DFIM Circular No. 02: Appointment of Independent Directors of a Finance-Company and their Duties, Responsibilities and Honorarium

1 Bangladesh Bank (Central Bank of Bangladesh) Head Office Motijheel, Dhaka-1000 Bangladesh. Ref. No. DFIM Circular No. 02 Chairman, Board of Directors and Chief Executive Officer/Managing Director All Finance Companies operating in Bangladesh. Dear Sir, Regarding the appointment of "Independent Directors" in Finance Companies and their duties, responsibilities, and honorarium. The duties and responsibilities of Independent Directors are more significant compared to other directors in the interest of protecting the interests of Finance Companies and depositors. Therefore, it is necessary to appoint suitable and professionally competent individuals as Independent Directors on the Board of Directors of Finance Companies. To this end, the following guidelines are provided for Finance Companies to follow regarding the appointment of Independent Directors and the determination of their duties, responsibilities, and powers:

2. Definition of Independent Director: According to the explanation in Section 14 of the Finance Company Act, 2023, "Independent Director" means "a person who is independent of the management and shareholders of the Finance Company and who will give his own opinion only in the interest of the Finance Company and who has no actual or apparent interest in the past, present or future with the Finance Company or any person connected with the Finance Company."

3. Number of Independent Directors: According to Section 14 of the Finance Company Act, 2023, "Notwithstanding anything contained in any other law for the time being in force or in the Memorandum or Articles of Association of any Finance Company, there shall be a maximum of 15 (fifteen) Directors in any Finance Company including not less than 2 (two) Independent Directors."

4. Experience and Suitability of Independent Directors: a) In the case of appointment as an Independent Director, the concerned person must have a minimum of 10 (ten) years of management, business, or professional experience. b) In the case of performing duties as an Independent Director, the minimum age of the concerned person shall be 45 (forty-five) years and the maximum age shall be 75 (seventy-five) years. c) He/She must be a graduate/post-graduate in Banking, Finance, Business Administration, Law, or Accounting from a recognized university.

29 Falgun 1430 Date: 13 March 2024 Institutional and Market Department

2 d) Experienced teachers in the Business Education Faculty or Business Administration, Management, Law, and Information Technology of Government, non-government, or autonomous universities, persons engaged in the legal profession, persons with professional degrees in Accounting engaged in the accounting profession, experienced bankers, and experienced officers of the Financial Institutions Department of the Ministry of Commerce, Ministry of Finance, and Finance Division, Ministry of Industries, and Ministry of Law may be considered on a priority basis. e) No person involved in any actual or apparent interest in the past, present, or future with any Finance Company or any person connected with the Finance Company can be an Independent Director of that Finance Company. f) No member of the family of a person nominated for appointment as an Independent Director in a Finance Company can hold shares in the said Finance Company and cannot be employed in any lucrative post of the said Finance Company. g) A person nominated as an Independent Director cannot be appointed as a Director on behalf of any other Finance Company, Bank-Company, Insurance Company, or any subsidiary company of such companies. Furthermore, the nominated Independent Director cannot perform duties as a Director on behalf of any company or institution that exercises control, joint control, or significant influence over the said Finance Company, Bank-Company, or Insurance Company. h) The nominated Independent Director has not been convicted of any criminal offense or has not been or is not involved in fraud, financial crime, or other illegal activities. i) The nominated Independent Director has no adverse observation or remark in any court judgment in any civil or criminal case concerning him/her. j) The nominated Independent Director was not involved in any illegal activity while performing duties in the Finance Company, Banking, or his/her profession. k) The nominated Independent Director has not defaulted on the payment of any dues to any creditor nor has he/she obtained exemption from recovering dues through compromise with the creditor, nor is he/she a willful defaulter. l) The nominated Independent Director is not a tax defaulter. m) The nominated Independent Director has never been declared insolvent by a court. n) A person listed as a willful defaulter by any Finance Company or Bank Company will not be eligible to be a Director of any Finance Company until 5 (five) years have passed since obtaining exemption from the said list. o) The nominated Independent Director has not been convicted for violating any rules, provisions, policies, or codes of conduct of any regulatory authority concerning the financial sector. p) The nominated Independent Director was not associated with the ownership of any company/institution whose registration/license has been cancelled or which has been dissolved.

5. Financial Benefits: A person performing duties as an Independent Director of a Finance Company shall be entitled to the following financial and other benefits: a) Independent Directors shall be entitled to a maximum of 50,000 Taka (subject to applicable tax) per month as permanent honorarium at the discretion of the Finance Company.

3 b) They shall be entitled to a maximum of 10,000 Taka (subject to applicable tax) per meeting as honorarium for attending meetings of the Board of Directors or auxiliary committees of the Finance Company. c) Regardless of the number of meetings of the Board of Directors and other committees of the Finance Company held in any month, Directors shall be entitled to the fixed honorarium per meeting for attending 2 (two) meetings of the Board of Directors, 2 (two) meetings of the Executive Committee, 1 (one) meeting of the Audit Committee, and 1 (one) meeting of the Risk Management Committee per month. d) They shall be entitled to accommodation and travel expenses for a maximum of 2 (two) days at a hotel for coming and going from any other divisional/district city within the country to the Head Office/meeting venue for participating in meetings of the Board of Directors or auxiliary committees of the Finance Company. e) The concerned Director must submit original receipts of travel expenses and hotel accommodation bills (e.g., travel tickets, airline tickets, hotel accommodation bill receipts/vouchers, etc.) for payment of expenses and must preserve the submitted proofs by the Finance Company.

6. Duties, Responsibilities, and Accountability of Independent Directors: a) He/She shall ensure proper compliance with the Finance Company Act, 2023 and other relevant laws and regulations. b) He/She shall duly inform Bangladesh Bank of any information regarding violation of the Finance Company Act, 2023 or any other law or regulation by the Board of Directors. c) He/She shall participate in Board meetings and provide thoughtful opinions on the agendas raised in the Board meetings. If any memorandum is presented by the Independent Director, the Board of Directors shall consider it with due importance. d) If he/she becomes a member of any other auxiliary committee of the Board of Directors in accordance with DFIM Circular No. 01, dated 29 February 2024, he/she shall faithfully and properly perform the duties, responsibilities, and instructions of the committees mentioned in the said circular. e) If the opinion of the Independent Director in the Board or various auxiliary committees of the Board is not given due importance, or if any irregularity is observed in the operation of the Finance Company, he/she shall inform the relevant department of Bangladesh Bank in writing. f) If any complaint against the Independent Director is proven in any inspection conducted by Bangladesh Bank or if any adverse observation is found due to negligence of duty, action shall be taken against him/her according to the Finance Company Act, 2023. g) The Independent Director shall be elected as Chairman/Chairperson of the Audit Committee of the Finance Company. The term of the Chairman/Chairperson of the Audit Committee shall be 3 (three) years. No Independent Director can perform duties as Chairman/Chairperson of the Audit Committee for two consecutive terms. h) At least 1 (one) of the Independent Directors shall be a member of the Executive Committee of the Board of Directors. i) Independent Directors shall always strive to protect the interests of depositors and general shareholders (excluding Directors).

4 7. Term and Removal of Independent Director: a) Generally, Independent Directors shall be appointed for a term of 3 (three) years and may be re-elected for a subsequent term upon expiration of the term, subject to the provisions of Sections 15 and 16 of the Finance Company Act, 2023. b) The Board of Directors may request Bangladesh Bank to remove the concerned Independent Director by mentioning specific reasons. c) An Independent Director may resign from the post of Independent Director by giving 7 (seven) days' notice. d) Bangladesh Bank may remove any Independent Director by mentioning specific reasons.

8. Prior Approval of Bangladesh Bank for Appointment of Independent Director: According to the provision of sub-section (11) of Section 15 of the Finance Company Act, 2023, prior written approval of Bangladesh Bank must be obtained for the appointment/re-appointment of Independent Directors. For obtaining such prior approval, the proposed proposal signed by the Managing Director/Chief Executive Officer of the Finance Company along with the updated curriculum vitae of the concerned person(s), relevant certificates, and a copy of the Board's approval must be submitted to Bangladesh Bank. The person nominated for the said post must submit declaration forms according to 'Appendix-A', 'Appendix-B', 'Appendix-C', and 'Appendix-D' and the attached 'Form-1' and 'Form-2' of the 'Proforma' to Bangladesh Bank. Bangladesh Bank will grant approval for the appointment of the required number of Independent Directors through interviews in a committee formed under the leadership of the Deputy Governor of the relevant department of Bangladesh Bank to verify and select the experience and suitability of the proposed person(s) by the Finance Company.

9. The other relevant instructions mentioned in DFIM Circular No. 01, dated 29 February 2024 regarding the appointment of Directors shall also be applicable in the case of appointment of Independent Directors.

10. Those persons who were appointed as Independent Directors prior to the issuance of this circular may continue to perform their duties as Independent Directors until their term is not renewed.

11. This instruction is issued under the powers conferred by Sections 14, 15, and 41 of the Finance Company Act, 2023. Finance Company Directors must present a self-contained paper in a Board meeting within the next 2 (two) months regarding the matters mentioned in this circular for their information and necessary action. Furthermore, arrangements must be made to bring the contents of this circular to the notice of all other employees of the Finance Company.

12. The instructions mentioned in this circular shall come into force immediately.

Yours faithfully, Enclosure: As per content. (Md. Asaduzzaman Khan) Director (DFIM) Phone: 9530178.

Information of persons nominated/elected/re-elected for appointment as Independent Director

1. Name:

2. Father's Name:

3. Mother's Name:

4. Nationality:

5. (a) Date of Birth: (b) Place of Birth:

6. Permanent Address: (a) Permanent Address (with telephone number): (b) Current Address (with telephone number):

7. National ID Number:

8. TIN Number:

9. Marital Status: (a) Name of Husband/Wife if married: (b) Profession of Husband/Wife: (c) Nationality of Husband/Wife: (d) NID of Husband/Wife:

10. Family Members (Wife/Husband, Father, Mother, Son, Daughter, Brother, Sister, and Dependent Person): Name Relation Date of Birth If Director of any Bank/Finance Company, Name and Address of that Company

11. Educational Qualification: (a) Institutional Education: (b) Professional/Technical Education: (c) Training/Seminar:

12. Details of Current Profession: (a) Name and Address of Institution: (b) Nature of Business: (c) Designation: (d) Phone Number:

13. Description of Experience: Name and Address of Institution Period of Performance of Duty (Date of Joining - Duration until Completion) Designation Duties and Responsibilities Appendix-A

14. Details of Independent Director's own, family, and interested institutions: Name of Institution Formation Nature (Sole Proprietorship/Partnership/Private Company/Public Company/Others) Nature/Type of Business Nature of Ownership Percentage of Ownership Details of Association with Independent Director

15. Period of holding as Independent Director (From the date of first appointment to the date of last appointment/re-appointment):

16. Interests (According to Section 16 of the Finance Company Act, 2023):

17. Has any loan facility been taken from any Finance Company/Bank/other source in favor of the Independent Director, family, or interested institutions? If taken, name of Finance Company/Bank/other source and amount of loan (including interest and principal): Signature: Date and Name:

Declaration

1. I hereby declare that - I am eligible for appointment as an Independent Director of a Finance Company according to the eligibility and suitability mentioned in Section 15 of the Finance Company Act, 2023, other regulations, and the provisions mentioned in DFIM Circular No. 01 issued by Bangladesh Bank on 29 February 2024. I further declare that - a) I have at least 10 (ten) years of management, business, or professional experience; b) I have not been convicted by any court for any criminal offense nor have I been or am involved in any fraud, financial crime, or other illegal activities; c) There is no adverse observation/remark in any court judgment in any civil or criminal case concerning me; d) I have never been convicted for violating any rules, provisions, or codes of conduct of any regulatory body concerning the financial sector; e) I was not associated with any company/institution whose registration/license has been cancelled or which has been dissolved; f) I do not have any willful loan with any Bank or Financial Institution in my own name or in the name of interested institutions; g) I have never been declared insolvent by any court; h) I am not employed as a Director, Advisor, Consultant, or in any other lucrative post of any other Bank-Company, Finance Company, Insurance Company, or any subsidiary company of such companies; i) I am not employed as an External Auditor, Legal Advisor, Advisor, Consultant, or in any other lucrative post of ------------------ PLC/Limited; j) I have never been removed from the post of Chief Executive, Chairman, or Director of any company, especially a Finance Company or Bank, nor has my post been made vacant; k) I am not a tax defaulter personally or for my sole proprietorship or partnership institution; l) No member of my family holds shares in the Finance Company nor is employed in any lucrative post. m) I am eligible for appointment as an Independent Director according to the policies of Bangladesh Bank.
2. According to Section 93 of the Companies Act, 1994, I hereby declare that, if I am appointed as an Independent Director of ------------------ Finance PLC/Limited, I am willing to perform this duty. Signature: Date and Name: Witness (Employee of Finance Company):

1. Signature: Name: Designation: Address:
2. Signature: Name: Designation: Address: Appendix-B

Confidentiality Declaration I, the undersigned, hereby assure that, if appointed as an Independent Director of ------------------ Finance PLC/Limited, I will not disclose to any person directly or indirectly any matter presented for my consideration or any matter brought to my notice as a Director during the performance of my duties as a Director. However, I will disclose only if it is necessary for the performance of my duties or if I am bound by the provisions of existing law or if I am empowered by the Board. Signature: Date and Name: Witness (Employee of Finance Company): 3. Signature: Name: Designation: Address: 4. Signature: Name: Designation: Address: Appendix-C

Declaration of Candidate Nominated as Independent Director The undersigned declares that I am not associated with the management of ------------------ Finance PLC/Limited and do not hold any shares in the said Finance Company. I will give my own opinion only in the interest of the Finance Company. I further declare that I have no actual or apparent interest in the past, present, or future with the said Finance Company or any person connected with the Finance Company, nor will there be any. Signature: Date and Name: Witness (Employee of Finance Company): 5. Signature: Name: Designation: Address: 6. Signature: Name: Designation: Address: Appendix-D

Form-1 (Proforma) Proforma

1. Name: *:
2. Father's Name: Father's Name:
3. Mother's Name: Mother's Name:
4. Spouse's Name: Spouse's Name:
5. National ID and Date of Birth* (10/17 Form Number)
6. Religion:
7. Date of Issue (DD/MM/YY): 8. Expiry Date:
8. Date of Issue of Passport: 10. Expiry Date of Passport*:
9. Address (Permanent): Village/Mouza/Post Office/Thana/District Date of Issue* Address Expiry Date*
10. Address (Current): Village/Mouza/Post Office/Thana/District Date of Issue Address Expiry Date
11. Details of Educational Qualification: SSC/HSC (Science/Arts/Commerce/Technical/University Degree) SSC/HSC (DD/MM/YY): SSC/HSC GPA:
12. Details of Professional Qualification:

• Proforma must be filled in English.

1. Date of Issue of National ID (10 digits) and Date of Birth (05 digits) must be filled.
2. Date of Issue of National ID (10 digits) and Date of Birth of Science/Arts/Commerce/Technical/University Degree (13 digits) must be filled.

Form-2 (Proforma for Academic/Professional/Technical Qualification) Proforma

1. Name of Candidate
2. Institution Name** 3. Religion
3. Details of Educational Qualification (Permanent): Village/Mouza/Post Office/Thana/District* Date of Issue* Address Expiry Date*
4. Details of Professional Qualification (English): Village/Mouza/Post Office/Thana/District* Date of Issue Address Expiry Date
5. Details of Professional Qualification

• Proforma must be filled in English. ** Proforma Institution must be a University, College, Technical/Industrial Training Institute, Board of Secondary/Higher Secondary, University Degree.

Proforma . . . Note: The proforma must be filled in English. To, , Director/Chairman/Member of the Board of Directors of ................................., Address: .................................................... Subject: Recommendation for Appointment of Independent Director of the Finance Company. Sir, With due respect, it is stated that the following person is recommended for appointment as Independent Director of the Finance Company under your charge: Name: ..., Father's Name: ..., Mother's Name: ..., Date of Birth: ..., Nationality: ..., Marital Status: ..., Permanent Address: ..., Current Address: ..., National ID Number: ..., TIN Number: ..., Educational Qualification: ..., Professional Qualification: ..., Experience: ..., Interest: ... It is further stated that the above-mentioned person has been verified and found suitable for the post of Independent Director of the Finance Company according to the Finance Company Act, 2023, DFIM Circular No. 01 dated 29 February 2024, and other relevant laws and regulations. It is therefore requested to kindly approve the appointment of the above-mentioned person as Independent Director of the Finance Company. Yours faithfully, Name: Designation: Signature:

Note: The proforma must be filled in English. ** The proforma Institution must be a University, College, Technical/Industrial Training Institute, Board of Secondary/Higher Secondary, University Degree.