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corporate

governance
Corporate Governance is the system of internal controls
and procedures used to define and protect the rights and
responsibilities of various stakeholders. The Bank has
adequately complied with all the Corporate Governance
Guidelines of Bangladesh Bank and Bangladesh Securities
and Exchange Commission (BSEC). It is ensured by the
Board that all activities and transactions of the Bank are
conducted in compliance with international best practices
to protect the highest interest of all the stakeholders.

The Board is made up by seven directors including a


non-executive chairman and 3 non-executive directors
representing shareholders, two independent directors
and one executive managing director as follows:

Maximizing value for shareholders through performance


with good governance is the responsibility of corporate
management. In line with the best practice, the
corporate governance systems and practices in DBBL
are designed to ensure adequate internal control in
operational process, transparency and accountability
in doing business; and proper and timely disclosures in
financial reporting so that value is maximized for all the
stakeholders.

Mrs. Frey Tang Yuen Mei, Barbara


Nominee of Ecotrim Hong Kong Limited

Responsibilities and functions are segregated in a


way to strike the right balance between the Board and
the Management. The Board provides leadership and
direction of the Bank, approves strategic plans and major
policy decisions and supervises performance of the
management. The Board is responsible for ensuring and
encouraging compliance, ethical standard and integrity
throughout DBBL.
The Bank has a policy for delegation of authority.
Accordingly, authorities are delegated to CEO, other
senior management and cross functional management
committees comprising head of functional divisions
and senior management to review achievements of
key objectives. The Board has also clearly delegated
authorities to Board Committees with specific terms
of reference which sets out their objectives and
responsibilities.

Mr. Sayem Ahmed


Sponsor Director & Chairman
Mr. Abedur Rashid Khan
Sponsor Director

Mr. Md. Fakhrul Islam


Elected from General Public Shareholders group
Mr. Md. Nazim Uddin Bhuiyan
Independent Director
Mr. Mohd. Khorshed Alam
Independent Director
Mr. K. Shamshi Tabrez
Ex-officio Director (Managing Director)

Chairman of the Board


The non-executive Chairman of the Board, Mr. Sayem
Ahmed, is fully independent from the office of the
Managing Director (CEO) of the Bank.

Independent Director
DBBL has two independent directors in the Board of
the Bank. In compliance with corporate governance
guidelines of BSEC and as per rule of Bangladesh Bank,
two independent directors have been appointed in the
Board of Directors.

The Board is comprised of directors having diverse skills,


experience and expertise to add value towards better
corporate governance of the Bank and maximizing value
for all stakeholders.

Mr. Md. Nazim Uddin Bhuiyan was appointed as an


independent director in the Board of the Bank. Mr.
Bhuiyan is a Professor, Department of Accounting &
Information Systems, University of Dhaka. He is a Fellow
Member of the Institute of Cost and Management
Accountants of Bangladesh.

The Board discharges its responsibilities itself and


through various committees. The Board meets on a
regular basis to discharge its responsibilities.

Mr. Mohd. Khorshed Alam was also appointed as an


independent director in the Board of the Bank. Mr. Alam
is a renowned businessman, having long 39 (thirty

The Board

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45

nine) years of business experience. He is a Director


of Bangladesh Textile Mills Association, Dhaka and
Managing Director of Duptara Spinning Mills Ltd. and
Intimate International Ltd.

Key objectives of the Directors


The Board is responsible for ensuring governance and
performance of the company by directing, controlling and
overseeing activities of the executive management by
making them transparent, accountable and responsible.
The directors are expected to protect the long term
interest of the shareholders and all stakeholders by
setting key objectives for the management and by
monitoring and ensuring that those objectives are
achieved by the management in a sustainable way while
maintaining transparency and accountability at every
stage of operations.
The Board must be satisfied that sufficient risk
management systems are in place to mitigate core risks
of the Bank and that there are adequate checks and
balances in the internal control system to protect the
value and quality of assets of the Bank.
The Board of Directors is entitled to get timely, accurate
and adequate information & data to ensure effective
control over operational, financial, strategic, compliance,
governance and risk management issues of the Bank.

Number of Board Meeting held in 2014


Number of Board Meetings held in 2014 and the
attendance of each Director are shown in Annexure A of
Corporate Governance Guidelines of BSEC.

The Committees of the Board of Directors


As per Bangladesh Bank guidelines, the Board has three
committees namely the Executive Committee, the Audit
Committee and Risk Management Committee. Each
Committee operates under specific Terms of Reference
(TOR) that sets out its responsibilities and composition.
The TORs are designed and reviewed to ensure that the
objectives of each committee are achieved in an effective
way and that regulatory obligations and obligation to
shareholders are fulfilled. The Committee regularly
evaluates progress towards key objectives. Accordingly,
time and efforts are dedicated to focus on responsibilities
those are central to achieve the core objectives of
respective committees.

Executive Committee of the Board


The Executive Committee of the Board is comprised of
the following members of the Board
Mr. Abedur Rashid Khan

: Chairman

Mr. Sayem Ahmed

: Member

The Board is responsible for ensuring the


following

Mr. K. Shamshi Tabrez

: Member

Setting key targets of the Bank and monitoring


progress towards achievement of such targets.

Responsibility of Executive Committee (EC)

Approval of major policy decisions and long term


strategic plans to achieve key objectives in an
efficient and effective way.

Disclosure of accurate, timely and reliable


information to shareholders.

The responsibility of Executive Committee of the Board


is clearly delegated by the Board in line with regulatory
guidelines. Accordingly, the EC exercises all the powers
and functions on behalf of the Board in regard to:

approving credit proposals,

administrative affairs and

They are expected to

financial affairs

demonstrate the highest professional and ethical


standard.

However, all policy matters and strategic issues are dealt


with by the Board of Directors of the Bank

be fully independent from the management.

Audit Committee of the Board (AC)

be knowledgeable about the business and challenges


that DBBL is facing.

Apply prudence and judgment in decision making.

display commitments to the Bank and its all


stakeholders through active participation in the
affairs of the Bank.

The Audit Committee of the Board is comprised of the


following non-executive members of the Board
Mr. Md. Nazim Uddin Bhuiyan
Mr. Md. Fakhrul Islam
Mr. Mohd. Khorshed Alam

: Chairman
: Member
: Member

Salient Feature of the Objectives and Responsibilities


of the Audit Committee of the Board, number of Audit
Committee meeting held in 2014 and Report of the Audit
Committee of the Board are given on Pages 60 to 61 of
this Annual Report.

Risk Management Committee of the Board


(RMC)
The Risk Management Committee of the Board is
comprised of the following non-executive members of
the Board
Mr. Abedur Rashid Khan

: Chairman

Mr. Sayem Ahmed

: Member

Mr. Md. Nazim Uddin Bhuiyan

: Member

Salient Feature of the Objectives and Responsibilities of


the Risk Management Committee of the Board are given
below
The TOR of the RMC is to oversee as to whether
various core risks of the Bank i.e. credit risk, foreign
exchange risk, internal control & compliance risk, money
laundering risk, ICT risk, operational risk , interest rate
risk, liquidity risk and other risks have been properly
identified and measured by the Bank Management
and whether adequate risk management and risk
mitigation systems have been put in place by the Bank
Management and whether adequate provisions and
capital have been maintained against combined risks
undertaken by the Bank.

Preparation of Financial Statements


Financial Statements of DBBL give a true and fair
view of the state of affairs of the Bank and the results
of its operations and cash flows. All the applicable
Bangladesh Accounting Standards (BAS) and Bangladesh
Financial Reporting Standards (BFRS) adopted by the
Institute of Chartered Accountants of Bangladesh
(ICAB) are complied with for preparation of financial
statements. The financial statements are prepared by
the management and approved by the Board of Directors
and audited by external auditors appointed in the Annual
General Meeting.

Directors Responsibility for Internal Control


and Financial Reporting
Directors statement on their responsibility for internal
control and financial reporting of the Bank is given on
Page 292 of this Annual Report.

External audit
M/s. Hoda Vasi Chowdhury & Co., Chartered Accountants
is the statutory auditors of the Bank. They dont provide
any other accounting, taxation or advisory services to the
Bank except certification of cash incentives payable to
exporters.

Compliance with Bangladesh Bank regulations


As a commercial bank, DBBL is regulated and supervised
by Bangladesh Bank under the Banking Companies Act,
1991 and rules and regulations made there under. DBBL
attaches highest priority to strict compliance with all
regulatory requirements of Bangladesh Bank in terms
of core risk management, risk management under
risk management division (RMD), capital adequacy
ratio, provisioning & interest suspending against
classified loans, foreign exchange regulations, liquidity
management, KYC (Know your customer) and anti-money
laundering & anti terrorist financing compliance etc.

Audit and Inspection by Bangladesh Bank


Bangladesh Bank also undertakes audit & inspection of
DBBL at regular intervals. Compliance with observations
and recommendations made by Bangladesh Bank help
the Bank to improve internal control, risk management,
corporate governance and regulatory compliance
maximizing benefit for all stakeholders.

Compliance with Corporate Governance


Guidelines of Bangladesh Bank
DBBL has also adequately complied with Corporate
Governance Guideline of Bangladesh Bank (BRPD
Circular No 11, dated October 27, 2013) in terms of overall
business activities of the Bank including credit and
risk management, internal control, human resource
management as well as income and expenses. It also
fully complies with formation of Board, Executive
Committee, Audit Committee and Risk Management
Committee of the Board and their TORs to improve
overall corporate governance system of the Bank and
safeguard the interest of all stakeholders. Segregation of
financial, operational and administrative authorities and
responsibilities between Board and Management have
been also ensured.

Compliance with BSEC regulations


As a listed company, DBBL is also regulated by
Bangladesh Securities and Exchange Commission (BSEC).
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47

We have adequately complied with latest Corporate


Governance guidelines issued by the Bangladesh
Securities and Exchange Commission as follows:

There are two independent directors on the Board of


the Bank.

Both the independent directors are members of the


Audit Committee of the Bank with one appointed as
its Chairman.

The quorum of the Audit Committee is not


constituted without at least one independent
director.
A certificate has been obtained from A. Qasem &
Co., Chartered Accountants (A Cooperating Firm
of PricewaterhouseCoopers) on reporting and
compliance of Corporate Governance guidelines of
BSEC.

Code of Conduct for the directors as laid down by


Bangladesh Bank and Bangladesh Securities and
Exchange Commission in their respective Corporate
Governance guidelines, is followed by the directors
and annual compliance has been reviewed and
recorded.

The Board has clearly defined the respective roles


and responsibilities of the Chairman and the Chief
Executive Officer.

The Board has also clearly defined the respective


roles, responsibilities and duties of the Chief
Financial Officer (CFO), the Head of Internal Audit
and the Company Secretary.

The Board has clearly set forth in writing, the duties


of the Audit Committee of the Board in term of BSEC
and Bangladesh Bank guidelines.

Credit Rating of the Bank


In line with Bangladesh Banks BRPD Circular No. 06
dated July 05, 2006 and in order to improve the risk

management and corporate governance system of


the Bank and to safeguard the interest of investors,
depositors, creditors, shareholders and the Bank
Management as a whole, Credit rating of the Bank for
the year 2013 was done by Credit Rating Agency of
Bangladesh (CRAB). The date of rating by CRAB was 17
June 2014.
Dutch-Bangla Bank has been affirmed AA1 (pronounced
Double A One) rating in the long term and retained ST-1
rating in the short term.
Credit rating will be done regularly on a yearly basis and
credit rating of 2014 will be completed before June 30, 2015.

Relations and communication with


shareholders
The Bank attaches highest importance on two way
communications with the shareholders. The Bank
believes that the shareholders should have access to all
relevant information about the Bank to make informed
judgment and decisions. All the relevant information
are placed in the website (www.dutchbanglabank.com)
of the Bank for convenience of the shareholders. As
per BSEC guidelines all the price-sensitive information
having any possible impact on share prices of the Bank
are communicated to the shareholders by publication
in national dailies and through website of DSE, CSE
and BSEC. Quarterly financial statements are also
communicated to all the shareholders by publication in
national dailies and through DSE, CSE and BSEC. Halfyearly financial statements are directly communicated to
all the shareholders. Audited yearly Financial Statements
are published in the national dailies. The half-yearly and
yearly results and press releases are also made available
in our website. The Annual General Meeting provides very
good opportunities for communication with shareholders.
All the suggestions or recommendations made by the
shareholders in AGM or any time during the year are
taken very seriously for compliance and better corporate
governance of the Bank.

Status of compliance with the conditions imposed by the Commissions Notification No. SEC/CMRRCD/2006-158/134/
Admin/44 dated 07 August 2012 issued under section 2CC of the Securities and Exchange Ordinance, 1969:

Condition
No.

Title

Compliance Status
(Put in the appropriate
column)
Complied

1.1
Boards Size

The number of the Board Members of the company


shall not be less than 5 (five) and more than 20
(twenty).

1.2
Independent
Directors

i) At least one fifth (1/5) of the total number of


directors in the companys Board shall be independent
directors.

Remarks
(if any)

Not Complied

ii) For the purpose of this clause Independent


director means a director(a) who either does not hold any share in the company
or holds less than one percent (1%) shares of the total
paid-up shares of the company;

(b) who is not a sponsor of the company and is not


connected with the companys 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. His/her family
members also should not hold above mentioned
shares in the company: Provided that spouse, son,
daughter, father, mother, brother, sister, son-in-law
and daughter-in-law shall be considered as family
members;

(c) who does not have any other relationship, whether


pecuniary or otherwise, with the company or its
subsidiary/ associated companies;

(d) who is not a member, director or officer of any


stock exchange;

(e) who is not a shareholder, director or officer of any


member of stock exchange or an intermediary of the
capital market;

(f) Who is not a partner or an executive or was not


a partner or an executive during the preceding 3
(three) years of the concerned company's statutory
audit firm;

(g) who shall not be an independent director in more


than 3 (three) listed companies;

(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);

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