Companies Act needs amendment: Commerce secretary

The Companies Act needs to be amended and modernised in line with the global perspective for sustainable financial growth, said a top official of the commerce ministry, on Saturday.

The previous amendments to the Companies Act of Bangladesh was done partially as all the stakeholders could not reach a consensus, senior commerce secretary Tapan Kanti Ghosh said.

The government expects that all the stakeholders will be able to reach a consensus this time and measures will be taken to send the amended draft to the parliament for House approval.

Although Ghosh did not say specifically when the draft would be sent to the parliament, he said the economy of the country has grown a lot over the years and a lot of provisions of the companies’ act needed to be reformed.

For instance, the emergence of E-commerce companies in Bangladesh was not projected. The E-commerce platforms have been demanding reinstatement of the previous option of advance payments against goods to be sold but the government does not want it to protect the interests of the customers, Ghosh explained.

Many companies want to wind up and seek exit plans from the ministry, but the procedures are quite complex. These are one of the few issues required resolution, he said.

Earlier, the last amendment to the law was made in 1994.

Ghosh was speaking at a journalists’ workshop on investigative journalism on company reporting jointly organised by the Economic Reporters Forum (ERF) and MRDI at the ERF headquarters in Dhaka.

The journalists who file stories and broadcast reports on economic, business and trade issues took part in the workshop.

Nihad Kabir, advocate of the Supreme Court and former president of the Metropolitan Chamber of Commerce and Industry (MCCI) highlighted some of the core areas of the companies’ act for amendment.

For instance, the exit plan for the sick companies looking for a way out to quit cannot simply wind up and exit from the businesses because of legal complications, she said.

The exit procedures are very time consuming and complex, she said, adding that, as a result, many do not follow the rules while leaving their businesses.

Similarly, the amendment while merging and acquisition under the act is also needed, Kabir said.

The first companies act amendment initiative was taken in 1981 to replace the act of 1913 (enacted during the British era) and, then, another reform came in 1994, she pointed out.

The issue of share transfer of a company should also be amended. Regarding the government’s permission to allow investment by the local companies abroad, Kabir said as the economy has grown a lot over the years, the decision of permitting investment abroad is a good one.

She said the permission of investment abroad will ensure technology transfer and will create new markets for Bangladesh.

If the government does not allow investment elsewhere, lawfully, many will invest abroad illegally, she explained.

Shahidul Islam, director of CFA Society Bangladesh, spoke on the matter of a company’s financial statement.