legislative obligations.  Enhancing board skills.  Proper appointments of board members.  Induction of board members and training.  Ensuring independence.  Convening properly.

board

meeting

 Following code of conduct.  Helping in strategy setting.  Performing business community obligation.

and

 Proper disclosure of financial and operational reporting.  Helping and co-operating board members to monitor the board performances.  Co-operating audit committees to review the adequacy of internal control and compliance with significant policies and procedures reporting to the board on key issues.

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 Ensuring that the proper risk management systems have been established.

3. Brian R. Cheffins, 2012. ‘The History of Corporate Governance’ ECGI Working Paper Series in Law.

Conclusion

4. Corporate Governance Guideline, 2012. BSEC

Trust in policy continuity and corporate disclosures stand vital factors for global capital attraction.

As it is well recognized by the governments, policy makers, think tanks and business community that without massive local and foreign investment, higher growth or a sustainable growth can’t be maintained. Chartered secretaries can work for attracting more investment by ensuring good governance in the corporate sector.

Working scope of governance professionals within the legal structure of Bangladesh is not satisfactory at all comparing to other neighboring countries. Government for the sake of better governance as well as attracting more investment needs to concentrate on it and to take comprehensive initiatives as soon as possible.

Bibliography 1. Cadbury Report www.ecgi.org/codes/documents/ cadbury.pdf 2. OECD Principles of Corporate Governance:www.oecd.org/datao ecd/32/18/31557724.pdf

5. Peter Grosvenor Munzig, 2003.

Enron and the Economics of Corporate Governance. Stanford University, Stanford CA 94305-6072 6. 34th Annual Report 2013-14, ICSI 7. Annual Report 2014-15, ICSA 8. Annual Report 2014, Governance Institute of Australia 9. Aydın Filiz, 2013. The Company Secretary within the Corporate Governance Framework, Dissertation to the of the University of St. Gallen, School of Management, Economics, Law, Social Sciences and International Affairs 10. ICSI study manual on ethics and corporate governance 11. Websites: ICSB, ICSP, ICSI, ICSA, MAICSA, ICSAN, Society of Corporate secretaries and Governance professional. » About the Author A Qualified Chartered Secretary

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THE CHARTERED SECRETARY: AN EVOLUTION AS A PROFESSION - Razia Sultana (Lubna)

N

owadays, the time of globalized economy, trends of good governance has transformed radically in every phases of an organization’s hierarchy. Considering this view, the role of CS is a challenging position who is responsible to ensure transparency, accountability, adequate disclosure, governance.

More specifically, key task of Corporate Governance is to keep balance between organization’s economic and social goal where Company Secretary (CS) is a leading authority to deliver corporate governance and compliance of the organization. Hence, a CS is the Chief Compliance authority to the application of best practice in Corporate Governance; reflect the confidentiality which is increasingly critical to an organization’s reputation and success. On the other hand, within the agenda of Corporate Governance, CS is predominantly a communicator, facilitator, arbitrator, trainer and advisor toward the organization. Shortly, Corporate Governance agenda for a CS is to promote efficient utilization of organizational resources by adopting internationally accepted standards through which organization’s activities would be strengthened and discourage fraud and mis-management. In order to perform these tasks, the CS has to be independent in providing advice, suitably qualified and aware of the rights, duties and obligations he owes

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to each group of an organization’s hierarchy. Core focus of the article is to illustrate role of a Chartered Secretary in disclosing of authentic financial information that is capable to ensure both investor and shareholders’ interest.

management says that it’s a reasonable as well as legal management decision to report, intended to achieve stable and predictable financial results. Here earnings are treated as the bottom line / net income and the single most important portion of a financial Earnings Management statement. Earnings of a statement refers to what extent an organization There has a wrong perception in has been involved in value-added common that earnings management activities. This is an indication that is the illegal activities to manipulate helps to address resource allocation financial statements and to report in capital markets.

Hypothetically, earnings of an THE CHARTERED SECRETARY HAS organization’s stock is the TO BE INDEPENDENT IN PROVIDING present value of it’s future ADVICE, SUITABLY QUALIFIED AND earnings. In this regard, as a AWARE OF THE RIGHTS, DUTIES AND leading authority to deliver compliance, a CS is required OBLIGATIONS HE OWES TO EACH to understand the effect of GROUP OF AN ORGANIZATION’S the accounting choices that HIERARCHY. can make the best possible decisions for the organization. A results that do not reflect economic recent research report examined reality or cooking the books by that only 38 percent organizations misrepresenting financial follow regulator’s compliance outline statements. Concept of the earnings in representing their financial results.

Figure: Earnings Management Management operating decisions

Transaction or Business: value changes Real economic activites

Management accounting choices

Recorded in Generally accounting system Accepted Accounting Principles

Net income in income statement

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Role of Financial Reporting To protect investors’ interest, it is important to deliver transparent, timely and reliable financial statements. If any organization fails to provide meaningful disclosure to investors as to i) where it has been, ii) where it is and iii) where it is going, a damaging pattern ensues.

Pressure to Make Numbers Corporate management is not operating in a vacuum and the different pressures and expectations placed by and on various participants in the financial community appear to be almost self-perpetuating. Thus, the pattern of earnings management creates earnings projections in order to grow market capitalization and increase the value of stock options.

Their ability to do this depends on achieving the earnings expectations of analysts and analysts seek constant guidance from organizations to frame those expectations. Auditors, who want to retain their clients, are under pressure not to stand in the way.

Accounting Magic Accountants are wise enough to know they cannot anticipate every business structure or every new and innovative transaction; so they develop principles that allow for flexibility to adapt to changing circumstances. That's why the highest standards of objectivity, integrity and judgment cannot be the exception, they must be the rule.

Flexibility in accounting allows it to keep pace with business innovations.

Abuses such as earnings management occur when people exploit this pliancy. Deception is employed to obscure the actual financial volatility. Consequently, it masks the true consequences of

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management’s decisions. These practices are not limited to smaller organizations struggling to gain investor interest. It has also happened in organizations whose products are well known and admired. Common techniques of accounting hocus-pocus are – a. Big Bath Charges Organizations remain competitive by regularly assessing the efficiency and profitability of their operations.

When an organization decides to restructure, management, employees, their investors, creditors, customers and suppliers all want to understand the expected effects.

Problems arise when large charges are associated with organizations restructuring. These charges help organizations to clean up their balance sheet and giving them a so-called big bath. Hence, these charges are conservatively estimated as income when estimates change or future earnings fall short. b. Creative Acquisition Accounting In recent time, many industries have been remade through consolidations and acquisitions. Some acquirers, particularly those using stock as an acquisition currency, have used this environment as an opportunity to engage to form creative accounting or the merger magic. Then few organizations have no choice but to exercise purchase accounting that result a lower future earnings. An equal trouble also arises by creation of large liabilities for future operating expenses to protect future earnings. c. Cookie Jar Reserves Few organizations are using unrealistic assumptions to estimate liabilities for the items like sales returns, loan losses or warranty costs.

By doing so, they hide accruals in

“cookie jars” during their good times and reach into them when needed in the bad times. d. Materiality Materiality is another way to build flexibility into financial reporting.

Using the logic of diminishing returns, some items may be so insignificant that they are not worth measuring and reporting with exact precision.

But some organizations misuse the concept of materiality and intentionally record errors. The abuse of materiality is the concern of both a Chartered Secretary and Professional Accountants. e. Revenue Recognition Organizations try to boost earnings by manipulating the recognition of revenue by assessing or recognizing before completion of sale, before the products are delivered to the consumers though there is option of terminating the sale of the customers.

What can be considered Capital market supremacy is based on the reliability and transparency of financial statements and the financial community problem that calls for timely financial community action.

Technical rule changes by the regulators to improve the transparency of financial statements, enhanced oversight of the financial reporting process by CS who is entrusted as the shareholders’ guardians and a fundamental cultural change on the part of corporate management with the whole financial community is required. This action plan represents a mutual effort which is essential to assure credibility and transparency. Following is the complete package for both the regulators and the CS in a listed organization to increase public confidence in capital market.

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« Improving the Accounting Framework •

•

•

•

•

SEC can instruct the CS in the listed organizations to disclose detailed impact of changes in accounting assumptions that should include a supplement to the financial statement showing beginning and ending balances with activity including any adjustments. This will enable the market to better understand the nature and effects of the restructuring liabilities and other loss accruals.

Since concept of materiality can be used to excuse deliberate misstatements of performance SEC can focus on the problem and publish guidance for the CS of listed organizations that emphasizes the need to consider both qualitative and quantitative factors of earnings to impact an investor’s decision.

SEC can immediately consider interpretive accounting guidance on the do’s and don’ts of revenue recognition by a CS. Moreover, SEC can also determine whether recently published standards for the software industry can be applied to other service organizations.

Improved External Auditing in the Financial Reporting Process Many people were surprised to know the headlines of certain accounting failures which have led to question the thoroughness of audits though auditors are the public’s watchdog in the financial reporting process.

People rely on auditors like a good housekeeping seal of approval on the information investors receive.

The integrity of that information must get priority over a desire for cost efficiencies and competitive advantage in the audit process. A CS cannot permit thorough audits to be sacrificed for re-engineered approaches that are efficient though less effective. CS should propose to form a group of all the major constituencies to review the way audits are performed and assess the impact of recent trends in the public interest.

Strengthening the Audit Committee Process

Private sector standard setters can also take action where current standards and guidance are inadequate disclosures by a CS and greater clarity to the definition of a liability should be considered.

A qualified, committed, independent and tough-minded audit committee represents the most reliable guardians of the public interest.

Unfortunately, there are stories of audit committees whose members are lack of expertise in the basic principles of financial reporting along with the mandate to ask relevant questions. SEC can take appropriate action through delivering authority to the CS if the interest of the stakeholders is not protected.

SEC’s review and enforcement teams will reinforce the regulatory initiatives.

CS of public organizations is to announce restructuring liability reserves, major write-offs or other practices that appear to manage earnings.

There is an important link between investor protection and the quality of accounting earnings reported to market participants. Investors’ protection is a primitive corporate choice in terms of organization’s financing and dividend policies with ownership structure where a CS

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explores the relation of investor protection and organization’s earnings management practices.

They analyze the concept of the insiders like Board of Directors (BODs) and controlling shareholders and have the authority to acquire private control benefits. However, the ability of BODs to divert resources for their own benefit is limited by legal systems that protect the rights of external investors. A CS can be empowered to take disciplinary actions against manipulating accounting reports in order to conceal some activities. Thus, CS can decrease the earnings management if necessary, by legal protection when investor’s protection is strong.

Sources:1. Board Characteristics and Earning Management, available at: <http://journal.ui.ac.id/index.php/jbb/ article/viewFile/969/892 > [accessed on September 15, 2015] 2. Quality of Earnings and Earnings Management - A Primer for Audit Committee Members, available at: <http://www.aicpa.org/ForThePublic/ AuditCommitteeEffectiveness/Audit CommitteeBrief/DownloadableDocu ments/Audit_Committee_Quality_of _Earnings.pdf > [accessed on September 15, 2015] 3. The Relationship between Compensation, Motivation, And Earnings Management available at: < http://www.cluteinstitute.com/ojs/ind ex.php/JABR/article/view/7658/7723 > [accessed on September 15, 2015] 4. Earnings management and investor protection: an international comparison available at: <http://webkuliah.unimedia.ac.id/ebo ok/files/earning%20management%2 0%28private%20benefit%29.pdf > [accessed on September 15, 2015]

» About the Author Student (Executive Level-II), ICSB

July-September 2015