B Mirror Report:  The Bangladesh Securities and Exchange Commission (BSEC) has proposed increasing the number of independent directors on the boards of listed companies from the existing one-fifth to one-third as part of efforts to strengthen corporate governance.

The securities regulator on Thursday published the draft Corporate Governance Code 2026 and invited stakeholders to submit opinions within two weeks. The final rules will be prepared after reviewing the feedback.

Under the proposed code, listed companies will be required to maintain boards consisting of a minimum of five and a maximum of 20 members. However, companies listed on the SME platform may have a maximum of 10 board members. Each board must also include at least one female director.

The draft stipulates that sponsor-directors, excluding independent directors, must collectively hold at least 30 percent of the company’s shares. Each individual director, excluding independent and executive directors, must personally hold at least 2 percent shares in the company.

The proposal further states that at least one-third of the total board members, or a minimum of three directors whichever is higher must be independent directors.

Regarding qualifications, independent directors must have at least 12 years of experience in business, corporate management, law, or academia. For female independent directors, the minimum experience requirement has been reduced to eight years.

Independent directors will be appointed for a three-year term and may be reappointed for one additional term. After serving two consecutive terms, or six years, a mandatory three-year break will be required before reappointment.

The draft also bars company sponsors, family members of sponsors or directors, and individuals who held executive positions in the company within the last three years from serving as independent directors.

To ensure specialized oversight, companies will be required to maintain at least three sub-committees an Audit Committee, a Nomination and Remuneration Committee (NRC), and a Risk Management Committee (RMC). The Audit Committee must consist of at least three non-executive directors, including at least one independent director, while the NRC must be chaired by an independent director.

The proposed code also emphasizes separation of powers in top management. The positions of chairman and managing director (MD) or chief executive officer (CEO) must be held by separate individuals. Companies will also be required to appoint separate officials for the positions of managing director, company secretary, chief financial officer, and head of internal audit and compliance.

In terms of dividend distribution, the draft requires companies to pay approved final dividends within 30 days. Unclaimed dividends remaining unpaid for three years must be transferred to the Capital Market Stabilization Fund (CMSF).

Listed companies will also need to obtain an annual corporate governance compliance certificate from a chartered secretary firm. The regulator is additionally encouraging companies to disclose environmental, social, and governance (ESG) practices, including corporate social responsibility (CSR) policies and implementation updates in annual reports.