Editorial
Amending Companies Act 1994
It may kill the goose that lays the golden egg
The government has proposed to amend the Companies Act that would allow it to appoint an Administrator to run companies in trouble. The Companies Act (amendment) 2012 would allow the government to effectively takeover the running of a business institution.
We most vehemently oppose the proposed amendment. Under the guise of preventing groups like Destiny in the future, the government is paving ways to intervene -- practically take over -- into the activities of private companies which is fundamentally against the growth of market economy and private enterprise.
Proposed Article 202 (Ka) (1) stipulates that government can appoint administrators if it feels that creditors, shareholders or any other persons are in danger of being swindled by the company's management, or if it has dishonest intentions. Article 202 (Kha) stipulates that no legal proceedings can be initiated by anyone feeling aggrieved by any action taken by the Administrator or by any person empowered by him.
We feel that the proposed changes are nothing but disguised attempt to allow for unbridled government control over any business venture in the land. This view is reinforced by the very fact that an 'indemnity' clause has been included in the list of changes. Should there at all be need for government intervention, we believe that it should go to the court. The court will appoint either an auditor or chartered accountant firm as administrator to run the company for a specified time, during which, the administrator should make periodic reports to the court. Under no circumstances, should a government employee be appointed as an administrator. If it happens, it will be a gross violation of the culture of free enterprise.
The proposed law opens possibilities for arbitrary government takeover of private property. This will discourage private sector investment as well FDI. That will certainly impede the strong economic growth rate Bangladesh has attained over the past few years.
This law must not be enacted at all. If the government chooses to do so it will kill the goose that is laying the golden egg. It has been the private sector that has brought dynamism in Bangladesh's economy since the mid-eighties when the flawed nationalisation policy was finally abandoned. Nothing should be done to affect that vital dynamism.
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