Corporate Governance Trends in Bangladeshi Firms: Rising Standards for a Modern Economy

As Bangladesh continues its upward economic trajectory, the role of corporate governance in ensuring transparency, accountability, and long-term sustainability is becoming increasingly important. In recent years, both public and private companies have been subject to more scrutiny by regulators, investors, and civil society—prompting a shift in how governance is approached.

In this blog, we explore the key corporate governance trends in Bangladesh, the challenges faced, and the evolving expectations from businesses in line with global best practices.

What Is Corporate Governance?

Corporate governance refers to the framework of rules, relationships, systems, and processes by which companies are directed and controlled. It balances the interests of various stakeholders, including:

• Shareholders

• Management

• Customers

• Employees

• Suppliers

• Government and the community

Strong governance systems lead to better decision-making, reduced corruption, enhanced investor confidence, and ultimately, higher company valuations.

Key Trends in Corporate Governance in Bangladesh

1. Strengthened Regulatory Frameworks

The Bangladesh Securities and Exchange Commission (BSEC) has made several regulatory updates to improve governance. Most notable is the Corporate Governance Code 2018, which made it mandatory for listed companies to:

• Appoint independent directors (at least one-fifth of the board)

• Establish audit, nomination, and remuneration committees

• Conduct annual board evaluations

• Ensure timely disclosures

2. Rise of Independent Directors

Independent directors are increasingly playing a critical role in oversight and risk management. Their participation helps reduce nepotism and ensures that decisions align with shareholder interests.

However, many firms struggle to find competent, truly independent candidates due to a limited pool of professionals with both governance and sectoral experience.

3. Focus on ESG (Environmental, Social, and Governance)

With global investors placing greater emphasis on ESG, Bangladeshi firms—especially those in textiles, banking, and energy—are beginning to report on:

• Carbon footprint

• Labor standards

• Corporate social responsibility

• Board diversity

While still in early stages, pressure from international buyers and lenders (like IFC, ADB, and World Bank) is pushing firms toward sustainable governance models.

4. Digitalization of Governance Processes

The adoption of digital platforms for board meetings, document storage, e-voting, and disclosures is gaining momentum. During and after the COVID-19 pandemic, virtual boardrooms and cloud-based compliance tracking tools became a norm in many firms, especially in the financial sector.

This digital transformation helps improve:

• Meeting attendance

• Real-time decision making

• Reduced paper-based fraud

5. Pressure from Institutional Investors

Institutional investors, including pension funds and foreign equity firms, are beginning to demand greater transparency, better risk disclosures, and consistent dividend policies. They are increasingly exercising their shareholder rights during AGMs and influencing board decisions.

Foreign direct investors (FDIs) also often require robust governance standards as a precondition for investing or entering joint ventures.

6. More Female Representation (But Still a Long Way to Go)

In line with SDG goals and BSEC codes, companies are being encouraged to improve gender diversity at the board level. While there has been some progress, as of 2024, only about 12% of board seats in listed companies are held by women—significantly below global averages.

NGOs and professional bodies are advocating for capacity building and mentorship programs to prepare more women for leadership.

Challenges Facing Bangladeshi Firms

Despite progress, several obstacles hinder effective governance:

• Family-owned dominance in many listed firms causes conflicts of interest.

• Lack of board transparency in privately held firms.

• Low awareness of corporate governance among SMEs.

• Weak enforcement of compliance by regulatory bodies.

The effectiveness of BSEC and the Registrar of Joint Stock Companies and Firms (RJSC) must be further strengthened to ensure consistent implementation.

Corporate Governance in the Banking Sector

Banks in Bangladesh have been under close watch due to rising non-performing loans (NPLs) and governance lapses. In response, the Bangladesh Bank has introduced several reforms, including:

• Capping director terms

• Limiting related-party lending

• Requiring fit and proper criteria for board members and CEOs

Case Study: Grameenphone

Grameenphone, a publicly listed telecom company, is often cited as a model for corporate governance in Bangladesh. With an active board, detailed disclosures, and commitment to anti-corruption policies, GP sets a benchmark in:

• Publishing sustainability reports

• Following international IFRS accounting standards

• Maintaining shareholder engagement through quarterly briefings

Future Outlook: What’s Next for Corporate Governance in Bangladesh?

Additionally, digital tools, blockchain-based voting, and AI in audit processes could revolutionize governance in the coming decade.

Conclusion

Corporate governance in Bangladesh is evolving. While challenges remain, regulatory improvements, investor expectations, and global market integration are forcing firms to upgrade their governance frameworks.

For investors, stakeholders, and entrepreneurs, understanding these governance trends is essential—not only for risk management but also for unlocking long-term growth opportunities in one of Asia’s fastest-growing economies.

Helpful Links for Further Reading

• 📰 World Bank: Doing Business in Bangladesh

• Bangladesh-agent.com.