The Bangladesh Enterprise Institute (BEI) started work on Corporate Governance (CG) in 2002. At that time, CG was virtually unheard of in Bangladesh; those who were familiar with the concept considered it to be the lofty prerogative of developed countries, inapplicable to the Bangladesh context. BEI’s work started with a research effort targeted at realistically assessing the CG status of Bangladesh compared to its neighboring countries, namely India, Pakistan and Sri Lanka. This was the first comprehensive diagnostic study of CG to be conducted in Bangladesh.

The project which started off as a research effort has since become a catalyst for change in the private, public and NGO sectors of Bangladesh. Consequently, the Securities and Exchange Commission of Bangladesh (SEC) has introduced CG guidelines to be enforced on a “comply or explain” basis for listed companies. The Bangladesh Bank has also introduced CG in their Prudential Requirements for Banks. About 700 NGO Board members have undergone CG training and have agreed in principle to voluntarily implement good governance principles in their NGOs. Thus it is clear that BEI has been instrumental in the materialization of CG in Bangladesh and its awareness and training programs have made a significant contribution to these outcomes.

BEI’s initiatives on CG are also in line with its goals and mission, which are to promote issues of importance to the private sector. BEI is a non-profit, non-political research centre established in October 2000 and has since cemented for itself a reputation for excellence in its research and advocacy work. BEI has a vision to send a strong message to international investors and observers that Bangladesh has recognized the importance of CG and is taking definite steps to improve CG performance in the private, public and non-governmental sector. This will in turn improve Bangladesh’s reputation as a destination for investment.

In August 2003, BEI first published its research outcomes for this project, which found that CG was not fully understood in Bangladesh and there was a need to interpret CG in a way that was relevant to the country. BEI later formed a Taskforce on Corporate Governance whose primary purpose was to develop a Code of Corporate Governance for Bangladesh. Members of the Taskforce included the Chairman of the Securities and Exchange Commission, President of the Institute of Cost and Management Accountants of Bangladesh, former President of the Institute of Chartered Accountants of Bangladesh and leading entrepreneurs and business executives, among others. The Taskforce members represented a cross section of the Corporate, NGO and Regulatory bodies in Bangladesh. The Taskforce members met regularly to discuss each section of the Code. Other international Codes were also consulted to draw on international best practices. This is a unique feature of the Code: it combines the situation and country specifics with international best practices. The Taskforce was supported by a Working Group consisting of 8 members each specializing on the different sections of Corporate Governance such as Capital Markets, Accounting and Auditing, Law, NGOs etc. The Bangladesh Code of Corporate Governance was finalised in March, 2004 and was launched in April, 2004 at a National Conference held at BEI.

The next phase for BEI was to ensure that the Principles are implemented so as to improve the overall practice of CG in Bangladesh. Based on its work with the Taskforce and Code, BEI started CG training programmes early in 2004. BEI carried out the first CG training seminar and workshop for Bank Chairmen and Directors in conjunction with Commonwealth Association for Corporate Governance (CACG), the Commonwealth Fund for Technical Cooperation (CFTC) and the Global Corporate Governance Forum (GCGF) in February 2004. The training programmes received only a lukewarm welcome, due to the limited participation from Directors and Chairmen of Banks. The main issue raised by participants was that they felt CG did not apply to them. The first NGO Board Governance workshop took place in March 2004, followed by four days of training for NGO Boards and two days of customised training on Monitoring and Facilitating Governance for the officers and staff of a leading international NGO. The NGO trainings, on the other hand, received a lot of interest both from the participants and from the donors who fund the NGOs.

In 2004, BEI carried out advocacy workshops and seminars to discuss and debate the various issues relating to the Principles. In 2005, BEI organised its flagship “Leadership Programme on Corporate Governance,” consisting of one-day programmes for each of the following groups: Listed Companies, Banks and Financial Institutions, Insurance, and SOEs. The Governor of Bangladesh Bank (the Central Bank of Bangladesh) and the Chairman of the Securities and Exchange Commission were both fully supportive of the programme. The SOE workshop was organized in collaboration with the Ministry of Industries. The entire programme was a huge success. Approximately 40 senior directors, chairmen and senior officials attended each day.

There were very few debated issues at the CG programmes. Apart from occasional concerns about the “independence” of the independent directors, and the limited remuneration of directors relative to their responsibilities and liabilities, most of the participants were in agreement about the need for effective boards, accountability to shareholders and stakeholders and transparent procedures. Hence, they were in agreement about the need for CG training.

Between November and December, 2005 BEI organized a workshop in Kuala Lumpur, Malaysia in collaboration with the Malaysian Institute of Corporate Governance (MICG). Board members from both Bangladesh and Malaysia attended the workshop. The Chairman of SEC, Bangladesh; the Deputy Governor of Bangladesh Bank; the President of the Certified Public Accountants of Malaysia; the Director, Market Policy and Development Division, Securities and Exchange Commission of Malaysia also made presentations at the workshops. BEI organzied a Training of Trainers Programme at BEI in partnership with the Academy of Corporate Governance (ACG) of Hyderabad, India in February, 2006. Talks are also underway to organize a programme with the Indian Institutes of Management (IIM). These networks not only facilitate the exchange of resources but also in the exchange of ideas and thoughts.

Bangladesh is known as a country of NGOs; this sector receives a large amount of foreign funds and delivers programmes that facilitate the economic development of the country. Good governance principles are equally important for this sector to ensure the effective and efficient utilization of funds along with transparency and accountability to stakeholders and beneficiaries. BEI carried out an extensive consultation programme in 2005 to revise and redraft the NGO Governance Principles to make it more practical and applicable to NGOs registered under different agencies. The BEI team visited the six divisions of Bangladesh, where they held extensive discussions with a wide cross section of NGOs with a view to revising the NGO Governance Principles, to capture the needs and requirements of all kinds of NGOs. About 400 NGO practitioners were consulted with regard to the revision. The revised document has been presented to the NGO Affairs Bureau at a roundtable at BEI in April, 2006 where leading NGOs, development partners, as well as, the Director General of the NGO Affairs Bureau, Bangladesh were present.

BEI’s next programme is to have the various universities in Bangladesh introduce and adopt Corporate Governance in their core curriculum. The objective is to educate the leaders of tomorrow with the expectation that this will give them a clear understanding of the importance of Corporate Governance in Bangladesh; this in turn will make them champions and advocates of CG principles in their own work and in the work of corporate Bangladesh. A national conference has been organized to take place on June 10 and 11, 2006. All leading management development institutes across the country will attend the conference.

BEI has developed a very strong corporate governance team, including lawyers and chartered accountants, who conduct the various CG training programmes organized at and by BEI. BEI’s CG initiative has been supported by a number of development partners, including DFID (UK), the Dutch government, the World Bank, the Commonwealth Secretariat, as well as several experts of international repute. BEI has been actively networking with the Organization for Economic Co-operation and Development (OECD), Commonwealth Association for Corporate Governance (CACG), Global Corporate Governance Forum (GCGF), and more recently has become a member of the International Corporate Governance Network (ICGN). BEI is actively working to develop a corporate governance network within the region.

Corporate governance is a journey not a destination. BEI shall continue with its training, advocacy and research efforts to bring about positive changes in the way things are done in Bangladesh, and to this end looks forward to interacting with the many international organizations and networks working on CG.

(Article by Mr. Farooq Sobhan, President, BEI for the ICGN 2006 Year Book)

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