Practice of Corporate governance In Telecommunication sector of Bangladesh

1. Welcome to our Presentation

2. Department of Accounting & Information Systems (2nd
Batch)
University of Barisal

3. A presentation on
By group no: 02
Practice of Corporate governance
In Telecommunication sector of Bangladesh

4. Name ID
Sarmin Akter Mitu 13 AIS 002
Tanzila Akter Ripa 13 AIS 054
Sabina Akter 13 AIS 029
Tajim Asadi 13 AIS 041
Md. Mosharrof Hossain 13 AIS 065
Shariful Islam 13AIS 018
Ayesha Siddika Munira 12 AIS 065
Mst. Ruma 13 AIS 076
Group Members

5. Governance & Corporate governance
Governance is:
Some rules and regulations for a country or organization.
Corporate governance is:
“The system by which companies are directed and controlled.”
(UK - Cadbury Report, London, 1992)…

6. Good governance elements

7. Corporate Governance of TelecomCorporate Governance of Telecom
IndustryIndustry
 Corporate Governance policies and practices of theCorporate Governance policies and practices of the
telecom Industry are focused on ensuring fairness,telecom Industry are focused on ensuring fairness,
transparency and accountability in the organization astransparency and accountability in the organization as
a whole. Telecom Industries are structured anda whole. Telecom Industries are structured and
systems and processes organized aligned withsystems and processes organized aligned with
accepted Corporate Governance practices and also inaccepted Corporate Governance practices and also in
line with guidelines of Bangladesh Bank and theline with guidelines of Bangladesh Bank and the
Bangladesh Securities and Exchange CommissionBangladesh Securities and Exchange Commission
(BSEC) in this regard. While pursuing the goal of(BSEC) in this regard. While pursuing the goal of
Shareholders value addition, Telecom IndustryShareholders value addition, Telecom Industry
attached utmost importance to setting up of well-attached utmost importance to setting up of well-
defined compliance oriented organization anddefined compliance oriented organization and
business structure.business structure.

8. Elements of Corporate governance

9. Why is Corporate Governance Important?
Good Corporate Governance ensures that the business
environment is fair and transparent and that companies
can be held accountable for their actions.

10. The Benefits of Corporate Governance

12. Board of DirectorsBoard of Directors
 Board of Directors of such companies LimitedBoard of Directors of such companies Limited
comprises of 12 (twelve) Members. This is incomprises of 12 (twelve) Members. This is in
conformity of Bangladesh Bank guidelines and alsoconformity of Bangladesh Bank guidelines and also
the Articles of Association . Board includes twothe Articles of Association . Board includes two
Independent Directors in pursuance with respectiveIndependent Directors in pursuance with respective
regulatory requirements. Board of Directors isregulatory requirements. Board of Directors is
professionally run forum having Members from variousprofessionally run forum having Members from various
backgrounds and professions. Board is the apex bodybackgrounds and professions. Board is the apex body
for strategy and policy formulations and for takingfor strategy and policy formulations and for taking
decisions on business, operational and financialdecisions on business, operational and financial
matters besides ensuring compliance and riskmatters besides ensuring compliance and risk
management . This is run professionally following themanagement . This is run professionally following the
guidelines and also within the authorities of theguidelines and also within the authorities of the
Memorandum and Articles of Associations .Memorandum and Articles of Associations .
Management operates within the policies, guidanceManagement operates within the policies, guidance
and limits approved by the Board. Board holdsand limits approved by the Board. Board holds

13. Executive CommitteeExecutive Committee
 Executive CommitteeExecutive Committee of the Board isof the Board is
formed following the guidelines of in thisformed following the guidelines of in this
respect and comprises of 5(five) Membersrespect and comprises of 5(five) Members
nominated by the Board. Executivenominated by the Board. Executive
Committee operates within the Terms ofCommittee operates within the Terms of
Reference (TOR) set by the Board.Reference (TOR) set by the Board.

14. Audit CommitteeAudit Committee
 Telecom Industry has been formed in strictTelecom Industry has been formed in strict
compliance guidelines and accordinglycompliance guidelines and accordingly
comprises of 5(five) Members. Chairman ofcomprises of 5(five) Members. Chairman of
the Audit Committee is the Independentthe Audit Committee is the Independent
Director of the Board. The CompanyDirector of the Board. The Company
Secretary acts as the Secretary of theSecretary acts as the Secretary of the
Committee while other Members of theCommittee while other Members of the
Management attends the Committee MeetingManagement attends the Committee Meeting
on invitation only. Audit Committee has seton invitation only. Audit Committee has set
Terms of Reference as contained inTerms of Reference as contained in
guidelines.guidelines.

15. Regulatory complianceRegulatory compliance
disclosuredisclosure
 Telecom Industry has been following related guidelinesTelecom Industry has been following related guidelines
on submission of Quarterly, Half-yearly and Yearlyon submission of Quarterly, Half-yearly and Yearly
financial statements and other statutory reports.financial statements and other statutory reports.
 Any significant development in the business is forth-withAny significant development in the business is forth-with
disclosed through the adherence of properdisclosed through the adherence of proper
rules/guidelines/directive in the form of price sensitiverules/guidelines/directive in the form of price sensitive
declarations. Telecom Industy also ensures submissiondeclarations. Telecom Industy also ensures submission
of returns to regulatory bodies in full-compliance of theof returns to regulatory bodies in full-compliance of the
requirements and appropriate disclosures ensuringrequirements and appropriate disclosures ensuring
transparency and accountability .Board of Directorstransparency and accountability .Board of Directors
ensures adequate disclosures for the Shareholders andensures adequate disclosures for the Shareholders and
other stakeholders through the Annual Report or otherother stakeholders through the Annual Report or other
specific disclosures, if required.specific disclosures, if required.

17. Delegation of PowerDelegation of Power
 Management of the telecom Industry hasManagement of the telecom Industry has
been empowered with appropriate financebeen empowered with appropriate finance
and business decision making .and business decision making .

18. Actors of Corporate governance

19. Corporate Governance InCorporate Governance In
Telecom IndustryTelecom Industry
 Approved by the Board from time to time with levelsApproved by the Board from time to time with levels
of authority and process delegation varied acrossof authority and process delegation varied across
the telecom industries .Telecom Industry also has athe telecom industries .Telecom Industry also has a
well empowered ALCO to deal with funding andwell empowered ALCO to deal with funding and
treasury matters. President & Managing Director istreasury matters. President & Managing Director is
the Executive Head of the telecom industries .the Executive Head of the telecom industries .
Telecom industries has approved OrganizationalTelecom industries has approved Organizational
Structure (Organ gram) up to the Unit Level withStructure (Organ gram) up to the Unit Level with
clear functional segregation and also segregation ofclear functional segregation and also segregation of
processing and functioning authorities. Thisprocessing and functioning authorities. This
ensures Core Risk Management compliance acrossensures Core Risk Management compliance across
the telecom industry. Telecom industries 's functionsthe telecom industry. Telecom industries 's functions
and plans also consider various regulatory limits andand plans also consider various regulatory limits and
restrictions to be risk compliant as wellrestrictions to be risk compliant as well

20.  . A Risk Management Division (RMD) has. A Risk Management Division (RMD) has
been formed in compliance with thebeen formed in compliance with the
relevant guidelines .relevant guidelines . telecom industriestelecom industries alsoalso
has a strong SRP Team in the overallhas a strong SRP Team in the overall
telecom industriestelecom industries are governed by the rules,are governed by the rules,
regulations, guidelines, directions andregulations, guidelines, directions and
policies as applicable for the bankingpolicies as applicable for the banking
business and operation . Different controlbusiness and operation . Different control
aspects on the basis of regulatory oraspects on the basis of regulatory or
business needs are in place which includesbusiness needs are in place which includes
capital adequacy, risk management, marketcapital adequacy, risk management, market
and liquidity, anti money launderingand liquidity, anti money laundering
compliance, prudential guidelines,compliance, prudential guidelines,
reporting standards, among others.reporting standards, among others.

21. Business Plan vs AchievementsBusiness Plan vs Achievements
 Business Plan of the telecom industryBusiness Plan of the telecom industry
provides for the Working Platformprovides for the Working Platform
embodying the growth aspect, profitability,embodying the growth aspect, profitability,
risk appetite, capital management, etc. Itrisk appetite, capital management, etc. It
also embodies accountability in terms ofalso embodies accountability in terms of
set KPI's and acts as a roadmap forset KPI's and acts as a roadmap for
Shareholders value additionShareholders value addition

22. Internal Control and ComplianceInternal Control and Compliance
Division (ICCD):Division (ICCD):
 Telecom Industry has a separate DivisionTelecom Industry has a separate Division
for Internal Control & Compliancefor Internal Control & Compliance
monitoring. This Division operatesmonitoring. This Division operates
 independently and has givenindependently and has given
responsibilities by the Board.responsibilities by the Board.
 Head of Internal Control & ComplianceHead of Internal Control & Compliance
Division is accountable to the AuditDivision is accountable to the Audit
Committee of the BoardCommittee of the Board

23. External Audit:External Audit:
 External Auditors also covered potentialExternal Auditors also covered potential
Branches and Head Office as part of theBranches and Head Office as part of the
Annual Audit Program. Auditors covered 80%Annual Audit Program. Auditors covered 80%
of the risk assets. Auditors submitted aof the risk assets. Auditors submitted a
Management Report with a Special SectionManagement Report with a Special Section
on the “Review of Bank’s Internal Controlon the “Review of Bank’s Internal Control
Environment” of the Bank. The Report wasEnvironment” of the Bank. The Report was
discussed in the Audit Committee. Auditdiscussed in the Audit Committee. Audit
Committee referred the Report for detailedCommittee referred the Report for detailed
review as to compliance to the Board ofreview as to compliance to the Board of
Directors Meeting.Directors Meeting.

24. Inspection by Bangladesh Bank:Inspection by Bangladesh Bank:
 Bangladesh Bank conducted theBangladesh Bank conducted the
comprehensive inspection of Head Officecomprehensive inspection of Head Office
and 10 selected Branches based on 31and 10 selected Branches based on 31
December 2014. A Tri party meetingDecember 2014. A Tri party meeting
among Bangladesh Bank, Externalamong Bangladesh Bank, External
Auditors and ManagementAuditors and Management
 OfOf telecom industriestelecom industries has been conductedhas been conducted
for finalization of annual Financialfor finalization of annual Financial
Statements.Statements.

25. Grameen phone ltdGrameen phone ltd
Condition no Title Compliance Status
2011 2012 2013 2014
1.00 Board of
Directors
yes yes yes yes
1.1 Board’s size:
should not be less
than 5 (five) and
more
that 20 (twenty)
yes yes yes yes
1.2 (i) Independent
Directors: At
least one fifth
(1/5) of the
total number of
directors in the
company’s board
shall
be independent
directors.
yes yes yes yes

26. 1.2 (ii) a) Shareholding less
than one percent
(1%) shares of the
total paid-up
shares of the
company;
yes yes - yes
1.2 (ii) b) Any sponsor or
director or
shareholder who
holds one
percent (1%) or
more shares of the
total paid-up shares
of the company on
the basis of family
relationship.
yes yes yes yes
1.2 (ii) c) Any other
relationship,
whether pecuniary
or otherwise,
with the company
or its
subsidiary/associat
ed
companies;
yes
yes yes yes

27. 1.2 (ii) d) who is not a
member, director
or officer of any
stock
exchange;
yes yes yes yes
1.2 (ii) e) who is not a
shareholder, director
or officer of
anymember of stock
exchange or an
intermediary of
thecapital market;
yes yes yes yes
1.2 (ii) f) who is not a partner
or an executive or
was not a partneror
an executive during
the preceding 3
(three) years of
any statutory audit
firm;
yes yes yes yes

28. 1.2 (ii) g) who shall not be an
independent
director in more
than 3
(three) listed
companies;
yes _ yes yes
1.2 (ii) h) who has not been
convicted by a court
of
competentjurisdictio
n as a defaulter in
payment of any loan
to abank or a Non-
Bank Financial
Institution (NBFI);
yes yes _ yes
1.2 (ii) i) who has not been
convicted for a
criminal
offenceinvolving
moral turpitude.
yes yes yes yes

29. 1.2 (iii) the independent
director(s) shall
be nominated by
theboard of
directors and
approved by the
shareholders in
the Annual
General Meeting
(AGM).
yes yes yes yes
1.2 (iv) the post of
independent
director(s) can not
remain
vacant for more
than 90 (ninety)
days.
_ yes yes
1.2 (v) the Board shall lay
down a code of
conduct of all
Boardmembers
and annual
compliance of the
code to
berecorded.
yes yes yes yes

30. 1.2 (vi) the tenure of
office of an
independent
director shall
befor a period of
3 (three) years,
which may be
extendedfor 1
(one) term only.
yes _ yes yes
1.3 (i) Qualification of
Independent
Director:
Independent
Director shall be
a knowledgeable
individual with
integrity who is
able to ensure
compliance with
financial,regulato
ry and corporate
laws and can
make
meaningfulcontri
bution yesto
business.
yes yes yes yes

31. 1.3 (ii) The person should be a
Business
Leader/Corporate
Leader/Bureaucrat/Uni
versity Teacher with
Economics or Business
Studies or Law
background/Profession
als like Chartered
Accountants, Cost &
Management
Accountants,
Chartered Secretaries.
The independent
director must have at
least 12 (twelve) years
of
corporatemanagement/
professional
experiences.
yes yes yes yes
1.3 (iii) In special cases the
above qualifications may
be relaxed subject to
prior approval of the
Commission.
yes yes _ yes

32. 1.4 Chairman of the
Board and Chief
Executive Officer:
The positions of the
Chairman of the
Board and the
ChiefExecutive
Officer of the
companies shall be
filled by different
individuals.
yes yes yes _
1.5 The Directors’
Report to
Shareholders
yes yes yes yes
1.5 (i) Industry outlook and
possible future
developments in the
industry.
yes yes yes yes

33. 1.5 (ii) Segment-wise or product-wise performance. yes yes yes yes
1.5 (iii) Risks and concerns. yes yes yes yes
1.5 (iv) A discussion on Cost of Goods sold, Gross Profit Margin
and Net Profit Margin.
yes yes yes _
1.5 (v) Discussion on continuity of any Extra-Ordinary gain or loss. yes _ yes yes
1.5 (vi) Basis for related party transactions- a statement of all related
party transactions should be disclosed in the annual report.
yes yes yes yes
1.5 (vii) Utilization of proceeds from public issues, rights issues
and/or through any others instruments.
yes yes yes yes
1.5 (viii) An explanation if the financial results deteriorate after the
company goes for Initial Public Offering (IPO), Repeat
Public Offering (RPO), Rights Offer, Direct Listing, etc.
yes yes _ yes
1.5 (ix) If significant variance occurs between Quarterly Financial
performance and Annual Financial Statements the
management shall explain about the variance on their
Annual Report.
yes yes yes yes

34. BanglalinkBanglalink
Condition no Title Compliance Status
2011 2012 2013 2014
1.00 Board of Directors yes yes yes yes
1.1 Board’s size: should not be
less than 5 (five) and more
that 20 (twenty)
yes yes yes yes
1.2 (i) Independent Directors: At least
one fifth (1/5) of the
total number of directors in the
company’s board shall
be independent directors.
yes yes yes yes
1.2 (ii) a) Shareholding less than one
percent (1%) shares of the
total paid-up shares of the
company;
yes yes - yes

35. 1.2 (ii) b) Any sponsor or director or shareholder who holds one
percent (1%) or more shares of the total paid-up shares
of the company on the basis of family relationship.
yes _ yes yes
1.2 (ii) c) Any other relationship, whether pecuniary or otherwise,
with the company or its subsidiary/associated
companies;
_ yes yes
1.2 (ii) d) who is not a member, director or officer of any stock
exchange;
yes yes yes
1.2 (ii) e) who is not a shareholder, director or officer of any member
of stock exchange or an intermediary of the capital market;
yes _ yes yes
1.2 (ii) f) who is not a partner or an executive or was not a partner or
an executive during the preceding 3 (three) years of
any statutory audit firm;
yes yes _ yes

36. 1.2 (ii) g) who shall not be an independent director in more than 3
(three) listed companies;
yes _ yes yes
1.2 (ii) h) who has not been convicted by a court of competent
jurisdiction as a defaulter in payment of any loan to a bank or
a Non-Bank Financial Institution (NBFI);
yes yes _ yes
1.2 (ii) g) who shall not be an independent director in more than 3
(three) listed companies;
yes _ yes yes
1.2 (ii) h) who has not been convicted by a court of competent
jurisdiction as a defaulter in payment of any loan to a bank or
a Non-Bank Financial Institution (NBFI);
yes yes _ yes
1.2 (ii) i) who has not been convicted for a criminal offence involving
moral turpitude.
yes yes yes yes
1.2 (iii) the independent director(s) shall be nominated by the board
of directors and approved by the shareholders in
the Annual General Meeting (AGM).
yes yes yes yes
1.2 (iv) the post of independent director(s) can not remain
vacant for more than 90 (ninety) days.
_ yes yes
1.2 (v) the Board shall lay down a code of conduct of all Board
members and annual compliance of the code to be recorded.
_ yes yes yes

37. 1.2 (vi) the tenure of office of an independent director shall be
for a period of 3 (three) years, which may be extended
for 1 (one) term only.
yes _ yes yes
1.3 (i) Qualification of Independent Director: Independent
Director shall be a knowledgeable individual with
integrity who is able to ensure compliance with financial,
regulatory and corporate laws and can make meaningful
contribution yes to business.
yes yes yes yes
1.3 (ii) The person should be a Business Leader/Corporate
Leader/Bureaucrat/University Teacher with Economics or
Business Studies or Law background/Professionals like
Chartered Accountants, Cost & Management Accountants,
Chartered Secretaries. The independent director must have
at least 12 (twelve) years of corporate
management/professional experiences.
yes yes yes yes
1.3 (iii) In special cases the above qualifications may be relaxed
subject to prior approval of the Commission.
yes yes _ yes
1.4 Chairman of the Board and Chief Executive Officer: The
positions of the Chairman of the Board and the Chief
Executive Officer of the companies shall be filled by
different individuals.
_ yes yes _
1.5 The Directors’ Report to Shareholders _ yes yes yes

38. 1.5 (i) Industry outlook and possible future developments in
the industry.
yes yes yes Yes
1.5 (ii) Segment-wise or product-wise performance. yes _ yes Yes
1.5 (iii) Risks and concerns. yes yes yes Yes
1.5 (iv) A discussion on Cost of Goods sold, Gross Profit Margin
and Net Profit Margin.
yes yes yes _
1.5 (v) Discussion on continuity of any Extra-Ordinary gain or
loss.
yes _ yes Yes
1.5 (vi) Basis for related party transactions- a statement of all
related party transactions should be disclosed in the annual
report.
_ yes yes Yes
1.5 (vii) Utilization of proceeds from public issues, rights issues
and/or through any others instruments.
yes yes yes Yes
1.5 (viii) An explanation if the financial results deteriorate after the
company goes for Initial Public Offering (IPO), Repeat
Public Offering (RPO), Rights Offer, Direct Listing, etc.
yes yes _ Yes
1.5 (ix) If significant variance occurs between Quarterly Financial
performance and Annual Financial Statements the
management shall explain about the variance on their
Annual Report.
yes yes yes Yes

39.  We have worked with the 2 telecom industry cWe have worked with the 2 telecom industry c
sector of Bangladesh and analyzed with thesector of Bangladesh and analyzed with the
Corporate governance policy which theCorporate governance policy which the
company provided. Here most of the telecomcompany provided. Here most of the telecom
industy followed policy. Finally we have seenindusty followed policy. Finally we have seen
that their share or stock prices was high beforethat their share or stock prices was high before
the declaration of Corporate governance policy.the declaration of Corporate governance policy.
But after this, their share or stock pricesBut after this, their share or stock prices
become low for a limited time. Later their sharebecome low for a limited time. Later their share
or stock prices become high because theiror stock prices become high because their
reputation rises for following corporatereputation rises for following corporate
governance policygovernance policy

40. Any questions?

41. Thanks All