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Aziz calls for instituting corporate governance PDF Print E-mail
Tuesday, 15 January 2008

Staff Correspondent

The finance adviser, AB Mirza Azizul Islam, has said that businessmen in the country have failed to understand the benefit of good corporate governance, which has some short-term implementing costs but its long-term benefit is immense.

'The corporate houses miss the point of long-term benefit over the short-term costs,' the adviser said on Sunday at the inaugural ceremony of Corporate Governance Week 2008 organised by the Bangladesh Enterprise Institute at the Sheraton Hotel in Dhaka.

The core principles of corporate governance are compliance with laws formulated by the authorities concerned, full and fair disclosure, especially financial disclosure, and equitable treatment of stakeholders, including shareholders, employers, customers, and suppliers, he said.

Corporate culture is new to this country and family ownership still dominates, he observed.

The basic concept of corporate governance is to separate management from ownership as companies will be benefited more if run by professional people, Aziz said. 'Many houses are now practising corporate governance in part.'

Corporate governance affects institutional competitiveness, the Bangladesh Bank governor, Salehuddin Ahmed, told the session. 'Many countries consider it an important tool for their development.'

As a regulatory authority, the central bank promotes corporate governance in the banking sector. Corporate governance leads to efficiency and efficiently run banks can provide services at lower costs, he observed.

The central bank formulated different guidelines for the banks to implement corporate governance, including restricting number of directors of a bank to 13 and limit their tenure to six years at a stretch, he mentioned.

The Bangladesh Bank not only promotes corporate governance in the banking sector but also follows it itself, he said. 'The BB announces six-month monetary policy in advance, has declared a citizen's charter, and takes many other steps that ensure good governance at the central bank.'

The governor, who is also the chairman of Micro-Credit Regulatory Authority, said the body would formulate a code of conduct for non-governmental organisations.

The Securities and Exchange Commission chairman, Faruq Ahmed Siddiqi, said the commission issued several guidelines for the listed companies in 2006. 'The level of compliance by the companies is encouraging but more legal provisions are needed to enforce the guidelines,' he added.

He said transparency and financial disclosure were extremely important for companies as well as the capital market.

Owners often use their business entities for personal benefits and this problem also needs to be addressed, he pointed out.

The BEI chairman, Farooq Sobhan, said the institute's current programme, Corporate Gov-ernance Strengthening Project, is funded by the Dutch government.

The BEI started its work on corporate governance in 2002 and prepared the first comprehensive code of corporate governance consisting of provisions for financial institutions and NGOs in 2004, he said.

YRK Reddy and K Padma Kumar made presentations on the theme at the programme.

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