Cumbersome processes, contradictions among different offices' needs, and overly-tough regulations have been emerging as concerns for the country's listed companies and are also big reasons why many businesses prefer to remain private.
"Just drop an email with the specific points we need to address. We will work on simplification to make business and life easier," Bangladesh Securities and Exchange Commission (BSEC) Chairman Professor Shibli Rubayat-Ul-Islam assured the companies in his first meeting with the Bangladesh Association of Publicly Listed Companies (BAPLC) in June.
The association and the regulator have already had their own working committees to discuss the points BAPLC raised. After the first working committee level meeting held recently, the listed companies got some good news that two of the 11 points they raised are going to be addressed soon.
The two working committees are closely working to discuss the remaining points on the table.
Md Amzad Hossain, secretary general of BAPLC, told The Business Standard, "BSEC informed us about the ongoing steps for a solution to the problems regarding board sub-committees for remuneration and nomination, and also the number of independent directors at listed companies who also have primary regulators with different requirements."
BSEC's 2018 Corporate Governance Code (CGC) requires that at least one-fifth of board members be independent directors; they may not be shareholders and must be on the board as experts.
Primary regulators of banks, financial institutions and insurers have different requirements; these place listed companies from the respective sectors in a dilemma.
The Bangladesh Bank and the Insurance Development and Regulatory Authority are likely to embrace the CGC, in cases of their regulated entities listed on the stock market, as the BSEC is trying to convince its counterparts to uphold the concept of stricter corporate governance, said commission officials.
More importantly, the CGC requires that listed companies have a nomination and remuneration committee to look after nominations and remuneration in companies; while the Bangladesh Bank regulation does not allow any such committee other than the executive committee, the audit committee and the risk management committee. Non-bank financial institutions are not even allowed a risk management committee.
"We are certain and hopeful that the regulators are going to present to us a harmonised requirement," said Amzad Hossain, who is heading the BAPLC working committee to propose changes for a smoother CGC that would bring comfort for companies to go public.
The BAPLC has also pointed out some tough requirements which are making compliance harder.
The CGC has prohibited listed company managing directors and chief executive officers from holding the same position at any other listed company. However, the BAPLC requests this be allowed if the second listed company is from the same group of companies; for the sake of better leadership, cost control and inspiring more stock market listing of businesses.
The CGC, which intends to ensure professional top executives' dedication and sole focus on the listed companies, said no listed company managing director, chief executive officer, company secretary, chief financial officer, or head of internal audit and compliance may hold any executive position at any other company at the same time.
The BAPLC seeks the opportunity to let them also work for companies under the same group to save costs.
Despite the fact that investors are still unhappy with the extent of disclosures by listed companies, the BAPLC is seeking some relief from the strict regulations in this regard.
The association requested the elimination of clauses in the CGC that require repeated disclosures on risk and concerns in business, along with the mitigation plan; including internal and external risk factors, threats to sustainability and negative impacts on the environment, if any. The directors' report in its annual report is enough, the BAPLC said.
It added that the requirement to present a comparison of financial performance, financial position and cash flows with the peer industry scenario should be relaxed and made mandatory only where it is applicable, as getting non-listed industry peers' data is not possible in Bangladesh. Also, economic benchmarks for companies vary.
The BAPLC also requested BSEC delete the clause requiring a brief explanation of the financial and economic scenario of the country and the globe as meaningful analysis is not affordable for all the companies and it leads to a cut and paste culture within listed companies.
"Investors can better source it from expert researchers," said Amzad.
His association also requested the elimination of clauses that require board meeting attendance of the head of internal audit and compliances as the post is independent in nature and should remain out of ordinary business discussions.
The BAPLC also requested some clarifications and modifications of the clauses related to a quorum in board and board committee meetings, and the appointment of professionals to certify the CGC compliance report.
The strict code was adopted two years ago to improve corporate governance. However, the actuators–the listed companies–have been requesting it be made implementable since the enactment.
These are real problems and the BAPLC member companies are hopeful that the regulator will consider their points to make things smoother for listed companies and also to inspire the desired culture of listing, said Amzad.
BSEC, in recent months, has begun to work on making capital market regulations more simplified and effective alongside building a technology-driven filing infrastructure.