Corporate Governance Advisory in Bangladesh
Corporate governance is the structure of boards, committees and records through which a company is directed and held to account. PayrollBD builds that structure for companies operating in Bangladesh: board and committee composition, statutory registers, director filings, and the calendar that keeps each one current.
What is corporate governance?
Governance answers a single question: who decides, and on what record. In Bangladesh that answer sits in two places. The Companies Act, 1994 sets what every registered company must constitute, keep and file.
For a listed company, the Corporate Governance Code 2018 adds rules on board size, independent directors and the audit committee. A private company answers to the first. A listed company answers to both, and the difference decides the whole scope of the work.
- Direction — who sits on the board, how they are appointed, and what they are answerable for.
- Oversight — the committees that examine accounts, risk and remuneration on the board’s behalf.
- Record — the registers, minutes and resolutions that prove a decision was properly taken.
- Filing — what reaches the Registrar of Joint Stock Companies and Firms, and by when.
Which duties fall on the board?
Two duties sit with the board and neither can be delegated away. The first is structure: who sits on the board, which committees exist, and what each one is authorised to decide. The second is record: the registers, minutes and resolutions that prove a decision was properly taken.
The panels below set out what we hold for each, and where the boundary with routine filing work falls.
Where does governance actually sit?
Governance is not one department. It sits across three areas that a board is answerable for at the same time, and a weakness in any one of them shows up in the other two. The panels below set out what each area covers in practice.
- Board composition and the appointment of directors
- Audit committee terms of reference and membership
- Delegation of authority and its written limits
- Statutory and regulatory duties carried by directors
- The board and committee meeting cycle
- Code of conduct and how it is enforced
- Declaration of conflicts of interest
- Approval route for related party transactions
- Whistleblowing channel and the record it leaves
- Disclosure to shareholders and to the regulator
- Internal control design and how it is tested
- Certification by the chief executive and chief financial officer
- The risk register and the owner named against each entry
- Fraud risk assessment and the controls answering it
- Reporting lines from control failure to the board
How does a governance review run?
Five stages, and the first is a read rather than a filing. We read what the constitution and the registers already say before anything is drafted. A resolution passed on top of an unknown position adds a second defect instead of closing the first. Companies restructuring ownership usually run this alongside business advisory work.
- Read the constitution. Memorandum, articles, the existing registers and the last returns filed with the Registrar of Joint Stock Companies and Firms.
- Test the board against the rule. Composition, independent directors and committee membership measured against what your company type actually requires.
- Name the gaps. Each gap recorded with the provision it fails and the date it arose, so the remedy runs from the right date.
- Rebuild the record. Registers, minutes and resolutions brought current, and committee terms of reference drafted where none exist.
- Set the calendar. Meeting cycle and filing dates placed on one schedule and handed back with the file rather than held by us.
Which rules set the board?
Five conditions decide the shape of a listed company’s board, and each is a fixed number rather than a matter of judgement. The table names what each condition sets and where it sits in the Code. Any row can be checked against the source rather than taken on trust.
Wider control and reporting duties sit under financial risk management and compliance consulting.
| Requirement | What the Code sets | Where it sits |
|---|---|---|
| Board size | Not less than 5 and not more than 20 members | Condition 1(1) |
| Independent directors | At least one-fifth of the total directors | Condition 1(2)(a) |
| Audit committee size | At least 3 members, all non-executive directors | Condition 5(2) |
| Audit committee meetings | At least four in a financial year | Condition 5(4)(a) |
| Who must comply | Companies listed on a stock exchange in Bangladesh | Corporate Governance Code 2018 |
These conditions come from the Corporate Governance Code 2018. It was issued by the Bangladesh Securities and Exchange Commission under notification SEC/CMRRCD/2006-158/207/Admin/80 dated 3 June 2018.
They bind listed companies, not every company in Bangladesh. A private limited company is governed by the Companies Act, 1994 instead, and we establish which of the two applies to you before any work is scoped.
Where does our accountability sit?
Four conditions define how this work is run, and none of them is a claim about size or reputation. Each one is a boundary you can hold us to, checkable against the file rather than against a description of it. Read them as terms of the engagement, because that is how they are written into it.
- The provision, not the reassurance. Every obligation we name is tied to the section or condition it comes from, so you can check it against the Act or the Code.
- Two regimes, one answer. We establish whether the Companies Act, 1994 or the Corporate Governance Code 2018 governs your company before any work is scoped.
- The record stays yours. Registers, minutes and resolutions are your company’s property and are handed back with the file rather than held by us.
- The boundary is written down. Where a matter needs legal representation before a court or a regulator, we say so at the review rather than after.
What do boards ask first?
These six questions come up before nearly every engagement, and the answer to the first one changes the scope of everything after it. Each answer states the position first, then names the provision it rests on, so the point can be checked against the Companies Act or the Code rather than accepted on trust.
Where a question has no fixed statutory answer, we say so instead of estimating one.
Does a private limited company need a board?
Yes. Every company registered under the Companies Act, 1994 is directed by a board, and the register of directors is a statutory record rather than an internal one. A private company does not carry the listed-company layer.
The independent director rule and the audit committee rule in the Corporate Governance Code 2018 bind listed companies only. We establish which of the two regimes applies to your company before anything is drafted, because the answer changes the whole scope.
How many independent directors are required?
For a company listed on a stock exchange in Bangladesh, at least one-fifth of the total number of directors on the board must be independent directors, under Condition 1(2)(a) of the Corporate Governance Code 2018.
The same Code sets the board itself at not less than five and not more than twenty members. A private limited company is outside that requirement, and adopting it voluntarily is a choice rather than an obligation.
What does an audit committee actually do?
It examines the accounts and the internal controls for the board. It reports what it finds to the board, not to management. Under the Corporate Governance Code 2018 the committee is composed of at least three members who are non-executive directors, including at least one independent director, and it meets at least four times in a financial year.
We draft the terms of reference and set the meeting cycle so each of those meetings is minuted.
Who keeps the statutory registers?
The company does, and the obligation does not move when the work is outsourced. We hold the registers, the minute book and the resolutions. We keep them current as directors and shareholdings change, and we file what goes to the Registrar of Joint Stock Companies and Firms.
The record stays the company’s own property and is handed back in the form an inspection expects, not reassembled after a query arrives.
Where does governance advisory stop?
It stops at the boardroom door. We build the structure, hold the record and name what the rules require, but the decisions themselves belong to your directors and we do not sit on the board or vote in it.
Where a matter needs legal representation before a court or a regulator, that is a lawyer’s work. We say so at the review, not after an engagement has started.
What happens if the registers are out of date?
They are brought current rather than replaced. Each gap is recorded with the provision it fails and the date it arose, so the remedy runs from the date the obligation started rather than from the date it was noticed.
Registers, minutes and resolutions are then rebuilt to that point, and committee terms of reference are drafted where none exist. A resolution passed on top of an unknown position adds a second defect instead of closing the first, which is why the read comes before any drafting.
Reviewed by Eicra Binte Islam, HR Admin, PayrollBD.
Start with a governance review
Send your company type, the board as it currently stands and whichever registers you already hold. Scope and fee are set by three things: whether the company is listed or private, the size of the board, and how much of the record already exists.
We come back with the regime that applies and the gaps we can see. A written scope and the fee against it follow, before any work begins. Companies hiring before incorporation usually start instead at employer of record.