Corporate Governance and Directors’ Responsibilities in Bangladesh

Corporate Governance and Directors’ Responsibilities in Bangladesh are not governed by a single universal checklist. The starting point is the Companies Act, 1994. For issuers listed on a Bangladeshi stock exchange, the Bangladesh Securities and Exchange Commission (BSEC) Corporate Governance Code, as amended, adds a more prescriptive layer around board composition, independent directors, committees, reporting and disclosure. Banks and other regulated businesses may also face sector-specific governance directions. The practical question for a board is therefore not simply whether it has adopted a policy; it is whether the company’s constitution, approvals, records, financial reporting and regulatory submissions evidence governance in the form required for that company.[1] [2]

This Insight outlines the framework as checked on 19 October 2026. It is written for directors, founders, investors, senior management and in-house teams who need to distinguish the baseline company-law position from the additional expectations that attach to a listed or regulated business. It does not assume that a governance model designed for another jurisdiction will satisfy Bangladesh-specific requirements.

Table of contents

The governance framework: identify the company before the rule

Corporate governance is the operating framework through which a company is directed, supervised and held to account. In Bangladesh, its legal content depends on the company’s status, business and financing. A private company that is neither listed nor subject to a sectoral regime begins with the Companies Act, 1994, its memorandum and articles of association, shareholder arrangements and properly adopted board processes. A public company must meet the statutory framework and its constitutional documents. A listed issuer must do all of that while also satisfying the BSEC requirements that attach to listed capital.[1] [2]

The Companies Act remains the foundation. Its director chapter requires at least three directors for a public company and for a private company that is a subsidiary of a public company. Other private companies require at least two directors. Only a natural person may be appointed a director. The Act also addresses appointment, retirement, office, loans and guarantees, certain contracts, removal, vacant office and restrictions on the board’s powers. These rules are not displaced because a company has a sophisticated group policy or a shareholder agreement; a governance review should test those documents against the statute and the articles.[1]

That distinction matters for transactions. A founder-led private company may legitimately have a lean board and informal commercial relationships, but informality can leave uncertainty about authority, abstention, record-keeping and shareholder consent. At the other end of the spectrum, a listed company has an external governance architecture designed to protect investors and support market confidence. Its annual report and corporate-governance disclosures are part of that architecture, not merely investor-relations materials.[2] [6]

Boards should also identify whether another regulator governs the entity. Bangladesh Bank publishes separate guidance on internal control and compliance for banks. It assigns the board an oversight role in compliance and internal control and describes audit-committee responsibilities. The BSEC also maintains a dedicated Corporate Governance Department that covers bank, non-bank financial institution and insurance issuers as well as other issuers; that administrative structure is a useful reminder that an issuer can be subject to overlapping corporate and prudential expectations.[9] [13]

A sensible opening step is to map the company’s category, regulator, securities status, constitutional limits, shareholder approvals and reporting calendar. That map prevents a common error: importing a listed-company committee structure into a private company without considering the articles, or treating a statutory baseline as the full rulebook for a listed, bank or insurance business.

Corporate Governance and Directors’ Responsibilities in Bangladesh: the board’s core role

A director’s role is collective before it is individual. The board acts through properly convened meetings, resolutions and delegations. The company’s articles and the Companies Act define much of the authority structure; the statutory definition of a managing director itself contemplates exercise of management powers under the board’s supervision, control and direction. A clear delegation framework therefore helps distinguish matters reserved for the board from matters delegated to management, and makes the boundary visible to auditors, investors and regulators.[1]

At a practical level, directors should insist on an adequate decision record. A board pack should make clear what is being requested, the material facts, alternatives, financial implications, conflicts, legal or regulatory conditions, proposed resolution and responsible executive. Minutes should record the decision, the basis for it where appropriate, declarations or abstentions, and follow-up ownership. Good minutes are not a substitute for sound judgment. They are evidence that the board received information, considered the right questions and exercised its authority through a recognisable process.

The Companies Act establishes several tangible markers of board responsibility. Directors are elected by members in general meeting, subject to the Act’s provisions for initial directors and casual vacancies. In companies other than private companies, the articles must provide for at least one-third of directors to be capable of retirement by rotation at any time. The Act also permits shareholder removal of a shareholder-director by special resolution before the end of the director’s term, with a replacement appointed by ordinary resolution in the circumstances set out in section 106. The exact process should be checked against the Act, articles, share structure and facts of the proposed action.[1]

The board’s legal remit cannot safely be separated from its information remit. A director who receives high-level assurance but no underlying risk, audit, cash-flow, related-party or compliance information cannot easily test whether management’s account is complete. Conversely, management needs clear escalation thresholds. Matters that should normally have a defined route include material financing, significant connected-party dealings, unusual revenue recognition, regulatory correspondence, internal-control failures, litigation that may be material to the company, whistleblowing and suspected fraud.

For a director, attendance alone is not governance. Preparation, probing questions, identification of conflicts, timely challenge and an insistence on corrective action when a control weakness is identified are practical parts of the role. The formal consequences of non-compliance depend on the particular provision and facts. This article does not state a general standard of personal liability because the outcome will turn on the statutory route, the articles, the decision, evidence, causation and any applicable sectoral or securities regime. Directors facing a live issue should obtain advice on the facts rather than rely on generic duty labels.

Listed companies: the BSEC Corporate Governance Code

For ordinary-share issuers listed on a Bangladeshi stock exchange, the BSEC Corporate Governance Code of 2018 is the central additional governance instrument. It was issued through a notification under section 2CC of the Securities and Exchange Ordinance, 1969. The Code has subsequently been amended. The BSEC’s 16 October 2023 Gazette notification expressly amended the original 2018 notification and took immediate effect.[2]

The Code’s operating effect is important. It is not a voluntary statement of good practice for listed companies. BSEC material treats compliance as a regulatory requirement, and the 2021 BSEC Financial Reporting and Disclosure rules require an issuer’s annual report to include a report or certificate on compliance with the Corporate Governance Code, where applicable, along with the directors’ report and annual audited financial statements.[6]

The 2023 amendment provides that at least two directors or one-fifth of the total number of directors, whichever is higher, must be independent directors. Any fraction is rounded up to the next integer or whole number for that calculation. It also provides that the board appoint an independent director, subject to BSEC’s prior consent, after considering the recommendation of the company’s nomination and remuneration committee (NRC). The prescribed eligibility, independence and documentation exercise is consequently not a matter for an informal appointment letter alone.[2] [7]

Board composition is only one part of the listed-company regime. The Code addresses the directors’ report, executive roles, audit committee, NRC and reporting and compliance. The 2023 amendment also states that where an audit-committee member’s term expires or a circumstance makes that member unable to remain in office and the committee falls below its prescribed three members, the board must fill the vacancy immediately or within 60 days. It requires at least two NRC members to be non-executive directors.[2]

The commercial lesson is that a listed board should operate an annual compliance calendar rather than wait for the year-end certification. It should track director tenure and independence, committee constitution, meeting attendance, committee reports, pending vacancies, statutory-auditor matters, annual-report disclosure and regulator or exchange correspondence. Compliance certificates are retrospective evidence of a governance system; they are a weak substitute for managing the system throughout the year.

BSEC has taken enforcement action involving corporate-governance compliance evidence. In a 2023 enforcement document, the Commission recorded findings concerning a corporate governance compliance status prepared under superseded guidelines, a clean report despite reported non-compliances, directors’ report disclosures and missing meeting records. This is a source-specific illustration, not a statement that every departure will produce the same consequence. It shows why boards should independently verify the accuracy of the compliance statement and retain underlying support.[8]

Independent directors and the woman independent-director timetable

Independent-director appointments should be treated as a regulated selection process. The BSEC’s independent non-executive director disclosure form calls for information and supporting material on the nominee’s qualifications, independence, tenure, committee process, shareholding, relationships, potential conflicts and Credit Information Bureau status. It requires declarations by board and senior officers and authentication by the proposed independent director. The form is not a replacement for the Code, but it is a practical indication of the evidence BSEC expects around the appointment.[7]

The selection question is broader than whether a candidate has an impressive curriculum vitae. The board and NRC should be able to demonstrate why the person meets the applicable eligibility and independence criteria, what skills they add, what relationships have been checked, whether their availability is realistic and how independence will be preserved during the appointment. A records-based process is especially valuable where a nominee has a long professional history with the company, its sponsors, its group or its advisers.

In April 2024, BSEC added a requirement that a listed company appoint at least one female independent director to its board, with an initial one-year compliance period. BSEC subsequently extended the time to 31 December 2025. Its 26 July 2026 notice extended the time again, to 31 December 2026. Accordingly, as at the checked date of 19 October 2026, the official BSEC notice located for this article sets 31 December 2026 as the appointment deadline.[3] [4]

There is a timing point worth handling carefully. BSEC’s October 2026 Quarterly Review describes an April 2026 follow-up meeting at which companies were asked to complete appointments by 30 June 2026 and stated that legal action would follow a failure to comply after that date. The later BSEC notice dated 26 July 2026 expressly records the earlier 31 December 2025 deadline and extends the appointment time to 31 December 2026. This Insight relies on the later express extension for the current deadline. Companies should nevertheless monitor BSEC and exchange communications for company-specific or subsequent directions and should not assume that an extension cures separate governance failures.[4] [5]

A board should avoid a last-minute nomination exercise. The process may involve NRC evaluation, BSEC prior consent under the Code, due diligence, documentation and board or shareholder steps. It should be planned with enough time to address a rejected candidate, a change in circumstances or a document gap. It is also prudent to consider how the new director will receive induction, committee information and access to independent advice where appropriate.

Committees, controls and information that reaches the board

Committee design should strengthen the board rather than obscure accountability. The audit committee and NRC have defined functions within the listed-company Code. The board remains responsible for appointing appropriate members, approving terms of reference, receiving clear reports, addressing unresolved issues and recording decisions. Delegating a task to a committee does not make a critical risk invisible to the full board.

For listed companies, a committee’s membership, chairing, quorum, terms of reference, meeting rhythm, report to the board and records should be reviewed against the current Code and all amendments. The BSEC’s independent-director form, for example, records that the NRC must include at least three non-executive directors, including at least one independent director; its chair is to be an independent director, and an NRC quorum cannot be formed without attendance by at least one independent director. The 2023 amendment’s requirement that at least two NRC members be non-executive should be read together with the operative Code and company facts, rather than in isolation.[2] [7]

The audit committee’s work has a direct connection to financial reporting and controls. BSEC’s audit requirements call for reporting on, among other matters, whether independent directors were duly appointed, whether the audit committee and its chair complied with the Code, whether the committee reported to the board and shareholders, whether the NRC complied, and whether financial irregularities or weaknesses found by a BSEC-appointed auditor had previously been identified and reported by the audit committee to the board. The point is not that a committee must foresee every issue. It is that the board should be able to show a credible route for risk identification, investigation, reporting and remediation.[6]

Controls need owners. A useful board dashboard identifies the control, risk owner, test frequency, failure or exception, remediation date, accountable executive and escalation point. It should include finance and reporting, treasury, procurement, payroll, information security, regulatory returns, tax, health and safety where relevant, sanctions and financial-crime controls where relevant, and third-party risk. The precise dashboard will vary by sector. The discipline of assigning owners and deadlines is transferable.

Questions that directors can usefully ask include: What are the company’s most material control exceptions? Which issues have been open beyond their target date? What did internal audit test, and what did it not test? Are committee papers reconciled with management reporting? Are there unexplained differences between operational data and financial results? What information has been given to the regulator or exchange since the last board meeting? These questions do not turn directors into managers. They help the board supervise management with a clear audit trail.

Financial reporting, the directors’ report and compliance evidence

Annual reporting brings the governance architecture into a public, auditable form. Under the BSEC Financial Reporting and Disclosure rules, an issuer’s annual report includes annual audited financial statements, management’s discussion and analysis, the Code compliance report or certificate where applicable, the directors’ report and AGM notice. The rules require annual financial statements of an issuer, other than a life insurer subject to the stated special date, to be audited within 120 days of the financial year-end and submitted to BSEC and the exchange within 14 days of the audit, subject to the rules’ provisions on extensions and other circumstances.[6]

For directors, the practical imperative is to treat the annual report as an integrated board product. Narrative statements should match the financial statements, board minutes, material risks, committee reports and compliance status. Boilerplate that is inconsistent with the company’s current operations can create avoidable risk. The BSEC enforcement document discussed above specifically records findings about missing director-report statements or disclosures and deficiencies in supporting records. It should not be read as a template for every company, but it illustrates why an annual-report verification process needs both management ownership and board challenge.[8]

A reliable verification process often has four stages. First, management prepares a disclosure matrix that maps each required item to its owner and source record. Second, finance, company secretarial and relevant control functions test consistency across the financial statements, directors’ report, governance report and committee reports. Third, the audit committee reviews significant judgments, exceptions, control weaknesses and management representations. Finally, the board approves the document only after it has been given enough time to challenge both content and omissions.

The audit is a critical but distinct safeguard. A statutory audit does not eliminate directors’ responsibility for the governance process or justify a passive approach to the annual report. Equally, directors should not expect a compliance certifier to validate conclusions unsupported by underlying records. The BSEC’s rules expressly contemplate reporting on governance matters by an auditor appointed by the Commission, and BSEC’s enforcement material highlights the consequences of inaccurate governance compliance reporting in its investigated facts.[6] [8]

Conflicts, related-party risk and decisions requiring shareholder authority

Conflicts are not confined to a director signing a contract with their own company. They may arise through a family member, partnership, private company, supplier, lender, customer, adviser, nominee or group entity. The governance response should be designed before the decision: identify the interest, determine whether disclosure is required, consider whether the director may receive papers or participate, obtain the correct approval, assess arm’s-length terms and record the process.

The Companies Act contains specific safeguards that need transaction-by-transaction attention. It restricts a director, or a connected firm or private company, from holding certain offices of profit without company consent, subject to stated exceptions. It also provides that a director or connected firm or private company cannot enter into a contract for sale or supply of goods with the company without board consent. Section 108 includes contravention of specified loan, guarantee, office-of-profit and contract restrictions among circumstances that can vacate a director’s office. Public-company boards also require shareholder consent before selling or transferring the company’s undertaking or waiving a debt due from a director, as set out in section 107.[1]

These provisions are reasons to slow down, not to find a technical workaround. The question is not just whether the commercial terms appear fair. The board must verify the correct decision-maker, disclosure, approvals and records. The articles, a shareholder agreement, banking covenants, listing rules and sectoral rules may impose additional conditions. If a transaction spans a group, the analysis should separate the legal entities rather than treating commercial control as a substitute for authority.

A well-maintained interests register is an efficient first line of defence. It should be updated at appointment and at regular intervals, supplemented by a standing agenda item and a transaction-specific declaration. The company secretary or another responsible officer can then flag conflicts before board packs circulate. Where the facts are material or unusual, the minutes should record the interest, who abstained, the approval route, the basis for assessing terms and any conditions imposed.

Banks and other regulated businesses

For banks, governance cannot be reduced to the BSEC Code or the Companies Act alone. Bangladesh Bank’s Guidelines on Internal Control & Compliance in Banks describe board responsibilities for the internal-control system, including review of audit-committee reports on compliance with recommendations from internal and external audit reports and Bangladesh Bank inspection reports. The guidance calls for an annual board review of the effectiveness of the internal-control process and provides for the board or audit committee to review the compliance policy at least annually.[9]

The Bangladesh Bank guidance also describes the audit committee’s role in reviewing financial reporting, internal control, financial-risk management, the audit process and compliance with law, regulation and the bank’s own code of conduct. It calls for the internal audit process to be independent of management and for internal auditors to have direct access to the audit committee where required. For a bank board, these are operational governance expectations: the quality and timeliness of reports, unfiltered escalation and remedial follow-through matter as much as the formal committee chart.[9]

The same general principle applies to other regulated businesses. Insurance, non-bank financial institutions, capital-market intermediaries, digital or financial services and public-interest entities may have additional rules, licensing conditions or directions. The correct framework must be verified against the entity’s regulator and current permissions. This article deliberately does not attempt to list every sectoral rule or to infer a universal rule from bank guidance.

There is also a live reform-development point. In May 2026, BSEC published a draft Bangladesh Securities and Exchange Commission (Corporate Governance) Rules, 2026 and invited comments, recommendations and objections. The document contains proposed rules and uses proposed language. As at 19 October 2026, this article does not treat the draft as law in force. A board should check BSEC’s official Gazette and current notifications before changing governance arrangements in reliance on the draft or assuming that it has replaced the 2018 Code.[10]

A practical governance review for boards and investors

Governance work is most valuable when it is connected to decisions. For a company preparing to raise capital, refinance, reorganise, enter a joint venture, appoint directors or undertake a related-party transaction, a focused review can identify gaps before they become an approval, disclosure or diligence problem.

A proportionate review will usually begin with the constitutional and factual record: certificate and filings, memorandum and articles, shareholder arrangements, board and committee registers, appointment documents, interests register, resolutions, minutes, delegations and current regulator correspondence. It should then map the legal and regulatory obligations that apply to the entity. For a listed issuer, that includes the BSEC Code and amendments, annual-report disclosures, committee compliance, independent-director documentation and the woman independent-director timetable.[1] [2] [3] [4]

The next step is to test operation rather than merely documents. Are minutes written and approved promptly? Do directors receive material in time to read it? Are conflicts disclosed before decisions are taken? Does the audit committee receive control exceptions and track remediation? Are committee recommendations considered by the board? Do the directors’ report and compliance certificate have source support? A company may have all the right policies and still have a weak process if decisions are made before the papers arrive or if exceptions disappear from reporting.

The result should be an owned remediation plan, not a generic risk register. Each item needs a legal or regulatory basis, an accountable owner, a realistic deadline, an escalation point and evidence of completion. Some issues are simple housekeeping. Others require a board decision, shareholder approval, regulator engagement or a careful assessment of past non-compliance. The response should be calibrated to the issue rather than assumed from a standard template.

TRW’s Corporate & Finance practice directory is a relevant route for organisations considering Bangladesh corporate, finance or governance questions. For a new matter, use TRW’s contact route to set out the broad context and question. The contact page asks enquirers not to send confidential, privileged or time-sensitive information through the initial route.[11] [12]

Frequently asked questions

Informational notice

This Insight is general information, not legal advice. It is current only as of 19 October 2026 and is not tailored to a company, director, transaction, regulator or dispute. Laws, regulations, regulatory directions and facts can change the analysis. Reading it does not create a lawyer-client relationship. Do not send confidential, privileged or time-sensitive information through an initial online enquiry.