Market governance in focus as BSEC reviews board roles

Muhammad Ayub ALi :

In a significant step towards strengthening corporate governance in the capital market, the Bangladesh Securities and Exchange Commission (BSEC) has received a set of recommendations aimed at reforming the appointment and remuneration of independent directors in listed companies.

The proposals were formally submitted on Wednesday, 18 June, by a task force constituted by the BSEC. One of the central features of the draft policy is the introduction of a centralised pool of qualified independent directors.

Under the proposed system, all listed companies would be required to appoint independent directors from this vetted panel – an initiative designed to improve transparency, consistency, and professionalism in board composition.

To attract skilled and committed professionals to these roles, the task force has recommended a standardised remuneration package comprising a fixed monthly allowance of Tk 50,000 and an additional honorarium of Tk 10,000 for each board meeting attended. These recommendations align with existing practices in the banking sector and are intended to harmonise governance standards across industries.

Dr Al Amin, a task force member and Associate Professor in the Department of Accounting Information Systems at the University of Dhaka, noted that the framework addresses longstanding concerns over the independence and qualifications of directors. “We’ve proposed merit-based criteria to ensure that independent directors are genuinely qualified, objective, and capable of contributing to good governance,” he said.

In response to concerns about the financial implications for listed companies, Dr Al Amin emphasised that the allowances should not pose a burden to well-managed firms. Rather, the initiative is seen as part of a broader strategy to enhance accountability and discourage underperforming or non-compliant companies from entering or remaining in the capital market.

“This is an investment in governance quality, not a cost,” he added.
The current requirement – stipulating that at least one-fifth of board members must be independent directors, with one serving as board chairman – will remain unchanged under the proposed policy.

The draft also proposes a two-tiered approach to corporate governance compliance, separating requirements into pre-listing and post-listing phases. This aims to streamline reporting obligations and reduce redundancy in corporate disclosures.

In addition, the task force has suggested revised eligibility standards for auditors of listed companies. A 100-point scoring system would be introduced to evaluate audit firms and individual auditors based on qualifications, professional experience, and age. The highest-scoring candidate would be selected to conduct audits-an effort to bolster audit integrity and transparency.

The five-member task force was formed by BSEC in January last year with a mandate to reform 17 key areas of capital market regulation. It has already submitted final recommendations on margin lending, initial public offerings (IPOs), and mutual fund regulations.