Govt to draft new company act ==>>17-member high-profile committee formed

Express (July 26, 2011)

The government will draft a new company act after the existing one was found to have lost touch with the new business scenario of the country, officials said Sunday.

A high-profile public-private committee led by commerce secretary has been entrusted to prepare a draft company act by October 30, an order issued by the ministry of commerce said.

An inter-ministerial meeting headed by the commerce minister made the decision last week after officials said a new company act has become an urgent need to cope with the changing situation.

An additional secretary of the ministry told the meeting that stakeholders including trade bodies and professional groups had suggested amendments to "at least 200 clauses" of the Companies Act, 1994.

"It's better to have a new company law than to undertake such an extensive change in the existing company law. The new law will reflect the changing scenario," he said, according to minutes of the meeting.

Experts also told the meeting that new company laws was a "must" because of the exponential growth that the country's trade and business had witnessed since the last law was enacted 17 year back.

Commerce Minister Mohammad Faruk Khan told the meeting that "the country's new economic situation and the current global scenario demand drafting of a new company act".

According to the MoC order, a joint secretary of the ministry has been made the member-secretary of the 17-member committee to prepare the first draft of the new act.

Other members include the head of the government's World Trade Organisation cell, registrar of the Joint Stock Companies and Firms and secretary, legislative and parliamentary affairs.

The committee will have representation from the Securities and Exchange Commission, Bangladesh Bank, Law Commission, Metropolitan Chamber of Commerce and Industry and Supreme Court Bar Association.

It also include representatives from Institute of Cost and Management Accountants of Bangladesh, Institute of Chartered Accountants of Bangladesh and trade bodies such as FBCCI, Chittagong Chamber of Commerce and Industry and Bangladesh Women Chamber of Commerce and Industry.

The committee can co-opt any expert and take assistance from the Bangladesh Investment Climate Fund, created by a private sector arm of the World Bank.

Lawyers who deal with company law related litigation in the Supreme Court, however, felt that there was no need for a new company act.

"The existing law is alright because it plugs most of the loopholes," said Tanim Hossain Shawon, a barrister at the law firm, Dr. Kamal Hossain and Associates.

He said the government has drafted the rules on the existing act in 2009, which has addressed "some of the new concerns" related to the Companies Act, 1994.

"As I see, the law needs updating and it can be best served by retaining a big chunk of the existing laws," he said, adding unlike other laws, the 1994 laws spawned only a few grounds for litigations.

He said the updated laws must include some provisions dealing with the situation that arose after the recent digitisation of the office of the registrar of joint stock companies and firms.

"There are also some areas of concerns related to minority protection, object clause in memorandum of association, annual general meeting and rectification of share registration,' he said.

Hossain said the main problem that lawyers face is the discrepancies in the Bengali and English versions of the Company Act.

"There are some glaring discrepancies in the two versions. The government should address them first," he said.