Terms of Reference of Board Audit Committee, Chairperson of the Board, Managing Director, Company Secretary, Chief Financial Officer and Head of Internal Audit & Compliance

As per the Notification No. SEC/CMRRCD/2006-158/207/Admin/80 dated 3 June 2018 of Bangladesh Securities & Exchange Commission regarding Corporate Governance Codes, the Board of Directors of a listed company shall clearly define respective roles and responsibilities of the Audit Committee, Chairperson of the Board, Managing Director, Company Secretary, Chief Financial Officer and Head of Internal Audit & Compliance. Accordingly, the Board of LankaBangla Finance PLC. has farmed the Terms of Reference (roles and responsibilities) of the Board Audit Committee, Chairperson of the Board, Managing Director, Company Secretary, Chief Financial Officer and Head of Internal Audit & Compliance.

TERMS OF REFERENCE OF AUDIT COMMITTEE

SECTION I: Purpose

The Audit Committee is constituted by the Board of Directors (“the Board”) of LankaBangla Finance PLC. (LBFPLC) to assist the Board in monitoring the followings, but not limited to those:

(1) the integrity of the financial statements of LBFPLC,

(2) the Company’s external auditor’s qualifications and independence,

(3) the performance and effectiveness of the Company’s internal and external audits,

(4) internal controls and the measurement of operational risk, and

(5) the compliance by the Company with legal and regulatory requirements.

The Audit Committee should also assess the effectiveness of (2), (3), (4), and (5) above.

SECTION II: Constitution of the Audit Committee

a) The Audit Committee shall consist of not fewer than five members, including at least one Independent Director of LBFPLC. The members of the Audit Committee shall meet the independence and experience requirements of Bangladesh Bank Guidelines and the rules and regulations of the Bangladesh Securities and Exchange Commission’s (BSEC) Corporate Governance Code. The members of the Audit Committee shall be appointed by the Board excepting Chairperson of the Board. Audit Committee members may be replaced by the Board;

b) All members of the audit committee should be “financially literate” and at least 1 (one) member shall have accounting or related financial management background and 10 (ten) years of such experience;

c) The company secretary shall act as the secretary of the Committee;

d) The quorum of the Audit Committee meeting shall not constitute without at least 1 (one) independent director.

e) The Board shall select 1 (one) member of the Audit Committee to be Chairperson of the Audit Committee, who shall be an independent director;

f) In the absence of the Chairperson of the Audit Committee, the remaining members may elect one of themselves as Chairperson for that particular meeting, in that case there shall be no problem of constituting a quorum as required under section III and the reason of absence of the regular Chairperson shall be duly recorded in the minutes;

g) Chairperson of the Audit Committee shall remain present in the Annual General Meeting (AGM):
Provided that in absence of Chairperson of the Audit Committee, any other member from the Audit Committee shall be selected to be present in the annual general meeting (AGM) and reason for absence of the

SECTION III: Meetings

The Audit Committee shall meet as often as it determines, but not less frequently than quarterly. Three members of the Audit Committee present in person shall constitute a quorum, where presence of an independent director is a must, for transaction of business. Action by the Audit Committee shall be upon the vote of a majority of those present at any meeting at which a quorum is present. The Audit Committee shall meet at least once in a year with the external auditors of LBFPLC. The Audit Committee may request any officer or employee of the Company or the LBFPLC’s outside counsel or external auditor to attend a meeting of the Committee or to meet with any member of, or consultants to, the Committee. A meeting of the Audit Committee shall also be held, if requested by the external auditors or the head of internal audit. At least once in a year, the audit committee shall meet the external auditors without the presence of Head of Internal Audit. At least once in a year, the Audit Committee shall meet the Chief Risk Officer and other members of the internal audit functions, without the presence of other members of the management.

SECTION V: Committee Authority and Responsibilities

The Audit Committee shall consult with the Board of Directors of LankaBangla Finance PLC. with regard to the selection, compensation and performance of the external auditors, and shall do so at least annually. The Audit Committee shall recommend, if necessary, the termination of the external auditor. The Audit Committee shall be directly responsible for the oversight of the work of the external auditors (including resolution of disagreements between management and the external auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The external auditors shall report directly to the Audit Committee.

The Audit Committee shall pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its external auditor, subject to de minimum exceptions which are approved by the Audit Committee prior to completion of the audit.

The Audit Committee shall make regular reports to the Board and ensure that all audit recommendations and concerns receive proper attention by company management. The Audit Committee shall review and reassess the adequacy of this ToR annually, confirm that all responsibilities outlined therein have been carried out, and recommend any proposed changes to the Board for approval. The Audit Committee shall annually review the Audit Committee’s own performance.

The Audit Committee shall identify and monitor the key risks of the Company and evaluating their management and approving risk management policies that establish the appropriate approval levels for decisions and other checks and balances to manage risk. The Committee shall also satisfy itself that policies are in place to manage the risks to which the Company is exposed, including market, operational, liquidity, credit, insurance, regulatory and legal risk, and reputational risk providing a forum for “big-picture” analysis of future risks including considering trends.

The Audit Committee shall receive reports from the Head of Credit Risk management regarding risk events involving the Board of Directors, an individual director, and/or the internal auditor, including but not limited to a waiver of any applicable policy.

The Audit and Operational Risk Committee, to the extent it deems appropriate, shall ensure:

A. Financial Statement and Disclosure Matters:

1. Review with management, the internal auditor and the external auditor the annual audited financial statements in both draft and final form and discuss any issues arising with respect to accuracy, fraud or other irregularities.

2. Discuss with management, the internal auditor and the external auditor significant financial reporting issues and judgments made in connection with preparation of the Company’s financial statements, including any significant changes in the LBFPLC’s selection or application of accounting principles, Policies and estimates any major issues as to the adequacy of the company’s internal controls and any special steps adopted in light of material control deficiencies.

3. Review of quarterly, half yearly and annual financial statements of LBFPLC, prior to the approval by the Board of Directors, focusing on:

major judgmental areas;
significant adjustment resulting from the audit;
any changes in accounting policies and practices;
compliance with accounting policies and practices; and
compliance with listing regulations and other statutory; regulatory requirements and relevant Accounting Standards.
4. Review and discuss reports from the external auditors on:

All critical accounting policies and practices being used.
All alternative treatments of financial information within Bangladesh Financial Reporting Standards, Bangladesh Accounting Standards, International Financial Reporting Standards, International Accounting Standards that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the external auditors.
Other material written communications between the external auditor and management, such as any management letter or schedule of unadjusted differences.
5. Discuss with management and the external auditor any off-balance sheet structures on the LBFPLC’s financial statements.

6. Discuss with management the LBFPLC’s major financial risk exposures and the steps that the management has taken to monitor and control such exposures, including the LBFPLC’s risk assessment and risk management policies and control and governance processes.

7. Discuss with the external auditors any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information, and any significant disagreements with management.

8. Review disclosures made to the Audit Committee by the Chairman of the Board, Head of Internal Control and Compliance, about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have significant role in the LBFPLC’s internal controls.

B. Oversight of LBFPLC’s Relationship with the External Auditor

2. Obtain and critically evaluate the report issued by the external auditors at least annually regarding (a) the external auditor’s internal quality-control procedures, (b) any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more external audits carried out by the firm, (c) any steps taken to deal with any such issues, and (d) all relationships between the external auditor and the Company. Evaluate the qualifications, performance and independence of the external auditors, including considering whether the auditors’ quality controls are adequate. The Audit Committee shall present its conclusions with respect to the external auditors to the Board.

3. Discuss with the managing partner of the external auditor issues on which they were consulted by the LBFPLC’s audit team and matters of audit quality and consistency.

C. Oversight of the Company’s Internal Audit Activity

1. Recommend to the Board of Directors the appointment, removal, performance evaluation, promotion, salary increment etc. of Head of Internal Audit.

2. Formally evaluate the performance of the internal auditor, following the guidelines set forth by the Company for evaluating the performance of other officers.

4. Approve all actions affecting the salary or classification of other officers assigned to the internal audit activity.

5. Ensure that the internal auditor is not dependent on any Company executive or operating officer for the security of his or her position and has access to the Board on a confidential basis.

6. Ensure that the internal audit activity is independent of Company management, both by intent and actual practice.

7. Review and approve any significant deviations from financial accounting practices.

8. Review the effectiveness of the internal audit function to ensure that it operates in accordance with applicable and appropriate professional standards, including those endorsed by the Institute of Chartered Accountants of Bangladesh and The Institute of Internal Auditors.

9. Review and approve the Annual Audit Plan and any material changes to that plan.

10. Review the reports issued to management prepared on internal audit activity for matters deemed significant by the internal auditor and management’s response to such reports.

11. Approve the LBFPLC’s operational risk management policy/ approach and review internal audit activity’s assessment of the LBFPLC’s operational risk management framework and execution of the same. The LBFPLC’s operational risk management policy and framework should be designed to identify significant operational risks and should explain how each of such risk is managed.

12. Discuss with the external auditor and management on the internal audit activity, budget and staffing and any recommended changes in the planned scope of the internal audit.

D. Compliance and Operational Risk Oversight Responsibilities

1. Obtain reports from Head of Credit Risk management, senior management, the Head of ICC, the LBFPLC’s internal auditor and the external auditors that the Company is in conformity with applicable legal requirements and the NBFI’s code of conduct. Such reports should include, among other things, and the Committee should review, the Company’s process for communicating the code of conduct to employees and officers and compliance therewith, and the Company’s investigation and follow-up regarding instances of non-compliance.

2. Obtain reports from senior management and the Head of Internal Control and Compliance regarding the policies, procedures, controls and risks related to the Company’s procurement activities and vendor management.

3. Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

4. Discuss with management any correspondence with Bangladesh Bank, any regulatory bodies and inspection reports that raise material issues regarding the LBFPLC’s financial statements or accounting policies.

5. Discuss with the Board legal matters that may have a material impact on the financial statements or the LBFPLC’s compliance with applicable laws and its own policies.

6. Obtain reports from management and the internal auditor on the effectiveness of internal controls over compliance, credit, operational and other risks.

E. Risk Management Division

The Committee shall oversee the Risk Management Division of the Company, including reviewing and approving the mandates of the Risk Management Department and the Head of Credit Risk Management (CRM) at least annually. The Committee shall satisfy itself that the Risk Management Department has adequate resources and independence to perform its responsibilities. In addition, the Committee shall:

review and approve, at least annually, the Risk Management Division budget and resource plan, including assessing the adequacy of the plan;
confirm the appointment, performance evaluation, promotion, dismissal etc. of the Chief Risk Officer and Head of CRM of the Company;
at least annually assess the effectiveness of the Risk Management Division and Head of CRM;
review regular reports prepared by the Head of CRM together with management’s response and follow-up on outstanding issues, as necessary; and
provide a forum for the Head of CRM to raise any risk issues or issues with respect to the relationship and interaction between the Risk Management Department and senior management of the Company, internal audit division, the shareholders’ auditor and/or regulators
F. ICT Governance and Security Management

The Committee shall oversee the ICT Governance and Security Management of the Company, including reviewing and approving the mandates of the ICT Risk Management issue. The Responsibilities of the Committee shall be as under:

Approving ICT strategy and policy documents.
Ensuring that the management has placed an effective planning process.
Endorsing that the ICT strategy is indeed aligned with business strategy.
Ensuring that the ICT organizational structure complements the business model and its direction.
Ensuring ICT investments represent a balance of risks and benefits and acceptable budgets.
Ensure compliance status of ICT Security Policy

SECTION VI: Reporting of the Audit Committee

A) Reporting to the Board of Directors

The Audit Committee shall report on its activities to the Board.
The Audit Committee shall immediately report to the Board on the following findings, if any:-
report on conflicts of interests;
suspected or presumed fraud or irregularity or material defect identified in the internal audit and compliance process or in the financial statements;
suspected infringement of laws, regulatory compliances including securities related laws, rules and regulations; and
any other matter which the Audit Committee deems necessary shall be disclosed to the Board immediately;
B) Reporting to the Authorities

If the Audit Committee has reported to the Board about anything which has material impact on the financial condition and results of operation and has discussed with the Board and the management that any rectification is necessary and if the Audit Committee finds that such rectification has been unreasonably ignored, the Audit Committee shall report such finding to the Bangladesh Securities and Exchange Commission (BSEC), upon reporting of such matters to the Board for three times or completion of a period of 6 (six) months from the date of first reporting to the Board, whichever is earlier.

(C) Reporting to the Shareholders and General Investors

Report on activities carried out by the Audit Committee, including any report made to the Board under clause A)(b)(ii) above during the year, shall be signed by the Chairperson of the Audit Committee and disclosed in the annual report of the issuer company.

SECTION VII: Limitation of Audit Committee’s Role

While the Audit Committee has the responsibilities and powers set forth, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the LBFPLC’s financial statements and disclosures are complete and accurate and are in accordance with Generally Accepted Accounting Principles, BAS, BFRS, IAS & IFRS and applicable rules and regulations. These are the responsibilities of management and the external auditor.

Terms of Reference (TOR) for the Chairperson

Background and purpose:

The Chairperson is the presiding member of the Board of Directors [“the Board”]. As the Board has ultimate responsibility for the management of the Company, the Chairperson must ensure that the relationships between the Board and management, shareholders, other stakeholders and/or the individuals are effective and efficient for the best interests of the Company. Therefore, the Chairperson has to work with the management for proper functioning of the Board.

The Articles of Association of a Company generally specify the procedure/manner of appointment/selection of the Chairperson and his/her roles and responsibilities. Bangladesh Securities and Exchange Commission (BSEC) has issued notification regarding Corporate Governance Codes [Notification No. SEC/CMRRCD/2006-158/207/Admin/80] dated 3 June 2018. The conditions of the Corporate Governance Codes are imposed aiming to enhance corporate governance to protect the interest of the investors and the capital market. The companies listed with any stock exchange in Bangladesh shall comply with the conditions of the Corporate Governance Codes. As per condition number 1(4)(d) of the said codes the Board of Directors of a listed company shall clearly define respective roles and responsibilities of the Chairperson.

Being a non-banking Financial Institution, LankaBangla Finance PLC. has to follow the rules, regulations, guidelines, notifications, etc. issued from time to time by Bangladesh Bank, in addition to other laws applicable to it.

Appointment / Selection of the Chairperson:

As per the Articles of Association-

The Board of Directors shall appoint one of them as the Chairperson of the Board of the Company.
If at any meeting the Chairperson is not present, the Directors shall choose one of them as Chairperson of the meeting.
The Chairperson of the Board will preside over every Board Meeting and General Meeting. If at any meeting, the Chairperson is not present or is unable to be present due to illness or any other reason or is unwilling to act as the Chairperson, the Directors shall elect one of them to act as the Chairperson of that meeting.
Roles & Responsibilities of the Chairperson

The duties of the Chairperson, which is a non-executive role, arise from his senior most position in the Company and his responsibility for presiding over the meetings of the shareholders and the Board.
While working with the Board, the Chairperson shall:
(i) ensure that the Board has full governance on the operations of the Company and the Board is aware with regard to its obligations to the Company, shareholders, management and other stakeholders;

(ii) set agenda for discussion at Board Meetings and General Meetings and ensure that adequate time is allowed for discussion of the agenda items;

(iii) set frequency of the Board Meetings and review such frequency from time to time as may be considered appropriate or as requested by the Board;

(iv) while presiding over Board Meetings and General Meetings ensure that the Board adopts a prompt and constructive approach in making decisions;

(v) provide strong leadership of the Board and assist in reviewing and monitoring the aims, strategy, policy and directions of the Company;

(vi) communicate with the Board Members to keep them up-to-date on all major developments/issues avoiding surprises through timely discussion of potential developments and ensure that the Board has sufficient knowledge to permit it to comfortably and properly make major decisions when such decisions are required;

(vii) recommend composition of the committees of the Board as may be deemed appropriate, review the performance and suitability of those committees and make such adjustments as may be required from time to time;

(viii) ensure that Board and committee meetings are conducted in an efficient, effective and transparent manner;

(ix) ensure that the corporate governance of the company is maintained strongly in line with the applicable laws/regulations, practices, policies and/or guidelines;

(x) annually review the governance and performance of the Board, its committees and individual directors and recognize the strengths and weaknesses;

(xi) foster a culture of openness and engagement by facilitating effective contribution of all directors ensuring constructive relations among them;

(xii) ensure that new directors participate in a formal and tailored induction program and the development needs of the directors and the Board as a whole are identified and met to enhance the effectiveness of the Board;

(xiii) introduce a system of whistleblowing within the Company and take into consideration of the message(s) conveyed by the whistleblower(s);

(xiv) be the contact person regarding expression of concerns of an individual director;

(xv) be available to assist the committee chairs in carrying out their responsibilities and addressing their concerns;

(xvi) lead the Board in:

(a) appraising, monitoring and evaluating the performance of the Managing Director and other relevant personnel and make appropriate recommendations;

(b) ensuring accountability of the senior management; and

(c) ensuring implementation of the succession and development plans by the management.

While working with the management, the Chairperson shall:

(i) act as a counselor for the management, help to define problems, review strategy, maintain accountability, build relationships and ensure that the management is aware of concerns of the Board, shareholders and other stakeholders;

(ii) review the long-term development plans of the company and ensure that effective strategic planning for the company is undertaken by the management and accordingly long term success of the company is promoted;

(iii) monitor progress towards timely and effective achievement and implementation of the objectives, policies and strategies set by the Board and ensure that appropriate actions are taken promptly; and

(iv) ensure that there is appropriate delegation of authority from the Board to Executive Management.

Conclusion:

This document will be applicable with immediate effect.
The Board shall have the authority to make amendment to this document at any time.
Terms of Reference (TOR) for the Managing Director (Roles and responsibilities)

Background and Purpose:

The role of the Managing Director (MD) is to ensure that the company achieves its strategic objectives and provide leadership and direction to the employees of the Company.

The Articles of Association of a Company generally specify the procedure/manner of appointment of the MD and his/her roles and responsibilities. Articles 2(xiii), 116, 126, 127, 138, 144 and 145 of the Articles of Association of MIDAS Financing Ltd. deals with this issue.

Bangladesh Securities and Exchange Commission (BSEC) has issued a notification regarding Corporate Governance Codes [Notification No. SEC/CMRRCD/2006-158/207/Admin/80 dated 03 June 2018]. The conditions of the Corporate Governance Codes are imposed aiming to enhance corporate governance in the interest of investors and the capital market. The companies listed with any stock exchange in Bangladesh shall comply with those conditions. As per condition number 1(4)(d) of the said code, “the Board of Directors of a listed company shall clearly define the roles and responsibilities of the Managing Director.”

Being a non-banking Financial Institution, LankaBangla Finance PLC. has to follow the Rules, Regulations, Guidelines, Notifications, etc. issued from time to time by Bangladesh Bank, in addition to other corporate laws.

In view of the above, the Board of Directors of LankaBangla Finance PLC. defined the TOR (specifying the roles and responsibilities) of the MD which was updated in its 114th Meeting held on 12 February 2019.

Appointment of the MD:

The Board of Directors, with the prior approval of Bangladesh Bank, shall appoint the Managing Director who shall be the Chief Executive of the Company.

Roles & responsibilities:

Major roles & responsibilities of the Managing Director are to:

remain accountable for overall performance of the company and for day-to-day operation and management of the company’s business under the authority delegated by the Board from time to time;
develop and present to the Board strategic and annual business plans, internal rules, regulations and systems for proper functioning of the organization;
implement the Board’s decisions, policies and strategies in an effective and efficient manner;
report to the Board on progress with regard to the strategic and annual business plans on a regular basis. Typically, reporting on the annual plan will be monthly, while reporting on the strategic plan will be less frequent, preferably it should be twice in a year;
coordinate the overall management, administration, corporate planning and business development;
ensure compliances of rules, regulations, laws and Good Corporate Governance;
supervise all technical, financial and operational aspects of the company, represent the company in the appropriate forum, facilitate generation of business and take initiatives to source credit/fund;
manage the day-to-day operations of the company;
manage, motivate, develop and lead members of the Management Team;
manage resources efficiently and effectively to achieve the company’s objectives;
take leadership role in establishing the company’s culture and values;
ensure that there is a fit between strategy and culture and the company’s processes and structure;
ensure that appropriate internal control processes and procedures are in place;
develop and implement a risk management plan; and
employ and retain good quality of Human Resources and ensure that there is a succession plan in place.
Conclusion:

This document is applicable with immediate effect.
The Board shall have the authority to make amendment to this document at any time.
Terms of Reference (TOR) for the Company Secretary

Background and Purpose:

The Company Secretary [“the CS”] is the focal point for communication with the Board of Directors and senior management and plays a key role in the administration of important corporate and governance matters. The CS works with the Board Chair to establish and administer the Company’s governance framework. He/She provides advice to the Board, individual directors, the executives and employees of the Company to ensure compliance with that framework and on issues relating to Board decisions, requirements and requests. At the direction of the Chair, the CS assists the Board in the discharge of its duties by organizing and recording the activities of each meeting of the Board and its Committees.

Bangladesh Securities and Exchange Commission (BSEC) has issued a notification regarding Corporate Governance Codes [Notification No. SEC/CMRRCD/2006-158/207/Admin/80 dated 03 June 2018]. The conditions of the Corporate Governance Codes are imposed aiming to enhance corporate governance in the interest of investors and the capital market. The companies listed with any stock exchange in Bangladesh shall comply with these conditions. As per condition number 3.(1)(d) of the said guidelines, “the Board of Directors of a listed company should clearly define the roles, responsibilities and duties of the Company Secretary.”

In view of the above, the Board of Directors of LankaBangla Finance PLC. framed the Terms of Reference (defining the roles, responsibilities and duties) for the Company Secretary which was updated in its 114th Meeting held on 12 February 2019.

Reporting relationship and accountability:

The Company Secretary is an employee of the Company, who-

reports administratively to the MD and operationally to the Chairman of the Board and accountable to the Board of Directors;
acts in the capacity of Secretary to the Board and its Committees;
is responsible for providing strategic and operational support to the Board by providing resources and information links among the Board, management and the shareholders, with particular emphasis on facilitating the flow of information;
is also responsible for maintaining effective working relationships with the Board Chairman, Committee Chairs, individual Directors and the management;
Duties and responsibilities:

Regarding Management of Board and Committee Meetings, the CS shall
(i) initiate the development of agendas for Board and its Committee Meetings, in consultation with the Chairperson of the Board, Committee Chairs and the management;

(ii) facilitate, in consultation with the Chairman, Committee Chairs or the Managing Director, notification of meetings, preparation and distribution of agenda items etc., and ensure that:

meetings are called with at least seven days written notice or in case of emergency with a shorter time limit as soon as possible;
Board meetings are called when required by the Chairman or the MD or any of the Directors and Committee Meetings are called when required by the MD, or the Board Chairman or a Committee Member;
if possible, the agenda and any discussion material is included in the notice of the meeting and is sent to the Directors well before the meeting;
(iii) attend Board and Committee Meetings and provide required information to the Chairman to support effective functioning of the Board or Committee and adherence to proper meeting procedure;

(iv) prepare accurate, complete minutes of meetings and circulate the same to the relevant authority;

(v) submit minutes for authorization to the Chairman of the meeting within reasonable time;

(vi) where required, prepare and submit to the Directors accurate and complete proposal for written resolutions;

(vii) arrange for signatures of minutes and written resolutions;

(viii) in conjunction with management, clearly communicate directives from the Board and Committees to the person responsible for carrying out the directive;

(ix) retain and safeguard the official minute books and corporate documents;

(x) ensure verification and authorization of Director’s expenses for performance of Board-related duties;

(xi) review all minutes for consistency, appropriateness of recorded decisions and issues with broader implications;

(xii) ensure that the record of minutes is at all times up to date; and

(xiii) provide secretarial services in all Board and Committee Meetings.

Regarding Corporate Governance Services, the CS shall:
(i) provide expertise and work with the Board Chairman to implement best practices in corporate governance by the Board and its Committees;

(ii) provide required assistance to the directors and the management regarding policies, directives and processes on corporate governance;

(iii) be responsible for promoting strong corporate governance practices within the organization;

(iv) work with the Board Chair to ensure continuous improvement of the Board and Directors by:

managing the annual Board and Director evaluation process and working with the Board Chair and MD to implement changes to policy or processes arising from the evaluations recommendations;
ensuring effective board orientation procedures;
keeping directors informed of changing or new requirements relating to their legal and fiduciary responsibilities.
(vi) keep up to date on evolving corporate governance practices and trends.

(vii) promote the role and responsibility of the CS both within the organization and externally, building networks to share ideas, discussing new trends in corporate governance and best practice;

(viii) refer issues for legal review and opinions as required and may be directed to obtain advice on behalf of the Board;

(ix) act as custodian for Company’s corporate and historical records, meeting minutes and related Board information; and

(x) maintain a record of consolidated Board motions.

Regarding Board Evaluation & Succession Planning Processes, the CS shall assist the Board and/or Committees in:
(i) evaluating and reporting on corporate governance commitments and the mandates of the various Committees;

(ii) implementing and reporting on the annual processes to assess the performance of the Board, Committees, Chairs and individual Directors;

(iii) identifying and communicating any skill requirements for making recommendations to fill Board vacancies;

(vi) identifying and communicating the professional development needs of the directors.

Regarding Policy Framework, the CS is responsible for
(i) overseeing the organization’s policy framework as approved by the Board; and

(ii) providing required assistance to the Board, the MD and Management on compliance with that framework.

Regarding Transparency, the CS supports the Board’s commitment by:
(i) ensuring continuous disclosure of the governance framework;

(ii) ensuring all external reporting requirements are met including the disclosure of Board meeting attendance, Board remuneration and expenses;

(iii) ensuring that appropriate controls are in place in relation to access to board information; and

(iv) ensuring preparation of governance related materials for the Service Plan and Annual Service Plan Report in collaboration with the Board Chair.

Regarding Communication, the CS shall:
(i) be the liaison between the Board and the MD and management and is the main contact for Directors;

(ii) promote a strong and effective working relationship between the Board and management;

(iii) ensure that all Directors have all the necessary information to discharge their responsibilities;

(iv) ensure that all Directors receive the same information to support the cohesive working relationship of the Board;

(v) ensure that the appropriate tools and mechanisms are in place to manage Board information and communication to ensure that Directors are able to properly discharge their responsibilities;

(vii) ensure that the appropriate technical support is available to the Board in relation to any online or paperless communication platforms; and

(viii) ensure the confidentiality of Board materials, records and deliberations as appropriate.

Regarding Code of Conduct and Conflict of Interest:
(i) The CS shall administer the Code of Conduct of the Board Members and update the Board Chair in respect of any matters where conflict, potential or real, may occur between the Board and its members.

(ii) If there is a conflict of interest, actual or potential, on any particular matter, between the Company Secretary’s administrative or managerial responsibilities within the Company and his/her responsibilities as a Secretary to the Board, it is his responsibility to draw it to the attention of the Board.

Regarding Statutory & Legal Matters, the CS shall-
(i) keep under close review all legislative, regulatory and corporate governance developments that might affect the Company’s operations and ensure the Board is fully briefed on those and that it has regard to them when taking decisions.

(ii) ensure proper and timely documentary filings and fulfillment of disclosure requirements to statutory authorities under applicable legislation and policy.

(iii) ensure that the standards and disclosures required by different statutes are observed and where required, reflected in the annual report of the directors.

(iv) make arrangements for and manage the process of General Meetings.

(v) perform such other duties which usually pertain to the CS or which may from time to time be prescribed by the Board or be required by law.

Conclusion

This document is applicable with immediate effect.
The Board shall have the authority to make amendment to this document at any time.
Terms of Reference (TOR) for the Chief Financial Officer (CFO)

Background and Purpose

The Chief Financial Officer [“the CFO”] is a member of the senior management of a company who reports to the Board through the Managing Director (“MD”). As delegated by the MD, the CFO has the responsibility for the overall financial planning and management for the Company and its subsidiaries, if any, and such other duties and responsibilities which may be reasonably required by the MD from time to time and which are suitable to this executive position. In addition, other departments may be assigned to this executive in accordance with the policies established by the Board.

Bangladesh Securities and Exchange Commission (BSEC) has issued a notification regarding Corporate Governance Code [Notification No. SEC/CMRRCD/2006-158/207/Admin/80 dated 03 June 2018]. The conditions of the Corporate Governance Code are imposed aiming to enhance corporate governance in the interest of investors and the capital market. The companies listed with any stock exchange in Bangladesh shall comply with these conditions. As per condition 3.(1)(d) of the said code, “the Board of Directors of a listed company should clearly define the roles, responsibilities and duties of the CFO.”

In view of the above, the Board of Directors of LankaBangla Finance PLC. framed the Terms of Reference (defining the roles, responsibilities and duties) for the CFO which was updated in its 114th Meeting held on 12 February 2019.

Reporting Relationships and Accountability

The CFO is a senior executive of the Company, who –

is the main custodian of all books of accounts and records/financial data (both hand and soft version) and accounting system and/or software.
reports administratively to the MD and operationally to the Board of Directors
is also accountable to the Audit Committee
must have a broad understanding of the organization and its operations to effectively carry out his/her responsibilities
Roles, Responsibilities and Duties of the CFO

The CFO, on behalf of the Board of Directors, is responsible for

following applicable Accounting Standards and Financial Reporting Standards like IAS, and IFRS and adequate disclosure for any departure there-from, if any;
compliance with application of appropriate accounting policies, and ensuring that accounting estimates are reasonable and prudent; and
providing close cooperation in establishing effective internal control environment.
As a senior executive, the CFO is responsible for leadership and management of the Company’s finance and accounting functions and is responsible for:
(i) The Company’s business planning, budgeting and forecasting processes, including coordination and integration of strategic and business plans for business segments, departmental cost centers and capital budgets;

(ii) The integrity of the Company’s accounting systems, sub-systems, internal controls, cash management, the signatories and discretionary authorities, and managing the relationship with the external auditors;

(iii) The Company’s financial and business reporting, tax planning, estimating and reporting, and regulatory reporting (corporate and securities);

(iv) Maintaining relationships with the Company’s bankers and investors, and peer companies. Responsibility for capital planning and structure and raising of equity or debt to fund the Company’s operations, investment analysis/presentations, and tracking of the Company’s market valuation;

(v) The financial analysis function which addresses product contribution and pricing/margins, the vetting of business cases and post reviews of completed/implemented initiatives, business analysis, operational efficiency and organizational and system capacity modeling/utilization;

(vi) The identification, assessment and management of the Company’s business risks and reporting thereon;

(vii) The procurement, reporting and administration of the Company’s insurance coverages;

(viii) Maintaining liaison with the Audit Committee of the Board;

As a member of the senior management of the Company, the CFO shall:
(i) Assist the MD in:

(a) Developing and implementing a communications program which supports the board objectives of a communications strategy aimed at enhancing the profile and image of the Company locally, nationally and internationally;

(b) Representing the Company in dealings with government and regulatory bodies;

(c) Maintaining relationships with outside agencies and strategic partners; and

(d) Maintaining a policy of on-going communication with investors and representatives of the investment community.

(ii) Meet regularly and as required with the MD to review material issues and to take reasonable steps to ensure that the MD is provided in a timely manner with all the information he/she requires to fulfill his/her statutory and other obligations;

(iii) Meet regularly and work effectively with the MD and the Company’s Senior Officers; and

(iv) Engage in public service as agreed with the MD in connection with the Company’s charitable, educational and cultural activities.

(v) Carry out analysis of assets and liability and submit recommendations to the management on a quarterly basis

(vi) Recommend to the management on how to match assets and liabilities based on strategic plan.

Towards the Board of Directors, the CFO shall have responsibilities:
(i) To furnish necessary and classified information to the board of directors along with his analysis and suggestions

(ii) To attend the board meetings and be part of the discussion having financial implication and meet their queries

(iii) To present to the board of director’s information on the following in order to strengthen and formalize corporate decision- making process:

(a) Annual business plans, cash flow projection, forecasts and long term plans

(b) Budget including capital, manpower and overhead budgets along with variance analysis

(c) Quarterly operating results of the Company as a whole and in terms of its business segments

(d) Details of joint ventures or collaboration agreements or agreements with third parties.

(e) Update information on default in payment of principal and/or interest, including penalties on late payments and other dues, to a creditor, bank or financial institution, or default in payment of public deposit from relevant departments (Credit & Operations)

(f) Failure to recover material amounts of loans, advances, and deposits made by the Company, including trade debts and inter-corporate finances

(g) Significant public or product liability claims likely to be made against the Company, including any adverse judgment or order made on the conduct of the Company in coordination with the Chief Legal Counsel, if any

Towards Shareholders the CFO shall have Responsibilities to provide all the necessary data to be presented in the “Director’s Report” and for this purpose to ensure:
(a) The financial statement, prepared by the management of Company, present fairly its states of affairs, the result of its operations, cash flows and changes in equities

(b) Proper books of accounts of the Company have been maintained by the relevant units and that sound internal controls are in place

(c) Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment

(d) International accounting standards, as applicable in the country, have been followed in preparation of financial statements and any departure there from has been adequately disclosed

(e) The system of internal control is sound in design and has been effectively implemented and monitored

(f) There are no significant doubts upon the ability to continue as going concern

(g) There has been no material departure from the best practices of corporate governance as detailed in the listing regulations or applicable guidelines

(h) Internal and External Reporting

As a part of routine work, the CFO shall be responsible for overseeing
(i) Coordination with the internal auditors for statutory auditing

(ii) Asset Liability Management

(iii) Risk Management (Credit Risk Management and Market Risk Management)

(iv) Treasury division

(v) Monitoring Cash Flows

(vi) Consulting with other departments, businesses units and or affiliated companies to improve financial performance

(vii) Strategic financial planning/ capital budgeting

(viii) Cash forecasting

(ix) Working capital management

(x) Financial risk management

(xi) Cash Management

(xii) Short term investing

(xiii) Short term borrowing

(xiv) Budgeting and Accounting

(xv) Business Strategies and Planning

(xvi) Designing a proper financial Model for the Business Plan

(xvii) based on data received from respective departments, carrying out analysis on:

(a) Cost of fund

(b) Interest rates (both for deposits and lending)

(xviii) Identifying major profit and cost centers

(xix) Working out proper charges based on Market competition

(xx) Maintenance of Investment Accounts

(xxi) Preparation of Financial Statements

For internal and external reporting, the CFO has extensive responsibilities, particularly-
All the information required for decision-making by the Board of Directors and MD is processed and furnished by the CFO.
External reporting requirement is fulfilled by CFO, the accounts and financial statements are signed by the CFO before they are sent to concerned authorities.
The CFO jointly with the MD shall certify to the Board that they have reviewed Financial Statements for the year that to the best of their knowledge and belief:
the Financial Statements do not contain any untrue statement or omit any material fact or do not contain statements that might be misleading;
the statements together present a true and fair view of the company’s affairs and are in compliance with accounting standards and applicable laws; and
there are no transactions entered into by the company during the year which are fraudulent, illegal or violation of company’s code of conduct.
Conclusion

This document is applicable with immediate effect.
The Board shall have the authority to make amendment to this document at any time.
Terms of Reference (TOR) for the Head of Internal Audit and Compliance

Background and Purpose

The Head of Internal Audit and Compliance (“HIAC”) occupies a critical position in any organization, helping it to achieve its objectives by giving assurance on its internal control arrangements and playing a key role in promoting good corporate governance.

Bangladesh Securities and Exchange Commission (BSEC) has issued a notification regarding Corporate Governance Codes [Notification No. SEC/CMRRCD/2006-158/207/Admin/80 dated 03 June 2018]. The conditions of the Corporate Governance Codes are imposed aiming to enhance corporate governance in the interest of investors and the capital market. The companies listed with any stock exchange in Bangladesh shall comply with these conditions. As per condition 3. (1)(d) of the said guidelines, “the Board of Directors of a listed company should clearly define the roles, responsibilities and duties of the HIAC.”

In view of the above, the Board of Directors of LankaBangla Finance PLC. framed the Terms of Reference (defining the roles, responsibilities and duties) for the Head of Internal Audit which was updated in its ——th Meeting held on —- February 2019.

Reporting Relationships and Accountability

The HIAC is an employee of the Company –

who reports administratively to the Managing Director (MD) and operationally to the Chairman of the Audit Committee;
who is accountable to the Audit Committee;
who is responsible primarily for giving assurance on the internal control arrangements in the Company and playing a key role in promoting good corporate governance;
who must have a broad understanding of the organization and its operations to effectively carry out his/her responsibilities.
Roles, Duties and Responsibilities

Roles, Duties and Responsibilities of the HIAC shall include-

(i) Regarding Audit Planning/Design-

To develop an annual audit plan using input from the team and stakeholders to identify priorities and resource requirements for the year to cover audit of all the activities of the Company.
To meet with Directors and Managers to discuss needs and propose audits, to build stakeholder requirements into department plans.
To ensure plan is developed to meet the Audit Committee’s expectations.
To schedule and assign audits to team members, ensuring effective and efficient use of resources.
To ensure quality control of the team’s audit plans on an ongoing basis by reviewing and approving plans as they are developed and communicated to clients.
To ensure annual audit plans have contingency built in, to provide unexpected audits to clients as they may surface.
To report to the Audit Committee at the required intervals on Internal Audit assignments including planned reviews, investigations, risk advisory work and any other ad-hoc activity as required.
(ii) Regarding Conducting Audits-

To oversee and provide quality control for the internal audits, to ensure departmental mandate and business goals are met and that professional standards are maintained at all times.
To ensure completion of audit assignments to provide independent, objective assurance to the Audit Committee.
To develop the team’s engagement with and support of major business change programs thus ensuring that appropriate consideration of risk and control is given to all change.
(iii) Regarding Reporting-

To ensure that internal audit reports are prepared and finalized in a timely manner and the same are submitted before the Audit Committee.
To ensure that internal audit reports are issued with all recommendations agreed and accepted by the audited individual/unit.
(iv) Regarding People Management & Development-

To manage and oversee team performance through performance planning, coaching and performance appraisals.
To hold direct reports accountable for managing and developing their assignments to ensure the department’s goals are achieved.
To provide ongoing feedback to the team to ensure they develop the skills and competencies required for effective planning and individual professional and personal career growth.
To motivate and inspire the team by providing them with the information and tools they need to do their jobs well and meet customer expectations.
To deal with performance issues, discipline as necessary and address poor standards, ensuring department targets and customer satisfaction is not compromised.
To manage the head count, recruiting and deploying resources as required, to ensure the department budget is balanced and the right mix of skills and strengths are being leveraged as effectively as possible.
(v) Regarding Improving the Practice of Audits/ Risk Management –

To build relationships with leaders across the organization to understand issues and identify areas for improvement for the organization as a whole.
To support and encourage team members to be proactive in identifying opportunities to share best practice with Directors and Managers to improve the control environment.
To develop new methodologies to improve the audit process, making it easier for the organization to request audits and implement recommendations.
To provide assistance to the business in meeting regulatory requirements.
To keep abreast of developments in Corporate Governance practices and advise the business accordingly.
(vi) In General –

To perform any other duties as are within the scope, spirit and purpose of the job, the title of the post and its grading as requested by the line manager or Head of Unit/Section/Department/Division.
Conclusion

This document is applicable with immediate effect.
The Board shall have the authority to make amendment to this document at any time.