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Administrator appointment move worries businesses in Bangladesh
Publication Date : 24-10-2012
Leading chambers in Bangladesh yesterday strongly opposed a government plan to amend the law to appoint administrators for companies, saying such control and unilateral decision would demoralise the business community.
"We are concerned about the proposed amendment to the Company Law 1994," AK Azad, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), told reporters at Sonargaon Hotel in the capital.
“We appreciate the government's plan to establish good governance and accountability in the country. But it is not wise to adopt a controlling and unilateral way to achieve such a goal."
"The business community thinks that there should be a participatory process to bring about any changes to the existing laws or formulate any new law."
"We are concerned that if such unilateral amendment is brought about, it will increase the risk of a misuse of the law by vested quarters. If that happens, it will disrupt the country's market-based and competitive business climate and discourage both local and foreign investments."
His comments came as the government moved to bring in changes to the Companies Act, 1994 to appoint an administrator for the controversial Destiny Group to protect the depositors' interests and prevent the company officials from selling its assets.
The commerce ministry yesterday issued a gazette notification outlining its plan to bring about the amendment to the law.
Shafiul Islam Mohiuddin, president of Bangladesh Garment Manufacturers and Exporters Association, Jahangir Alamin, president of Bangladesh Textile Mills Association, Mir Nasir Hossain, a former president of FBCCI, were also present there.
The current law allows the government to appoint administrators to any company on the court's permission to prevent fraudulent and anti-public activities in the company, said Azad.
"But it should not be done through the government's administrative process. If the law is applied through an administrative order bypassing the court, it will encourage undemocratic forces in exerting unfair influence on the businesses."
This will create the scope for a misuse of the law, as the government will be able to appoint an administrator to any company any time, he said.
The FBCCI chief also questioned the government's plan to provide indemnity to government-appointed administrators.
"Businesses are accountable to the government, the regulators and the shareholders. But the administrator will not be accountable to anyone. This cannot be a law. Any change in the law is unnecessary."
Azad said companies submit income tax returns every year in line with the company law. If any company fails to do so, its officials will face criminal charges and could be jailed for up to six months.
"We have been doing business in the country for 30 to 40 years, but we have not seen any application of the law. However, there was wholesale use of the law to punish businessmen during the last caretaker government's tenure."
"The government should not have done this without consulting the business community,” said the FBCCI president.
The business leaders urged the government to rescind its move to bring about “the controlling and undemocratic amendment”.
Azad said if the government ultimately sticks to its plan to bring about the amendment, it should apply to a specific company such as a multilevel marketing company, but not to the whole business community.
He called upon the government to consult the business community before implementing such decision. "We are ready to sit and give our opinion."
Earlier at the same venue, Law Minister Shafique Ahmed said the government planned to bring about changes to the law to appoint administrators in companies that cheat people.
"If we continue to follow the traditional way of dealing with a fraud company, its officials may liquidate its assets by the time the probe is completed, leaving nothing for the general shareholders," the minister said at a consultative meeting on the company law.