BRAC Bank gets approval to expand single-shareholder board representation
Bangladesh's banking regulator is easing a long-standing board representation rule for BRAC Bank, allowing larger shareholder companies to nominate more directors than previously permitted. The change applies to shareholders holding at least 10% and up to 50% of the bank's shares, creating room for BRAC, which holds 46%, to appoint up to three representative directors.
Highlights
- Bangladesh Bank on 12 October relaxed Section 23(1)(kakaka) of the Bank Company Act, 1991 specifically for BRAC Bank.
- A single shareholder company with 10% to 50% of BRAC Bank shares may now appoint up to three board representative directors, up from one previously.
- BRAC, owning 46% of BRAC Bank, can now appoint up to three representative directors, enhancing its governance influence proportional to its shareholding.
Regulatory exemption changes board appointment rules
As reported by The Business Standard, citing Bangladesh Bank, the central bank issued a circular on 12 October relaxing Section 23(1)(kakaka) of the Bank Company Act, 1991 for BRAC Bank under powers granted by Section 121 of the same law.The exemption means a shareholder company holding 10% or more, but not more than 50%, of the bank's shares may appoint up to three representative directors to the board. Under the standard provision, a single institution or company is allowed to appoint only one representative director to a bank's board.
The relaxation is specific to BRAC Bank, and the regulator says no single institution will be allowed to appoint more than three representative directors under this arrangement.
Implications for BRAC's stake in the bank
A Bangladesh Bank official says BRAC owns 46% of BRAC Bank's shares. Under the existing legal provision, that holding did not allow the organisation to appoint multiple representative directors despite its large stake.With the restriction now relaxed for BRAC Bank, BRAC can appoint more than one representative director, subject to the new cap of three. The move signals a governance change for the bank by aligning board representation more closely with the scale of a major shareholder's ownership.
Bangladesh’s five-year reform and recovery agenda, which we previously covered, outlined broad policy alignment with international lenders on restoring macroeconomic stability and reinforcing banking-sector discipline. The plan pairs tighter financial oversight with steps to raise revenue, expand social protection, and revive investment and industrial activity to support growth and jobs.
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