ICB seeks CIB list waiver for its officials becoming defaulter cos' directors

The Investment Corporation of Bangladesh (ICB) has urged the authorities concerned to take necessary steps so that its officials are not enlisted as defaulters by the central bank's Credit Information Bureau (CIB), when they are nominated as directors of any loan defaulter company.

The state-run entity recently requested the Financial Institutions Division (FID) under the Ministry of Finance to take necessary steps in this connection.

The government established ICB in 1976, aiming to foster rapid industrialisation and help develop a sustained capital market in the country. Keeping these in view, the ICB was listed with the Dhaka Stock Exchange in 1977.

The ICB has played a pivotal role in developing the capital market, helping companies overcome capital shortages, promoting the mutual fund industry and institutional investment, according to the letter.

As per Section 17 of the Investment Corporation of Bangladesh Act, 2014, nominated directors are appointed on behalf of the Corporation from among the officers including the managing director of this institution to sit on the board of a company in order to protect the interests of the ICB.

Thus the ICB protects its own interests and those of other small investors by serving on the company's board of directors, it has stated.

However, a significant operational challenge arises, when any ICB-nominated director is listed as a loan defaulter by the CIB.

The ICB in its letter has said following such actions the ICB officials become reluctant to accept nominations for the directorship, as their personal CIB status is negatively affected because of it.

Moreover, if the corporation's managing director is considered a defaulter due to the nominated company's bad loan, the ICB itself is consequently listed as a defaulter, it has added.

It has highlighted that its nominated directors act purely as representatives of the investor institution and do not provide any personal guarantee against the loans taken by the investee company.

The ICB points out that there are no specific instructions in the Companies Act, 1994, the Corporate Governance Code, 2018, or existing Bangladesh Bank (BB) circulars regarding listing of investor representatives/nominated directors by the CIB.

A directive of Bangladesh Securities and Exchange Commission (BSEC) directive dated October 18, 2023, stipulates that independent directors will not be included in the CIB list on account of any loan or liability of the company.

A BB circular dated January 12, 2025 has also mentioned that independent directors of financial companies will not be considered as loan defaulters, even if their respective finance company is a defaulter (in line with Section 16(5) of the Financial Company Act, 2023).

The ICB has explained that since it is the only state-owned investment institution engaged in protecting its own as well as small investors' interests, its nominated directors should be treated as independent directors.

When contacted, a senior official of the ICB said: "We have requested the FID to take necessary measures so that the ICB and its nominated directors are not enlisted as defaulters by the CIB."

However, a senior FID official said: "We have received a request letter from the state-owned ICB, seeking exemption of names of nominated directors from the CIB list of defaulters. And we are working on the issue."

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