Bangladesh is, now, one of the fast-growing economies of the globe and booming with national and multinational firms. Bangladeshi companies are now likely to release their stakeholder responsibilities and societal obligations, along with their shareholder-wealth maximization objective. Business depends, for its survival and long term prosperity, on society providing the resources; people, raw materials, services, and infrastructure. On top of all, neither the business can survive without society nor society without business. Therefore, the growth of Bangladesh in businesses, new regulatory prescriptions, intense antagonism and emergence of multifaceted business models expect the Chartered Secretaries, the Governance Professionals as developed countries recognize, can play a very important role in the rising economy like Bangladesh as they play a variety of different roles.
The concept of “governance” is not new. It is as old as human civilization. Simply put “governance” means the process of decision-making and the process by which decisions are implemented (or not implemented). The fundamental reasons why organizations should adopt good governance practices are:
1) To preserve and strengthen stakeholder confidence – nothing distracts an organization more than having to deal with a disgruntled stakeholder group caused by a lack of confidence in the governing body.
2) To provide the foundation for a high-performing organization – the achievement of goals and sustainable success requires input and support from all levels of an organization.
3) To ensure the organization is well placed to respond to a changing external environment –business today operates in an environment of constant change. The process of understanding our changing world does not happen by chance, it requires leadership, commitment, and resources from the governing body to establish and maintain such a system within the organization.
The term “company secretary” is commonly used in the United Kingdom and other commonwealth countries. In the United States, Canada, Eastern Europe, and post-Soviet states, the term “corporate secretary” is more common. Now, the modern company secretary or corporate secretary is no longer a “mere servant,” but is expected to provide professional guidance to shareholders, boards, individual directors, management, and other stakeholders on the governance aspects of strategic decisions.
The role of the company secretary has evolved over time in developed counties. The role of the company secretary has evolved in the United Kingdom from the 19th century when a secretary was needed by directors to assist in organizing meetings and keeping records required by law. In the early 20th century, for instance, in 1929 the UK Companies Act gave additional responsibilities to company secretaries including signing annual reports and certifying private companies for meeting certain criteria.
The corporate collapses of the late 1990s and early 2000s in many developed counties resulted in an increased shareholder focus on corporate governance and transparency. This focus had emphasized the company secretary’s role in assisting with and supporting the governing and monitoring role of the board within their organizations. Thus, comes the buzz word “corporate governance” and the company secretary became the high sounding professional on good governance after then.
Corporate governance best practices as we know them today were first introduced following corporate scandals in the United Kingdom in the early1990’s. This award was developed with listed companies in mind. All organizations, however, practice governance and can learn from the best practices.
Institute of Chartered Secretaries and Administrators (ICSA), UK-qualified company secretaries (Chartered Secretaries) deliver more rounded governance and board member service than those who have come to the role via other professional routes. This is because the qualifying scheme for Chartered Secretaries equips them with cross-functional business knowledge to coordinate cross-divisional activities. ICSA has nine divisions globally and operates in over 80 countries with 36,000 members worldwide.
Table 1. History of the company secretary (Sources: Barton, 1841; Cadbury, 1992; Armour, 2012)
|1841||Early appearance of company secretary in English law case reports from 1841 onwards. Duties were to advise the directors and attend meetings.|
|1856||The origins of the company secretary begin in the UK with the Joint Stock Act of 1856. Position held no responsibilities or duties|
|1891||Institute of Chartered Secretaries and Administrators (ICSA) was founded in 1891.|
|1948||Companies Act of 1948 recognized the company secretary as an officer of the company alongside the directors. There were no specific duties; however, the company secretary was authorized to sign prescribed forms on behalf of the company and make statutory declarations on fact matters.|
|Company secretary recognized as a responsible officer under a succession of Acts including the Trade Descriptions Act 1968, Taxes Management Act 1970 and Unsolicited Goods Act. 1971. The company secretary was formally noted as the ‗chief administrative officer.|
|1980||Companies Act 1980, required company secretaries of public companies to be qualified either by professional qualification or by prior experience|
|The key role of company secretaries in good Corporate Governance (CG) was recognized in the Cadbury report.|
|1995||Corporate Governance best practices award was given by ICSA for the first time.|
The Institute in Australia changed its name in 2013 to the Governance Institute of Australia upon the realization that the role of its members in corporate governance-related areas had greatly increased for them to continue with the “secretary” tag. Following that the Institute in Canada has changed its name Governance Institute of Canada as well.
Now, the Institute of Chartered Secretaries and Administrators (ICSA), UK and the institute in New Zealand were renamed as the Chartered Governance Institute (in September 2019) and give their members a duel degree recognizing them as Chartered Secretaries and Chartered Governance Professional simultaneously.
As the role of the company secretary is changing as it is becoming increasingly outward focused and not just about internal administration, more and more countries are introducing the position of the corporate Secretary, whether in law or through regulations, standards, or codes of corporate governance. The Corporate Secretaries International Association (CSIA) is a Geneva-registered global organization. It’s structured as an international federation of professional bodies enables it to effectively represent those practitioners who work at the frontline of governance. CSIA’s Governance Principles for the Corporate Secretary are:
- Separation of board and management
- Corporate responsibility to society and the environment
Thus, key global governance trends are as follows:
– Shareholder rights and engagement
– Risk management and internal controls
– Corporate social responsibility and ethics
Now many countries have requirements in law, regulations, standards, or codes for the qualifications of those carrying out the role of corporate secretary. These include members of professional bodies such as Institute of Chartered Secretaries of Bangladesh (ICSB) for Bangladesh, Institute of Company Secretaries of India (ICSI) for India, Institute of Chartered Secretaries and Administrators in Zimbabwe for Zimbabwe, The Institute of Certified Public Secretaries of Kenya for Kenya, Chartered Secretary Southern Africa(CSSA) for South Africa, The Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) for Malaysia, The Institute of Corporate Secretaries of Pakistan for Pakistan, The Society of Corporate Secretaries and Governance Professionals, Inc for the USA, Chartered Secretaries Canada for Canada, Institute of Chartered Secretaries and Administrators (ICSA) for UK and many Commonwealth countries.
With a motto ‘Promoting governing excellence’ the Institute of Chartered Secretaries of Bangladesh (ICSB) serving the country as the Governance Professionals’ Institute of the country. Nearly six hundred members of ICSB as Chartered secretaries have an important role to play as governance professionals in all types of organizations in the private or public sectors.
It is known that governance is more than just complying with laws, regulations, standards, and codes; it is also about creating cultures of good practice. So, the work of a Chartered Secretary or governance professional is essential to the direction, governance, administration, and management of any organization. Public and political concern about governance, ethics, probity, accountability, and good practice is higher than ever before as is the risk of getting it wrong. To succeed in this climate whether in the public or private it is essential to have people who can chart a course through the jungle of legislation, regulation and the best practices; people who are authoritative, identify the problems, understand the issues and have the expertise to provide the right solutions; people who will keep an organization on track and help it to prosper and develop. Chartered Secretaries, members of ICSB, are the only qualified professionals specifically trained to carry out the role of company secretary as well as a governance professional in the country.
The role of the company secretary in Bangladesh has increased over the last couple of decades, citing the increases in regulatory demands, board and committee services, advisory works, and shareholders and other communications. The increasing sophistication of their work and increased reporting structure to management as there is a demand for better Governance as well as Corporate Governance practices. It is also for increased expectations of institutional and other investors with calls for greater transparency in corporate affairs, and a new complex corporate environment. The company secretary has evolved and the responsibilities and challenges have increased substantially as demands for better Corporate Governance have grown. New opportunities have also arisen as Governance Professionals. The reasons include more corporate legislation and regulation, growing demands for limpid corporate affairs, demands for better Corporate Governance practices, and ever-changing expectations of investors. The increase in the size and complexity of some companies has also contributed to new expectations and demands on Governance activities.
Though the roles of Chartered secretaries are very significant to the economy, most of their true endeavors become in vain as they are not properly recognized and empowered by the law of land. Besides, inadequate Compliance Audit, weak Statutory Audit system, poor audit report, inconsistency among Companies Act, other relevant Acts, BAS and SEC Requirements and weak regulatory system hold back their effective role in the economy. In addition, governance constitutes a major challenge for Bangladesh nowadays. It’s underperformance is evident in many areas of national life. In fact, it is crystal clear from evidence as well as the pronouncement of our policymakers and international donors that Bangladesh’s improvement in the governance realm is not keeping pace with the progress achieved in some areas of economic and social policies.
Therefore, the Bangladesh government should come forward to nursing this profession with extra care for the better interest of the country financing more in this field as well as take steps to develop this profession with the help of the World Bank and other concern institutes of the world. Then, governance issues will properly be addressed, monitored and checked by the quality governance professionals keeping face with the developed world and will help the country to reach the highest level of governance indicators and achieve the goals for reform as a truly developed country by 2041.
In conclusion, good governance is the launchpad for meeting the challenges to reform and longer-term perspective development of Bangladesh. The Chartered secretaries, as the catalysts, will play a leading role in this regard if they are properly used by the government. On top of all, Bangladesh cannot go forward and be a developed country by 2041 unless administrative, financial and political powers are exercised with good governance. Hence, reforming all the institutions with good governance is a must to start with for a new Bangladesh transiting towards a developed country as dreamt by our Prime Minister.
Md.Noor-Ul-Alam ACS, an Associate Member of ICSB and Vice-President of Prime Insurance Co. Ltd