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Corporate Governance

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Sharmin A Salma

on 11 February 2015

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Transcript of Corporate Governance

Guiding principle of CG

Responsibilities of the Board

Fiduciary responsibility
Work-planning and Strategic Management
Oversee management
Lending and risk management
Internal control management
Human resources management and development
Financial management
Formation of supporting committees
Monitor corporate governance
Oversee disclosure, communications

Responsibilities of Management

Code of Ethics
Training on Corporate Governance
Conducted training for MANCOM & EMT members.

Conducted 8 (Six) CG training sessions for Branches, SMESC & SME Unit Offices alongside AML trainings since October 2013, covering the following regions:

Dedicated training & certification program for all employees.

Phase I:
Country-wide training for all branches, SMESC and unit offices along with AML trainings.
Senior Management
Board of Directors

Phase II:
New employees & refresher trainings at training centre
Quarterly Governance meeting @ Department
Monthly Governance Meeting@ Branch

4 Pillars of
Corporate Governance



“Corporate governance is the system by which companies are directed and controlled….”

Sir Adrian Cadbury, UK, 1992

Good Governance Implementation

Governance meeting
to be conducted on quarterly/ monthly basis.

Meeting Agenda:
employees on
new policy/procedure/ instructions
and explain the change in their role
Communicate/ clarify
from the
senior management
Discuss on
raised by
customers & other departments
on time returns/ queries/ responses
Discuss on
recent fraud forgeries
and case studies on
Discussion on
ethical issue and conflicts
Discussion on
control issues/audit findings
Duty to act within powers
Duty of care
Company’s best interests
Compliance with company’s code of conduct
Fiduciary duties
Good faith
Proper purpose
Avoiding conflicts of interest
Duty of Loyalty Not to…
Conduct transactions in which they have a personal interest
Enter into contractual relations with a competing company
Use the company’s assets, facilities for personal use
Use information, business opportunities received in their official capacity for personal gain
Accept gifts

Presentation Outline
What is Corporate Governance?
Why is Corporate Governance needed?
Who is to ensure Corporate Governance?
4 pillars of corporate governance
Responsibility of management for good governance: policy highlights
Training and implementation of good governance culture

What is Corporate Governance?
It indicates the system of taking care of the interest of all stakeholders involved and the goals for which the organization is established.

Cooperation with the employer
Protection of Asset
Influencing Others
Insider Trading
Process Guideline
Personal Interest
Gifts and Inducements
New Product Approval
Reputation Risk
Advertisement and Mis-selling
Authorized Persons
“Corporate Governance is a set of relationships between a company’s management, its Board, its shareholders, and other stakeholders.  Corporate governance provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined. Corporate governance should also provide proper incentives for the Board and management to pursue objectives that are in the interests of the company and shareholders and should facilitate effective monitoring, thereby encouraging firms to use resources more efficiently.”

Organization for Economic Cooperation and Development (OECD)

Regulatory Framework
Bangladesh Securities and Exchange Commission:
Corporate Governance Guidelines

Responsibility of Management
for Good Governance
Customer Confidentiality
Record Retention
Policy Highlights
Regulatory Requirement
“I am Head of SME and I have asked the Area Manager of Islampur to sanction a business, the proprietor of which also happens to be my wife’s relative. He has assessed the file and tells me that his financials do not support his fund requirement. I still instruct him to go ahead with it. Have I done the right thing?”

“I am the CAMLCO. The Branch Manager of Tongi Branch has been given a BFIU query to search a person and/or any related party by the name “X”. However, he fails to do so. Later, Bangladesh Bank informs me that there is an account by the name of a company, the proprietor of which is “X”. Who is responsible and who is accountable for the NIL report.?”

“I am the Head of Retail Banking. One of my cousins is working in the same bank, and he appears for a promotion interview where I am one of the board members. I try to extol him and highlight his performance to the board. Have I done the right thing?”

“I am the Branch Manager of X Branch. Of the two CSMs reporting to me, one of them belong to my home town and we attended the same University. Both of them have similar business performance. But I am more comfortable with the CSM from my home town and prefer to refer any prospective business deal to him. I have also rated him high in his performance appraisal. Have I done the right thing?”

Benefits of
Disclosure & Transparency
An Important Disclosure for all employees of BRAC Bank
Objective of discussion on Corporate Governance

We want to create an
enlightened workforce conforming with
BRAC’s values
. For this, we need to instil a good
governance culture
beginning with the
young, fresh resources
, because if they are not
in it, we cannot expect them to
proper governance as they move up to higher managerial roles in the organization.

Objectives of discussion on Corporate Governance
Create an understanding on corporate governance

Know the key principles and elements of good corporate governance systems

Develop the competencies required to implement responsible corporate governance practices

Ensure compliance of code of ethics

Identify ethical challenges and learn how to address them

Corporate Governance

For efficiency
For probity
With responsibility
Both transparent and accountable

“Nothing is more important than a company’s
. It is the first and most important value in an organization.”

Chief Executive, a Global Company

All employees are expected to provide a declaration to HR regarding all relatives within the bank, affiliation with any related business (on their own or through family), & engagement with any employment (part/full) outside of the Bank.
OECD Principles:
Disclosure & Transparency
“Timely and accurate disclosure should be made on all material matters regarding the company, including the financial situation, performance, ownership, and governance of the company.”
Increased access to external capital
Lower cost of capital
Improved operational performance
Reduced risk of corporate crises, scandals
Enhanced trust
Ethics is a moral philosophy that involves systematizing, defending, and recommending concepts of right and wrong conduct.

“I have no problem with ethics. I merely ask myself whether I would mind if my old mother read about this in the press.”

Chairman, a major British public company

Ethical Values
Establishes values and principles that a company uses to inform the conduct of its activities
Is based on the organization’s core values
Helps staff decision-making when the boundaries of right and wrong are unclear
Enhances corporate reputation and image
Develops corporate culture
Improves risk & crisis management
Advances stakeholder communications
May help to avoid litigation

Thank You!
When Does A Business Problem Involve Ethics?
Issues not covered by the law

When boundaries of right and wrong are unclear

Corporate Governance
at BRAC Bank Ltd.

Prepared by:
Company Secretariat

Prepared for:
MANCOM, EMT members
& Managers
BRAC Bank Ltd.

Difference between Directing & Managing
Protect the Rights of Shareholders and Key Ownership Functions
Ensure equitable treatment
Recognize the rights of stakeholders
Ensure timely and accurate disclosure
Ensure Effective Monitoring & Risk Management
Why Corporate Governance?
Enron, Arthur Andersen, Worldcom, Tyco ....

When corporate names become synonymous with scandal and greed, public confidence wavers.

Why important for Banks in particular?
Bank deals with customer’s deposits

Banks are responsible for protecting interests of stakeholders

High ratios of debt to equity

Interconnectedness of the financial system

Foreign investors look for organizations that are strongly regulated and ethically sound

Markets are sensitive to earnings. Correct representation of accounts affect share price.

Steps Ahead

Bangladesh Bank:
Compilation of all circulars in ‘Corporate Governance in Bank Management’ under the ‘Prudential Regulations for Banks’
Ensure the Basis for an Effective Corporate Governance Framework:
Full transcript