BRAC Bank allowed to appoint up to three directors from a single shareholder

Shareholder companies holding 10% to 50% of a bank’s shares can appoint up to three representative directors to its board.

BRAC Bank has been granted permission to appoint up to three representative directors on behalf of a single shareholder company, following Bangladesh Bank’s relaxation of a provision of the Bank Company Act, 1991.

In a circular issued today (12 October), the central bank said it had relaxed Section 23(1)(kakaka) of the Bank Company Act, 1991, for BRAC Bank under the powers conferred by Section 121 of the same law.

As a result, a shareholder company holding 10% or more, but no more than 50%, of the bank’s shares may appoint up to three representative directors to its board.

Under Section 23(1)(kakaka) of the Bank Company Act, a single institution or company is not permitted to appoint more than one representative director to a bank’s board. Under the existing provision, therefore, a shareholder company can appoint only one representative director.

Bangladesh Bank’s decision relaxes this restriction specifically for BRAC Bank. However, no single institution will be allowed to appoint more than three representative directors.

A Bangladesh Bank official said BRAC owns 46% of BRAC Bank’s shares. Under the existing law, the organisation could not appoint multiple representative directors to the bank’s board. With the provision relaxed for BRAC Bank, it will now be possible for BRAC to appoint more than one representative director, subject to the limit of three.

Source: The Business Standard