All listed companies, from now on, will require prior approval from the securities regulator to appoint independent directors in their boards.
The Bangladesh Securities and Exchange Commission (BSEC) has issued a notification in this regard on Thursday, which will be effective from 1 February.
The regulator has also made the "Regulatory Submission Form for Independent Directors" available online, through which companies can seek approval before appointing an independent director.
Asked on the matter a BSEC official said, "According to the Corporate Governance Code-2018, to appoint an independent director, it is obligatory to take approval from the board of directors and the shareholders at the annual general meeting. The code does not mention the need to take approval from the commission. However, the bank company law requires the company to file approval from the BSEC to appoint an independent director."
Considering the overall situation, the decision to take the BSEC's approval was made compulsory for all listed companies, added the official.
Sources at the BSEC said, independent directors are appointed to safeguard the interest of the shareholders but the regulator has received complaints that many independent directors are not performing their duties properly. Therefore, their appointment from now on will be cleared through the commission.
According to the Corporate Governance Code-2018, at least one-fifth of the total number of directors in the listed company's board shall be independent directors. They can hold less than 1% shares of the company. Business leaders, corporate top officials, university teachers, high court lawyers, and chartered accountants and secretaries can play roles as independent directors.