Corporate Governance Practices

In
Grameenphone

Independent University, Bangladesh

Submitted to
Dr. Zahurul Alam
Faculty of Corporate Governance (FIN 547)
School of Business
Independent University, Bangladesh

Submitted by
Name
1.
2.
3.
4.
5.

Ashad Chowdhury
Md. Moinuddin Hasan Chowdhury
Syed Kaiser Azam
Sadia Samdani
Tasnim Al-Amin

ID
1010515
1010587
1010516
1127039
1030206

Date of Submission: 29th March, 2016

Letter of Transmittal
March 29, 2016

Dr. Zahurul Alam

Faculty of Corporate Governance (FIN 547)
School of Business
Independent University, Bangladesh

Subject: Submission of Term Paper.

Dear Sir
We are glad to state that we have been successful to submit the Term Paper titled Corporate
Governance Practices in Grameenphone . We have tried our level best to fulfill all the requirements
of the report.
Therefore, we would like to thank you for giving us the opportunity to apply whatever knowledge
we have gained from this course and also for your continuous guidance and encouragement.

Sincerely yours
Ashad Chowdhury
Md. Moinuddin Hasan Chowdhury
Syed Kaisar Azam
Sadia Samdani
Tasnim Al-Amin

Acknowledgement
At first we would like to thank our honorable course instructor Dr. Zahurul Alam for giving us the
auspicious chance to work with the topic. In fact it is very important for us, as we are the students
of MBA and who are doing Businesses. We would like to express our heartiest gratitude to all of
us.

And we would like to thank all the personalities who helped us for making our report. We would
like to thank our honorable course instructor Dr. Zahurul Alam for hir kind and considerable help
for the preparation of our report on -Corporate Governance Practices in GrameenPhone. He has
helped us throughout the time and has given us advice and guidance for any kind of help we wanted
without being a bit irritated. His helpfulness has always inspired us. We would be ever grateful to
him. We would like to give thanks to Mr. Mohammad Abdullah Al Mamun (DGM)

from

Grameenphone for his continuous support .

Executive Summary
Grameenphone the leading multinational company in telecommunication service sectors occupying around
50% of the market share and having more than 23 million subscriber bases. Grameenphone (GP) firmly
believes that business operation means dealing with the stakeholders with trust and confidence and there is
a link between stakeholders' value and governance. With that objective in view, GP has been working
relentlessly to create long-term stakeholders value through providing as well as maintaining vastly
innovative, easy-to-use and best-value telecommunications services in the market. In pursuing these
objectives, the Board of Directors of the Company is committed to high standards of Corporate Governance
which it believes are critical to business integrity and performance. As a responsible corporate citizen, GP is
also committed to maintaining full transparency and positive business conduct internally and towards the
community with which GP carries out its business, including its suppliers, customers and business partners.
At the same time the Company expects that all its Board of Directors, employees and suppliers would act
with honesty, integrity and openness.
Grameenphone (GP) believes that good corporate governance is the backbone of an upright business entity.
Accordingly, GP emphasizes on stronger diligence to business, all operations being transparent and invites
larger involvement of the stakeholders. And aspiring on that, the Company has always strived to maintain the
highest standards of corporate governance and business conduct so as to create and maintain value for
Shareholders, safeguard stakeholders' interest and justify investor confidence. With this end in view, GP
has been providing and maintaining innovative, user-friendly and best-value telecommunication services to
create sustainable stakeholders' value. To attain these objectives, the Board of Directors of the Company is
dedicated to ensuring highest standards of Corporate Governance to keep the Company's business integrity
and performance on the right track. Being a responsible corporate entity, GP maintains adequate
transparency and encourages sound business conduct both in its in-house practices and in its external
relationship with the community as well as suppliers, customers and business partners.
The Company, at the same time, expects acts of honesty and integrity from its Board of Directors,
employees and suppliers. As a Public Listed Company, GP Board of Directors plays a crucial role in
upholding the interests of all its stakeholders. The Board of Directors and the Management Team are also
dedicated to maintaining a well-established culture of accountability, transparency, easy-to-understand
policies and procedures to ensure effective Corporate Governance at every level of its operations. The Board
and the Management Team also put their best efforts to comply with all the laws of the country and all
internal regulations, policies and procedures to make GP a thoroughly transparent Company. Moreover,
recognizing the fact that compliance has been the corner stone of good governance, the Company
meticulously undergoes through the process of statutory audit and compliance certification as required by
laws of the land. As a result, GP has been able to maintain the highest level of integrity, transparency and
accountability of global standards over the years.
GP believes in transparency and accountability to the society as a whole through establishment of an
efficient and effective Corporate Governance regime. It also believes that Corporate Governance is a journey
and not a destination and it needs to be continuously developed, nurtured and adapted to meet the varying
needs of a modern business house as well as the justified aspirations of our valued investors, other
stakeholders and the society at large.

Table of Contents
Subject
Chapter 1 - Introduction
1.1 Introduction
1.2 Objectives
1.3 Methodology
1.4 Scope
1.5 Limitation of the Study
1.6 Literature Review
Chapter 2 - Corporate Governance Concept & Bangladesh Perspective
Chapter 3 Overview of Grameenphone
3.1 Company Profile
3.2 Mission
3.3 Vision
3.4 Corporate Governance Practice in Grameenphone
3.5 SWOT Analysis of Gramenphone
3.6 Structure of Grameenphone
3.7 Achievement
3.8 Shareholders of Grameenphone
Chapter 4 Findings of the Term Paper
4.1 Consumers Perspective
4.2 Employees Perspective
4.3 Shareholders Perspective
Chapter 5 Conclusion
Chapter 6 Recommendations
Chapter 7 References
Chapter 8 Appendix

Page No

6-12

13-15

16-25

26-32

33
34
35
36-40

Chapter-1
Introduction

1.1 Introduction
Corporate Governance (CG) mainly controls how well the interests of the stakeholders are being maintained,
reflecting the need for accountability in the handling money and the ways of commercial activities. It primarily
aims to enhance corporate transparency and accountability (Thapa, 2008). It is extensively recognized that
transparency enhances trust among the major players within the governance framework and CG is equally
important for all types of corporate institutions. Furthermore, good CG in the telecommunication sector is
considered to be an integral part of the development of sound, transparent and properly functioning money
by inspiring investor confidence. The necessity for CG arises from the possible conflicts of interest among
different stakeholders in the organization.

These conflicts of interest often arise from two reasons. First, different stakeholders have different
preferences and objectives. Second, the stakeholders have inadequate information as to each others
knowledge, preferences and activities (Osman 2006). The requirement of CG is about how owners of
corporation can safeguard its properties and the returns generated by those properties are used efficiently
and in their best interests by the managers given with powers to operate those properties. This problem is
essential to any company where owners themselves do not involve in the management functions directly.
The CG problem arises due to the separation of ownership and control rights, informational irregularity, and
state contingent agreements. The precondition for effective CG in the telecommunication industry includes:

Arrangement of risk-bearing and control, Monitoring the inaccuracy of management and firms performance
based on transparency, regular and reliable disclosures, and internal checks and balances; and Incentives
(Haque, Jalil and Naz, 2007). It is generally accepted that the governance problem involves a difficulty
between accountability and managerial initiative. There is an overall consensus about the aim of good CG;
maximizing long term shareholder value. Since shareholders are remaining claimants, in sound performing
deposit, capital and financial markets, whatever maximizes shareholder value must automatically maximize
banking prosperity, and best satisfy the claims of employees, depositors, creditors as well as the State. CG
indicates the values, ethics and moralities under which organizational decisions are taken. However, in a
situation such as Bangladesh, where organized markets are developing and a weak market for corporate
control has been observed generally. This study particularly attempts to evaluate actual governance
practices in the Bangladesh telecommunication industry.

The structure of corporate governance specifies the distribution of rights and responsibilities among
companys different participants, such as board, management, shareholders and other stakeholders.
Transparency and accountability are its major attributes. Corporate governance covers the concepts,
theories and practices of boards and their directors and the relationship between boards and shareholders,
top management, regulators and auditors and other stakeholders.

Therefore, this study is an effort to identify whether grameenphone are practicing good or bad governance
within their organization.

1.2 Objectives
The main objective of the study grameenphone is practicing good or bad governance within their
organization.
In order to achieve the main objective, the study highlights the following specific objectives:
To examine the composition of the Board size in Grameenphone.
To find out the major problems hindering good Corporate Governance practice in
Grameenphone
To highlight the prospects of Corporate Governance practices in Grameenphone by removing
the problems involved therein.
How they are taking initiative to involve their current governance system.

1.3 Methodology
The study aims at evaluating the Corporate Governance practices in Grameenphone and find out the
existing problems in matching with the standards.
Data Collection Methods
The study is the outcome of both the primary and secondary data.
Primary Data Sources

Discussion with the GP officers, customers and shareholders.

Surveying

Secondary Data Sources

Policy Guidelines on Corporate Governance

Various relevant online articles and journals
Annual Report of the Grameenphone

Sample
The opinions on Corporate Governance have been collected from the respondents on the basis of three
different sets of prepared questionnaires. Data were collected from 15 randomly selected GP personnel
from Grameenphone, 10 shareholders of the grameenphone and 15 customers of the grameenphone.
Research Instrument
A close-ended questionnaire has been used as a tool for collecting primary data for the study.
Data Analysis
The collected data have been analyzed and interpreted critically in order to make the study more
effective, valuable & useful to the readers. The results are presented in charts to obtain better visual
representations.

1.4 Scope
The scope of the report is limited to the overall description of the telecommunication, its services, its position
in the industry and its competitive advantages. The scope is also defined by the organizational set-up,
functions and performances.

1.5 Limitation of the Study

The present study suffers from the following limitations:

There was a limited scope for us to deal with the grameenphones activities directly.
Due to lack of time sufficient information could not be gathered.
The number of respondents for collecting primary data was small compared to the total
population.
Enough information could not be collected due to lack of access to data.

1.6 Literature Review

Berle and Means (1932) and the even earlier Smith (1776), Zingales (1998) defines corporate governance as
allocation of ownership, capital structure, managerial incentive schemes, takeovers, board of directors,
pressure from institutional investors, product market competition, labour market competition, organizational
structure, etc., can all be thought of as institutions that affect the process through which quasi-rents are
distributed (p. 4).

Andres and Vallelado (2008) have examined the corporate governance in banking: the role of the board of
directors. They pointed out that bank board composition and size are related to directors ability to monitor
and advice management and that larger and not excessively independent board might prove more efficient in
monitoring and advising functions, and create more value.

Corporate governance importance arises in modern corporations due to the separation of management and
ownership control in the organizations. The interests of shareholders are conflicting with the interests of
managers. The principal agent problem is reflected in the management and direction related problems due to
the differential interests of firms stakeholders. There is not a single definition of corporate governance rather
it might be viewed from different angles. Berle and Means (1932) and the even earlier Smith (1776). Zingales
(1998) defines corporate governance as allocation of ownership, capital structure, managerial incentive
schemes, takeovers, board of directors, pressure from institutional investors, product market competition,
labour market competition, organisational structure, etc., can all be thought of as institutions that affect the
process through which quasi-rents are distributed (p. 4). Garvey and Swan (1994) assert that governance
determines how the firms top decision makers (executives) actually administer such contracts (p. 139).
Shleifer and Vishny (1997) define corporate governance as the ways in which suppliers of finance to
corporations assure themselves of getting a return on their investment (p.737). OECD in 1999 defined

corporate governance as "Corporate governance is the system by which business corporations are directed
and controlled. The corporate governance structure specifies the distribution of rights and responsibilities
among different participants in the corporation, such as, the board, managers, shareholders and other
stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing
this, it also provides the structure through which the company objectives are set, and the means of attaining
those objectives and monitoring performance. Oman (2001) defined corporate governance as a term refers
to the private and public institutions that include laws, regulations and the business practices which govern
the relationship between the corporate managers and the stakeholders. The Ministry of Finance, Singapore
(CORPORATE GOVERNANCEC 2001) defines corporate governance as the processes and structure by
which the business and affairs of the company are directed and managed, in order to enhance long term
shareholder value through enhancing corporate performance and accountability, whilst taking into account
the interests of other stakeholders. Good corporate governance therefore embodies both enterprise
(performance) and accountability (conformance). (Fin, 2004, pp 13-14). La Porta, Silanes and Shliefer
(2000, 2002) view corporate governance as a set of mechanisms through which outside investor
(shareholders) protect themselves from inside investors (managers). The Organization for Economic
Cooperation and Development provides another perspective by stating that corporate governance is the
system by which business corporations are directed and controlled.

The corporate governance structure specifies the distribution of rights and responsibilities among different
participants inthe corporation, such as the Board, managers, shareholders and other stakeholders, and
spells out the rules and procedure for making decisions on corporate affairs. By doing this, it also provides
the structures through which the company objectives are set, and the means of attaining those objectives
and monitoring performance.

McColgan (2001) gave a very broader view of agency theory and corporate governance. The major interest
of his research was to cover the area that where the interests of managers diverge from those of the
interests of shareholders. He kept in view the agency relationship and the agency cost which arises from
these relationships. He extended the work of Jensen and Meckling (1976) who defined the agency
relationship as a type of contract in which the principal keep the agent to carry out the services of the firm on
his behalf. The agency problem arises due to the different interest and the conflict between the ownership
and control as principal delegate some decision making authority to the agent. Jensen and Meckling (1976)
argued that this delegation authority reduces the value maximizing decisions taking by the manager in the
firm. Himmelberg,, Hubbard and Palia. (1999), argued Jenson and Meckling (1976) by saying that principal
agent problem are not similar in all firms rather they are different in different firms, different industries and
also in different cultures. Himmelberg et al. (1999) said that Jenson original theory nexus of contract
suggest the same. McColgan (2001) agreeing with the authors said that agency problem can be reduces by
the help of effective corporate governance mechanism which can be important in reducing the agency cost
and the ownership problems in the firms. The governance should be design according to the firm
environment as one general mechanism can be more important for some firms and less important for other
firms. Okeahalam and Akinboade (2003) reviewed the issues and challenges of corporate governance in
Africa. They presented the reason for their review that many of the non financial corporations failed in the
United States and in Asia due to the non efficient corporate governance. They said that Africa can learn a
great from the experiences of these countries and may improve the governance for its corporate sector.
Okeahalam and Akinboade (2003) conducted the review by studying a contribution on the corporate
governance in Africa and said that the modern concepts of separation of management from the ownership

10

make the corporate governance an important issue for research. The interests of people who control the
organizations are differing from those who invest in the company by external finance. Also the principal agent
problem and the interest of shareholders can only reduced through the effective corporate governance.
Okeahalam and Akinboade (2003) stated that the organization systems, practices, process and rules of
governing institutions are concerned closely with the corporate governance so there is a need to find those
relationships that regulate, create or determine the nature of relationship through those relationships.
Corporate governance implies that companies should balance between the interests of shareholders with
stakeholders at all levels of organization.

Okeahalam and Akinboade (2003) stated that Africa is highly influence by mismanagement, corruption in
business environment, therefore effective corporate governance can create the transparency and safeguard
against these threats facing by the companies to promote the foreign investment by foreign traders and
companies. The authors stated that research publication in the area of corporate governance is very low and
suggested that the research should be promoted in both empirical and theoretical ways. Farinha (2003)
conducted the theoretical and empirical literature review to find out the true nature and consequences of
corporate governance. The main focus of his literature was to find out the reasons of conflict between
manager and shareholders in organizations with respect to ownership mechanism. He also tried to find out
the link between the corporate governance and the value of the firm.

Farinha (2003) argued that major problem in organization arises with the relationship of principal and agent
relationships and a different approach of manager than the shareholders. The perspective of the manager
remains with the limited cash-flows thus managers focus lies with the short term perspective on investment
whereas shareholders stuck with the quick return of cash flows. Risk preference is also a major source of
conflict between the principal and the agent. Shareholders associated with the market risk and the risk of
stock returns whereas managers always concerned with the company risk because their survival depends on
the firm risk. The area of corporate governance is lacking with the external disciplining devices. The firms
through the effective corporate governance can implement these devices which includes the composition of
the board of directors, increase number of shareholders, maximize the inside ownership and by providing
different financial policies and compensation packages. Filatotchev, Lien and Piesse (2004) studied the
Corporate Governance and Performance in Publicly Listed, Family-controlled Firms in Taiwan. They
analyzed the effects of the structure of ownership and board characteristics on performance in large, publicly
traded firms which are controlled by family controlled firms. The authors argued that firms located in East
Asia, operate with a distinctive culture and in different legal and institutional environments than west and
Europe, These culture differences may have a strong impact on governance-performance relationships
suggested by the study of agency and strategy research.

The authors did not find a direct association between family ownership and managerial entrenchment and
extraction of the private benefits of this control, which might be the negative cause to financial performance.
The authors also identified the differences in corporate governance effects which are associated with
different types of institutional shareholders. Filatotchev, Lien and Piesse (2004) suggested that foreign
investors may attract to the Taiwan markets by the process of globalization which may lead to good
corporate governance being imported by the domestic firms in Taiwan. The results of their study also find
that family control over the executive board is the major determinant to the performance. Becher and
Campbell (2004) studied the corporate governance of bank mergers and acquisitions. He was of a view that

11

during these mergers and acquisitions the CEOs negotiates for their own interests whereas the outside
directors of the company face the financial problems. The corporate governance of independent companies
affected a lot.Becher and Campbell (2004) made empirical investigation to find out the effects of personal
benefits and the merger premiums by taking a sample of 146 mergers of large US banks in 1990s. They
targeted the two thousand directors and executives during these mergers and found that targets merger
premium is inversely related to the number of target directors who are retained during these mergers. This
also implies for the corporation size, incentives, payment methods and bidder returns. The study found that
the interests of target director relatively lies with the size of the company rather than performance and they
exercise their bargaining power with the acquirer which counters the interests of shareholders interest in the
merger. Novikova (2004) studied the impact of internal corporate governance system on firms innovative
activities and addressed the question that how much firms internal corporate governance system varieties
with the type and efficiency of firms innovative activities. Novikova (2004) listed out major participative actors
for the firms which are the board, the shareholders, the managers and the other stakeholders for the
companies. He defined the institutions as the rules and procedures use to make decisions on corporate
affairs of the firm.

Novikova (2004) designed his research on the definition of OECD which defines corporate governance in a
narrow term as a relationship between a company and its shareholder whereas in broader term the
relationship between the company and the society. Kowalewski, Stetsyuk and Talavera (2007) studied the
corporate governance practices in determining the dividend policy in Poland. Jensen (1986) said that
dividends can reduce the agency costs because of the distribution of free cash flows that can be spent on
the unprofitable projects by the firms management. Gompers, Ishii, and Metrick (2003) in their research on
agency cost also said that agency cost is the strengthen relationship between the shareholders rights and its
associated with the corporate governance. Kowalewski et al. (2007) studied the view of many authors in their
extensive literature on the topic and found that by empirical implications that corporate governance is an
important determinant for explaining the dividend policies. They also found that larger asset retain
companies and highly profitable firms without good investment opportunities pay more dividends whereas
the high risks and indebt firms pay low dividends. In Poland the companies with strong corporate governance
practices and strong shareholder rights pays higher dividends and it mitigates the agency problems in the
Poland. Another study conducted by Cueto (2007) to find out the role of ownership mechanism and
corporate governance practices in emerging markets of Latin America. In context of weak shareholder
protections the corporate governance mechanism affects the firm value, the liquidity of market and the
organization of industries. Cueto (2007) proposed that the relationship between the corporate governance
mechanism and the firms value and the effects of ownership structure and among the liquidity of the stock
market must be explored.

12

Chapter-2
Corporate Governance Concept &
Bangladesh Perspective

13

Corporate governance is the set of process, customs, policies, laws and affecting the way in which
corporation is directed, administered and controlled. The United Kingdom Cadbury Report (Cadbury,
1992, p.15) defined corporate governance as the system by which companies are directed and controlled.
Its structure specifies the distribution of rights and responsibilities among companys different participants,
such as board, management, shareholders and other stakeholders. Transparency and accountability are its
major attributes. Corporate governance covers the concepts, theories and practices of boards and their
directors and the relationship between boards and shareholders, top management, regulators and auditors
and other stakeholders. As for example, Asian Development Bank (ADB) describes corporate governance as
(i) a set of rules, that define the relationship between shareholders, managers, creditors, the government
and stakeholders, (ii) a set of mechanism that help directly or indirectly to enforce these rules (Asian
Development Bank, 2000, p. 5).
From a banking industry perspective, corporate governance involves the manner in which the business and
affairs of banks are governed by their boards of directors and senior management, which affects how, they:

Set corporate objectives;

Operate the banks business on a day-to-day basis;

Meet the obligation of accountability to their shareholders and take into account the interests
of other recognized stakeholders

Align corporate activities and behavior with the expectation that banks will operate in a safe
and sound manner, and in compliance with applicable laws and regulations; and

Protect the interests of depositors (Basel Committee on Banking Supervision, 2006).

Good corporate governance requires appropriate and effective legal, regulatory and institutional foundations.
A variety of factors, including the system of business laws and accounting standards, can affect market
integrity and overall economic performance. Supervisors are nevertheless encouraged to be aware of legal
and institutional impediments to sound corporate governance, and to take steps to foster effective
foundations for corporate governance where it is within their legal authority to do so (Basel Committee on
Banking Supervision, 1997).

The corporate governance of banks in developing economies is important for several reasons. First, banks
have an overwhelmingly dominant position in developing- economy financial systems, and are extremely
important engines of economic growth (King and Levine, 1993a,b; Levine, 1997). Second, as financial
markets are usually underdeveloped, banks in developing economies are typically the most important source
of finance for the majority of firms (Levine, R. 2004). Third, as well as providing a generally accepted means
of payment, banks in developing countries are usually the main depository for the economys savings.
Fourth, many developing economies have recently liberalized their banking systems through
privatization/disinvestments and reducing the role of economic regulation.

Corporate Governance ensures to bring transparency, accountability and professionalism in the

management system of a corporate body that enhances the credibility and acceptability to the shareholders,
employees, potential investors, customers, lenders, governments and all other stakeholders. This is truer in
case of Banking Industry. Since Banks deal in public money, public confidence is of outmost importance in
this Industry

14

Kutubi (2011) has examined board of directors size, independence and performance: an analysis of private
commercial banks in Bangladesh. This study has examined the impact of board size and the independent
directors on the performance of the local private commercial banks in Bangladesh. The study has found that
statistically significance positive relationship existed between the proportions of the independent directors
and the performance of the banks.
Corporate governance issue came into light in the wake of stock market debacle in Bangladesh in 1996 by
organizing seminars, conferences and discussion by Organization for Economic Co-operation and
Development (OECD), SEC and other scholars of corporate culture (Talukdar,2007). Bangladesh Enterprise
Institute in March 2004 introduces the code of corporate governance for Bangladesh. The corporate
governance issue came to front line in Bangladesh after Oriental Bank had taken by Bangladesh Bank
in2006 (Aims of Bangladesh, 2006).The Securities and Exchange Commission (SEC) in February 2006
issued a notification and by this notification the SEC imposes condition comply or explain to all companies
listed with any stock exchange. After introducing SEC guidelines the corporate governance practices are
gradually increasing in Bangladesh, but it is in initial stage till now. 100 companies within 107 disclosed
according to SECs guidelines, only 18 companies fully complied with all the conditions of SEC corporate
governance guidelines, in their annual report and another seven did not disclosed according to SEC format
of corporate governance (Uddin and Begum, 2012). They also examine corporate governance compliance
gives the poor state of disclosure as well as compliance with corporate governance in Bangladesh need to
make compulsory instated of comply or explain.

Hossain (2011) highlighted the corporate governance practices in Bangladesh. The study has pointed out
that good corporate governance has implication for company behavior towards employees, shareholders,
customers & banks. He has suggested that improving corporate governance can provide significant rewards
to both individual companies and countries.

Rashid et al (2010) have examined board composition and firm performance from Bangladesh perspective.
The study has also examined the influence of corporate board composition in the form of representation of
outside independent directors on firms economic performance in Bangladesh. The finding of the study has
provided an insight to the regulators in this quest for harmonization of internal corporate governance
practices.

Corporate governance actually deals with the duties and responsibilities of a companys board of directors in
managing the company and their relationships with the shareholders of the company and the stakeholder
group (Cornelius, 2004).Corporate governance is the relationship between the investor, the management
team and the board of directors of company (Levitt, 2002). Corporate governance is not only shown and
analyzed the conflict of interest and its impact on firm value, but also has unveiled good governance
principles and their implementation (Doost & Fishman, 2004).Corporate governance refers to the rules and
incentives by which the management of a company is directed and controlled to maximize the profitability
and long-term value of the firm for shareholders while taking into account the interests of other legitimate
stakeholders (Hurley and Khemani, 1998).Corporate governance refers to the private and public institutions,
including laws, regulations and accepted business practices, which in market economy; govern the
relationship between corporate managers and entrepreneurs on one hand, and those who invest resources
in corporations, on the other (Oman 2001).In addition, theory of corporate governance can be interpreted as
a theory concerned with the alignment of management and shareholder interests (Grant, 2003).

15

Chapter-3
Overview of Grameenphone

16

3.1 Company Profile

Grameenphone Ltd. has stepped into its 17th year of operation, having completed its 16th year on March 26,
2013. It is the leading telecommunications service provider in the country with more than 45 million
subscribers as of December 2012. Grameenphone has been recognized for building a quality network with
the widest coverage across the country while offering innovative products and services and committed aftersales service.
History and Milestones: November 28, 1996: Grameenphone was offered a cellular license in Bangladesh
by the Ministry of Posts and Telecommunications.
March 26, 1997: Grameenphone launched its service on the Independence Day of Bangladesh.
June 1998: GP started its services in the port city of Chittagong, the second largest city in the country. Cell
to cell coverage in the DhakaChittagong corridor also enabled GP to introduce its service in a number of
other districts along the way.
September 1999: GP started its service in the industrial city of Khulna. Once again, a number of other
districts came under coverage of GP because of the cell to cell coverage between Dhaka and Khulna. Earlier
in September 1999, it introduced the EASY prepaid service in the local market. It also introduced the Voice
Mail Service (VMS) and the Short Message Service (SMS) and other Value Added Services (VAS).
June 2000: Grameenphone started its services in Sylhet, Barisal and Rajshahi, bringing all six divisional
headquarters under the coverage of its network. The service in Barisal region was started after the
microwave link between Khulna and Chittagong was completed.
August 2003: After six years of operation, Grameenphone has more than one million subscribers.
November 2005: Grameenphone continues to being the largest mobile phone operator of Bangladesh with
more than 5 million subscribers.

November 16, 2006: After almost 10 years of operation, Grameenphone has over 10 million subscribers.
Grameenphone has built one of the most extensive infrastructures of Bangladesh and is a major contributor
to the development of the national economy.
December 31, 2007: Grameenphone is one of the largest private sector investments in the country with an
accumulated investment of USD $1.7 billion up to December 2007. Grameenphone is also one the largest
taxpayers in the country, having contributed nearly BDT 5000 Crore in direct and indirect taxes to the
Government Exchequer over the years of which is amount, BDT 1670 Crore was paid in 2005 alone.
2008: Introduced BlackBerry Service; commissioned brand positioning & launched Stay Close & Customer
Care Campaign and reached 20 million subscribers.
2009: Listed on Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd.; launched internet modem,
special Olympic Regional Talent Hunt, Stay Green Campaign, Internet Package P5 & P6, Grameenphone
branded handset &studyline also reached 21 million subscribers.
2010: Launched new tariff plan, MobiCash financial service brand, Ekota for SME, Baadhon package and
mobile application development contest & network campaign; reached 29.97 million subscribers.
2011: Launched My zone- location based discount on usage, Micro SIM cards for iPhone, Spondon
Package with 1-sec pulse; Grameenphone branded handset (C200, QWERTY handset Q100 and Android

17

handset Crystal), Customer Experience Lab, eCare solution; Completed swapping of 7,272 nos. of BTS;
Reached 36.5 Million Subscribers.
2012: Awarded license for 2G operation for 15 years effective from November 2011; two new affordable
packages Amontron and Nishchinto were launched, 10-second pulse was introduced for all products
including helplines; A GP App was launched to facilitate mobile self service; Reached 40.02 million
Subscribers.
January, 2013: Successfully Deploys Oracle Communications Network Resource Management Solution to
Transform Inventory Operations.
Grameenphone was also the first operator to introduce the prepaid service in September 1999. In addition to
core voice services, Grameenphone offers a number of valueadded services, in each case on both a
contract and prepaid basis. It established the first 24hour Call Center, introduced valueadded services such
as VMS, SMS, Fax & Data Transmission Services, International Roaming Service, WAP, SMS based
PushPull Services, EDGE, personal ring back tone and many other products and services. Grameenphone
nearly doubled its subscriber base during the initial years while the growth was much faster during the later
years. It ended the inaugural year with 18,000 customers, 30,000 by the end of 1998, 60,000 in 1999,
193,000 in 2000, 471,000 in 2001, 775,000 in 2002, 1.16 million in 2003, 2.4 million in 2004 and 5.5 million
in 2005 customers. Currently the customer base of Grameenphone is over 40 million. Grameenphone offers
the widest coverage in Bangladesh. The population coverage has increased from approximately 85% in 2005
to above 90% in 2006. Currently the population coverage is 98% (Including voice call and Edge/GPRS). In
addition; Grameenphone also offers GPRS in most of the country and EDGE in urban areas. From the very
beginning, Grameenphone placed emphasis on providing good after sales services. In recent years, the
focus has been to provide after sales within a short distance from where the customers live. There are now
more than 400 GP Service Center, 20 GPC Franchise, recharge retailers: 105,000+, total retailers: 18000+,
distributors: 96, Single hotline which operates 24/7; the country covering all 64 districts.
In addition, there are 62 GP Customer Centers in all the divisional cities and they remain open from 8am7pm
every day including all holidays. Grameenphone has generated direct and indirect employment for a large
number of people over the years. The company presently has more than 6,000 fulltime, parttime and
contractual employees. Another 70,000 people are directly dependent on Grameenphone for their livelihood,
working for the GP dealers, retailers, scratch card outlets, suppliers, vendors, contractors and others.
In addition, the Village Phone Program, also started in 1997, provides a good income earning opportunity to
more than 200,000 mostly women Village Phone operators living in rural areas. The Village Phone Program
is a unique initiative to provide universal access to telecommunications service in remote, rural areas.
Administered by Grameen Telecom Corporation, it enables rural people who normally cannot afford to own a
telephone to avail the service while providing the Village Phone operators an opportunity to earn a living.
Grameenphone has generated direct and indirect employment for a large number of people over the years.
Grameenphone considers its employees to be one of its most important assets. GP has an extensive
employee benefit scheme in place including Gratuity, Provident Fund, Group Insurance, Family Health
Insurance, Transportation Facility, Gym, Recreation Centre, Day Care Centre, Childrens Education Support,
higher Education Support for employees, InHouse Medical Support and other initiatives.

3.2 Mission
Leading the industry and exceed customer expectations by providing the best wireless services, making life
and business easier.

18

3.3 Vision
We exist to help our customers get the full benefit of communications services in their daily lives. We want to
make it easy for customers to get what they want, when they want it. We're here to help.

3.4 Corporate Governance Practice in

Grameen Phone
Grameenphone (GP) throughout its entire business operation puts persistent efforts to ensure stakeholders'
trust and confidence as governance and stakeholders' value are interconnected. With this end in view, GP
has been providing and maintaining innovative, user-friendly and best-value telecommunications services to
create sustainable stakeholders' value. To reach these objectives, the Board of Directors of the Company is
dedicated to ensuring higher standards of Corporate Governance to keep the Company's business integrity
and performance on the right track. Being a responsible corporate entity, GP maintains adequate
transparency and encourages sound business conduct both in its in-house practices and in its external
relationship with the community as well as suppliers, customers and business partners.
The Company, at the same time, expects acts of honesty and integrity from its Board of Directors,
employees and suppliers. As a public listed company, GPs Board of Directors plays a crucial role in
upholding the interests of all its stakeholders. The Board of Directors and the Management Team are also
dedicated to maintaining a well-established culture of accountability, transparency, easy-to-understand
policies and procedures to ensure effective Corporate Governance at every level of its operations. The Board
of Directors and the Management Team also put their best efforts to comply with all the laws of the country
and all the internal regulations, policies and procedures to make GP a thoroughly transparent company.
Moreover, recognizing the fact that compliance has been the corner stone of good governance, the
Company meticulously undergoes through the process of statutory audit and compliance certification as
required by laws of the land. As a result, GP has been able to maintain the highest level of integrity and
accountability of global standards over the years.

Board Organization & Structure

a) Role of the Board
The Directors of the Board are appointed by the Shareholders at the Annual General Meeting (AGM) and
accountable to the Shareholders. The Board is responsible for ensuring that the business activities are
soundly administered and effectively controlled. The Directors keep themselves informed about the
Company's financial position and ensure that its activities, accounts and asset management are subject to
adequate control. The Board also ensures that GP Policies & Procedures and Codes of Conduct are
implemented and maintained and the Company adheres to generally accepted principles for good
governance and effective control of Company activities. In addition to other legal guidelines, the Board has
also adopted Rules of Procedure for the Board of Directors for ensuring better governance in the work and
the administration of the Board. The Board is also guided by a Delegation of Authority which spells out the
practices and processes in discharging its responsibilities.

19

b) Board Composition
The Board in GP is comprised of ten (10) Directors, including the Chairman who is elected from amongst the
members. In compliance with the Corporate Governance Guidelines issued by the Bangladesh Securities
and Exchange Commission (BSEC), the Board of Directors has appointed two (2) Independent Directors. We
believe that our Board has the optimum level of knowledge, composure and technical understanding about
the Companys business which, combined with its diversity of culture and background, stands as the perfect
platform to perform and deliver.
c) Board Meetings
The AoA of the Company requires the Board to meet at least four times a year or more when duly called for
in writing by a Board member. Dates for Board Meetings in a year are decided in advance and notice of each
Board Meeting is served in writing well in advance. Such notice contains detailed statement of business to be
transacted at each meeting. The Board meets for both scheduled meetings and on other occasions to deal
with urgent and important matters that require attention.
d) Division of work for the Board and Chief Executive Officer (CEO)
The roles of the Board and Chief Executive Officer are separate and delineation of responsibilities is clearly
established, set out in writing and agreed by the Board to ensure transparency and better corporate
governance. To that end, GP has also adopted Rules of Procedure for Chief Executive Officer. The CEO is
the authoritative head for day-to-day management in GP. He acts to reasonably ensure that GP operates
business as per the Articles of Association, decisions made by the Board and Shareholders, as well as
according to GP Policies and Procedures and applicable regulatory legislations.
e) Access to Information
The Board recognizes that the decision-making process is highly dependent on the quality of information
furnished. In furtherance to this, every Director has access to all information within the Company. Throughout
their tenure in office, the Directors are continually updated on the Companys business and the regulatory
and industry specific environments in which it operates. These updates are given by way of written briefings
and meetings with senior executives and, where appropriate, external sources.
Board Committees
For better, quicker and furnished flow of information and thereby exercising effective governance, the Board
has also constituted a number of Committees and has delegated certain responsibilities to the Board
Committees to assist in the discharge of its responsibilities. The role of Board Committees is to advise and
make recommendations to the Board.
Each Committee operates in accordance with the Terms of Reference (TOR) approved by the Board. The
Board reviews the TOR of the committees from time to time. The Board appoints the members and the
Chairman of each committee. A brief description of each Committee is presented below:
a) Audit Committee
The GP Audit Committee was established in late 2008 as a sub-committee of the Board and has jurisdiction
all over GP and its subsidiaries. The Audit Committee is comprised of three (3) members of the Board. The
Chairman of the committee is an Independent Director. The Chief Executive Officer, the Chief Financial
Officer, the Company Secretary and the Head of Internal Audit are permanent invitees to the Audit
Committee meetings. The Audit Committee assists the Board in discharging its supervisory responsibilities
with respect to internal control, financial reporting, risk management, auditing matters and GPs processes of
monitoring compliance with applicable legal & regulatory requirements and the Codes of Conduct. The Audit

20

Committee Charter, as approved by the Board, defines the purpose, authority, composition, meetings, duties
and responsibilities of the Audit Committee.
b) Treasury Committee
This committee consists of three (3) members who are appointed by the GP Board. All significant financial
matters which concern the Board are discussed in this committee meeting in detail. Upon endorsement of
the Treasury Committee, such issues are forwarded to the Board for their final review and approval.
c) Human Resources Committee
This Committee consists of three (3) members who are appointed by the GP Board. The Committee supports
the Board in discharging its supervisory responsibilities with respect to Companys Human Resources policy,
including employee performance, motivation, retention, succession matters, rewards and Codes of Conduct.
d) Health, Safety, Security and Environment Committee
This Committee consists of three (3) members who are appointed by the GP Board. The Committee meets
whenever necessary and supports the Board in fulfilling its legal and other obligations with respect to Health,
Safety, Security and Environment (HSSE) issues. The Committee also assists the Board in obtaining
assurance that appropriate systems are in place to mitigate HSSE risks in relation to the general
environment, company, employees, vendors, etc.
Company Secretary
To ensure effective assimilation and timely flow of information required by the Board and to maintain
necessary liaison with internal organs as well as external agencies, the Board has appointed a Company
Secretary. The Corporate Governance Guidelines issued by the Bangladesh Securities and Exchange
Commission (BSEC) also require a listed company to appoint a full fledged Company Secretary, as distinct
from other managers of the Company. In pursuance of the same, the Board of Directors has appointed
Company Secretary and defined his roles & responsibilities. In GP, among other functions, the Company
Secretary:

Performs as the bridge between the Board, Management and Shareholders on strategic and
statutory decisions and directions.
Acts as a quality assurance agent in all information streams towards the Shareholders/Board.
Is responsible for ensuring that appropriate Board procedures are followed and advises the Board on
Corporate Governance matters.
Acts as the Disclosure Officer of the Company and monitors the compliance of the Acts, rules,
regulations, notifications, guidelines, orders/directives, etc. issued by BSEC or Stock Exchange(s)
applicable to the conduct of the business activities of the Company so as to protect the interests of
the investors and other stakeholders.

21

3.5 SWOT Analysis of Grameenphone

Strengths:
Weaknesses:
Too many missed deadlines and a lot of
Have an excellent staff for handling
work on pending
sales with strong knowledge of
High cost of rental for the office
current products
Infrequent cash flow system
Strong customer relationships
Too much stock in inventory and
Strong
internal communications
higher inventory costs
system
An inefficient record maintenance
A strong geographical location with
system in place
high traffic input
Outdated market research data
Well-designed
and
successful
marketing strategies
Business
reputation
of
being
innovative
Opportunities:
Threats:
A lot of competitors in the market with
Products similar to yours in the
similar products
market are expensive or of poor
A new advertising campaign launched
quality
by competitors
Customers in the market are loyal
A competitor opening new shop in a
Seasonal high demand of the product
nearby location
High demand for product or similar
A downturn in economy and less
merchandise
spending budget of people

22

3.6 Structure of Grameenphone

The divisions are:

Finance Division
Deputy Managing Director Division
Regulatory & Corporate Affairs Division
Human Resources Division
Chief Marketing Officer Division
Internal Audit Division
Technical Division
Information Technology Division
New Business Division

23

The Directors and the AGM have to report directly to the Managing Director. The heads of the other
four departments directly report to the Managing Director too.

3.7 Achievement
GrameenPhone is one of the largest private sector investments in the country with an accumulated
investment of BDT 5200 crore up to December 2005. GrameenPhone is also one the largest taxpayers in the
country, having contributed nearly BDT 5000 crore in direct and indirect taxes to the Government Exchequer
over the years. Of this amount, BDT 1670 crore was paid in 2005 alone. Grameenphone nearly doubled its
subscriber base during the initial years while the growth was much faster during the later years. It ended the
inaugural year with 18,000 customers, 30,000 by the end of 1998, 60,000 in 1999, 193,000 in 2000, 471,000
in 2001, 775,000 in 2002, 1.16 million in 2003, 2.4 million in 2004, 5.5 million in 2005, 11.3 million in 2006,
16.5 million in 2007, 20 million in 2008, 23.26 million in 2009 and end 2010 with 25.00 million customers and
2014, 45.6 million customer of Grameenphone.

3.8 Shareholders of Grameenphone

Shareholders of Grameenphone (GP) bring together experiences from different parts of the world.
This is particularly enriched by the unique in-depth experience of Grameen Bank, an institution dedicated
to poverty alleviation through collateral-free small loans in the rural areas of Bangladesh. The foreign
shareholders from Norway, Japan, and the United States -countries that have been working as close
partners of Bangladesh in its struggle for economic progress since independence bring a rich heritage of
human progress in technology, business cooperation, free market competition, and socio-economic
institution building.

Telenor
Which owns 62% of GP, is the state-owned telecommunication company in Norway operating since 1885. It
is amongst the oldest, most sophisticated, and diversified telecom companies in the world. The company
has a long history of successful cooperation with other operators and governments in and out of Norway.
Telenors home base, Norway, has the highest density of mobile phones in the world and one of the most
competitive markets in the field. Telenor has been playing a pioneering role in the development of GSM,
one the latest and most successful versions of cellular technologies.
Grameen Telecom
The second largest shareholder owning 38% of GP, has been established by Grameen Bank, which believes
that a lack of communication facilities in the rural areas is one of the major

24

obstacles to rapid economic development in the rural areas of Bangladesh. Grameen Telecoms deep
understanding of the people and culture of Bangladesh helps GP to build up convenient and costeffective communication facilities in the rural areas, which in turn, create more jobs and open up
business opportunities there.
These two companies own shares of GrameenPhone in the following manner:

25

Chapter-4
Findings of the Term Paper

26

4.1 Consumers Perspective

Corporate governance is applied in all aspects of customer care operations.
It is important that customers can discuss their views and have knowledge about their position . These
are important elements for ensuring good governance at the corporate level to safeguard rights of the
customers. As in the below figure, majority of the consumers agreed that corporate governance is applied
in all aspects of consumers care perspective.

Above figure shows that 60% respondents said yes, 33% no, and 20% had no idea about whether
Corporate governance is applied in all aspects of customers care operations. This shows that majority,
60%, agrees and satisfied with the governance system of GP, though there are much to improve in order
to retain consumers and also increase awareness in order to attract more.

Corporate governance is corrupt free in Grameen Phone.

Above figure shows that 80% of the consumers said yes, and 20% said no idea which means that
consumers are well aware of their fame as highest taxpayer giving the signal of free of economical
corruption and also that the organizations adminstration is strong and stuffed with skilled and intellectual
employees with high or at least moderate salaries.

Employees of GP are co-operative with customers.

It is important that customers can become comfortable when they bring issues to the GP employees.
These are important elements for ensuring good governance at the corporate level to safeguard rights of
the customers as well as retain them (customers). As in the below figure, majority of the consumers
agreed that employees of GP are co-operative with customers.
Above figure shows that 75% respondents said yes, 20% no, and 5% had no idea about whether
employees of GP are co-operative with customers.. This shows that majority, 75%, agrees and satisfied
with the governance system of GP, as employees trust each other and have strong cooperation among
them leading to good co-operation with the consumers, though there are much to improve in order to
retain consumers and also increase awareness in order to attract more.

27

Grameenphones treats the customers fairly.

Above figure shows that 75% respondents said yes, 25% no, and 5% had no idea about whether
employees of GP treats fairly to their customers.. This shows that majority, 75%, agrees and satisfied with
the governance system of GP, as employees treats customers fairly as offers and services to different
consumers are almost similar, but there are much to improve in order to retain consumers and also
increase awareness in order to attract more.

Grameenphone clearly informs the customers about the cost involved.

Above figure shows that 65% respondents said yes, 25% no, and 15% had no idea, this shows that
majority, 75%, agrees and satisfied with the governance system of GP, as GP informs customers about
the cost involved as offers and services usually have no hidden charges, yet customers are unhappy due
to certain costs that involves when using an offer therefore in order to retain consumers this issue must
be addressed and also increase awareness in order to attract more consumers.

GP contributes in the welfare of the society.

Above figure shows that 80% respondents said yes, 20% no idea about whether GP contributes in the
welfare of the society. This shows that majority, 80%, agrees and satisfied with the governance system of
GP, as many CSR activities like relief for poor during cold or hazard condition, though there are much to
improve in order to retain consumers and also increase awareness in order to attract more as minority of
public are unaware of such activities showing GP failed to reach them.

28

4.2 Employees Perspective

Employees awareness of corporate governance system.
Employees are aware of the corporate governance system of Grameen Phone.
Disclosure is an important element of governance in the corporate world because it builds trust, among
the employees.85% of the employees is aware of the corporate governance system and 15% are not
aware of the system and 5% have no idea.GP failed to aware this 20% employees and its not a big issue
.GP can make them aware by motivating.
Corporate governance principles are properly communicated with employees.
Above figure shows that 85% of the employees are know about the corporate governance principles and
9% of the employees are not properly communicated about the principles and remaining 6% have no idea
about the principles. Each and every employee has to know about the principles to follow them and run
the business successfully.
Management of GP largely represented by few important people.
Above figure shows that 20% people said yes and 75% people said no because management of GP
largely represented by all employees not by the few people.
There is a separate code of corporate governance in GP.
Above figure shows that 85% said yes and 10% said no.GP has a separate code of corporate
governance which are strongly followed by them ,have some separate rules and regulation which are only
followed in GP. The 15% who are not aware of the code, they may be dissatisfied.
Written performance evaluation system of CEO.
Above figure shows that only 5% said yes, 2% said no idea and 93% said no, because the performance
system of CEO is computerized. The 7% who said yes and no idea, they may be didnt participate in the
evaluation system. The company must ensure the every employee participation in the evaluation system
of CEO.
Self directed teams are encouraged to motivate employees.
Above figure shows that 90% said yes, 7% said no, 3% said no idea. If employees are get the opportunity
to make their own team for a particular task, it will be more encouraging for them and it will also make to
feel them independent.GP failed to motivate 7% employees.
Job rotation and cross training are encouraged to improve employee performance.
Above figure shows that 70% said yes, 25% said no and 5% said no idea. Employees are encouraging by
job rotation and cross training, by this they can learn many new things, can know more about the
company, and it also remove their boredom as well as improve their performance. The employees who
said no, actually they dont want to rotate job or company failed to encourage them.

29

There is employee stock ownership plan.

Above figure shows that 70% said yes, 20% said no and 10% said no idea. Employees of GP can be the
owner of company stock and participate in the companys decision making system.GP failed to
encourage employee to stock ownership plan.
Annual general meetings are held as per as legislation.
Above figure shows that 85% said yes,9% said no and 6% said no idea. General meetings are held
annually by followed rules and regulations and the 9% who said no ,they have no idea about the general
meeting and GP failed to make them aware about the annual general meeting.
Employees and share holders have right to question the decisions of the meeting.
Above the figure shows that 75% said yes,20% said no and 5% said no idea.GP gives the right to the
employees to ask question about the decisions which are taken in the meeting and also failed to make
attention about the decisions of the 20% employees.
The GP has committee of corporate governance.
Above the figure shows that 90% said yes, 6% said no and 4 % said no idea .GP has the corporate
governance committee who make some ethics, laws, rules and regulations for the company and make
ensure that every employee followed those. GP failed to encourage 10% people to follow the committee
rules.
The BODs meet at least once in every quarter.
Above the figure shows that 75% said yes, 15% said no and 10% said no idea. BODs meet at least once
in every quarter to take report from the management of every section of the company and make decisions
and may be change some laws if its required for the company to run the business successfully.15%
employees have no idea about this meeting and company failed to pay their attention about it.
Employees participation is encouraged to bring forward any idea for improving the system.
Above the figure shows that 95% said yes, 4% said no and 1% said no idea. Not only the management or
directors have the ideas about improving the system but also employees have also innovative and
creative idea about the improving system because they are related with day to day activities of the
company, they gather knowledge and impose them to create new idea which can improve the system.
The outcomes of the general meetings of the communicated to the employees.
Above the figure shows that 70% said yes, 25% said no and 5% said no idea. General meetings results
are communicated to the employees because they can easily understand what they have to do next
according to the outcomes or decisions of the meetings.
The executive body is selected by the board of directors.
Above the figure shows that 85% said yes, 10% said no and 5% said no idea. BODs selected the
executive body of every department to look after the works of employees and here GP failed to aware of
this to 25% of the employees.
GP discloses only information which must be disclosed in accordance with legislation.
Above the figure shows that 80% said yes, 20% said no and 10% said no idea. All information is not
disclosed by GP, only few in accordance with legislation. The total 30% of the employees dont have any
idea about the issue.
The disclosures of information are easily available to all employees.
Above the figure shows that 85% said yes, 10% said no and 5% said no idea. Information are available to
the employees for easily understand their task in accordance with the information. Total 15% has not
aware of this issue.

30

4.3 Shareholders Perspective

The Annual General Meetings are held as per legislation every year in the Grameenphone.
The General Meeting of the Shareholders is the supreme governing body in GP. The Company
recognizes the rights of Shareholders and the Shareholders' interests are primarily ensured through GPs
Annual General Meeting (AGM). The Board Members and Statutory Auditors attend AGM to respond to
the Shareholders queries on the result or any other aspect of the Company, if any.
Above figure shows that 80% respondents said yes, 20% said no about the Annual General Meetings are
held as per legislation every year in the Grameenphone. This shows that majority, 80%, agrees and
satisfied with the governance system of GP.
All shareholders are properly notified about general meeetings,all financial and other informations.
the Company follows these three main forms of information disclosure:
(a) Continuous disclosure which is its core disclosure and primary method of informing the market and
Shareholders;(b)Periodic disclosure in the form of quarterly and yearly reporting of financial results and
other issues; and (c)Event based disclosure as and when required, of administrative and corporate
developments, usually in the form of stock exchanges & press releases.
Above figure shows that 75% respondents said yes, 20% no, and 5% had no idea about whether they are
properly notified about all financial and other informations. This shows that majority, 75%, agrees that
they are properly notified about all financial and other informations and decisions of grameenphone.

The shareholders are well informed about the agenda of the general meetings.
The Companys policy is that Shareholders will be informed in a routine manner of +agenda of general
meetings. They also know about the all major developments that impact the business of the Company
and also be able to make informed decisions
Above figure shows that 95% respondents said yes, 5% no. This shows that majority, 95%, agrees that
they are well informed about the agenda of the general meetings.
The outcomes of the general meetings are communicated to the shareholders.
Grameenphonebelieves good Corporate Governance involves openness and trustful cooperation
between all stakeholders involved in the Company. Information is communicated to the Shareholders
regularly through a number of forums and publications. The Company has adopted a detailed policy on
information disclosure ancommunication. In compliance with continuous disclosure requirements.
Above figure shows that 85% respondents said yes, 10% no, and 5% had no idea about whether the
outcomes of the general meetings are communicated to the shareholders.This shows that 85%, agrees
that the outcomes of the general meetings are communicated to the shareholders.Though there are much
to improvethe information providing & communication channel.

31

Shareholders have the right to call for extraordinary general meetings.

Extraordinary general meeting is an irregular meeting called by B.O.D / Shareholders for certain decision.
Above figure shows that 30% respondents said yes, 60% no, and 10% had no idea about whether they
can call for EGM. This shows that majority portion of shareholders, 60%, disagree.So, Gp should provide
shareholders the right to call for EGM.
Shareholders have right to question the decisions of the meetings.
GP aims to provide sufficient information to Shareholders and Investors about the Company and its
activities. It also recognizes that Shareholders may have specific queries relating to their shareholding.
These queries may be directed at 01711555888 or mailed to GP Share Office at
shareoffice@grameenphone.com.
Above figure shows that 90% respondents said yes, 5% no about whether they have right to question the
decisions of the meetings.
Shareholders participation is encouraged to bring forward any idea for improving the system.
Above figure shows that 80% respondents said yes, 20% no. This shows that majority, 80%, agrees and
satisfied with the governance of Grameenphone.
The meetings of the B.O.D. are just a formality and the decisions are from before.
The AoA of the Company requires the Board to meet at least four times a year or more when duly called
for in writing by a Board member. Dates for Board Meetings in a year are decided in advance and notice
of eachBoard Meeting is served in writing well in advance. Such notice contains detailed statement of
business to be transacted at each meeting. The Board meets for both scheduled meetings and on other
occasions todeal with urgent and important matters that require attention
Above figure shows that 20% respondents said yes, 80% no, about the meetings of the B.O.D. are just a
formality and the decisions are from before This shows that majority, 80%, are not agreed with the above
statement. Thus it indicates the governance system of GP is good enough
The members are selected through voting by all major shareholders.
The Directors of the Board are appointed by the Shareholders at the Annual General Meeting (AGM) and
accountable to the Shareholders. The Board is responsible for ensuring that the business activities are
soundly administered and effectively controlled. The Directors keep themselves informed about the
Company's financial position and ensure that its activities, accounts and asset management are subject
to adequate control. The Board also ensures that Grameenphone Policies &Procedures and Codes of
Conduct are implemented and maintained and the Company adheres to generally accepted principles for
good governance and effective control of Company activities.
Above figure shows that 100% respondents said yes. This shows all shareholders agree that the
members are selected through voting by all major shareholders.

So, we can see, Shareholders have a overall positive perception about Grameenphone. So we can say
from the shareholders perspective that is Grameenphone is maintaining a good corporate governance
system.

32

Chapter-5 : Conclusion
In this review which is a collection of volume of research on corporate governance the significance of
effective corporate governance is being evident. The aim of the review done is to check the effectiveness
of corporate governance and its effective mechanism in running and managing the business operations.
The issue of ownership and control and the principal-agent problem and its effect on corporate
governance is the main area of research in this review. The findings of the most studies show that
effective corporate governance reduces the ownership and control problems and draws a clear line
between the shareholder and the manager. Finally from the discussion from all articles this review
provides a general overview of principal-agent problem and ownership and control for the researchers
and academic practitioners in the domain of corporate governance.
The primary objective of the study was to evaluate whether the practices of Corporate Governance
codes by Grameenphone is good or bad. The broad issues like shareholders rights and disclosure of
information, disclosure and transparency, audit practices, board issues and customer satisfaction are the
main yardstick to assess the practice of CG codes. The study found some problems in meeting the
Corporate Governance Issues transparency and accountability, financial reporting, reliability on audit
reports, shareholders participation, customers satisfaction, etc.
In short the fairness, accountability and transparency of private banks can be improved in order to meet
Corporate Governance standards. The telecommunication sector of Bangladesh is becoming stronger
day by day and it is playing a pivotal role in the volatile economy of this country to become Bangladesh
one of the growing economies of the world in near future. So to be more effective and to put more
contribution for the betterment of Bangladesh, each telecom company should follow the Corporate
Governance codes properly to bring the authenticity in its operations and to bring the faith of the
stakeholders as well as the people of Bangladesh.

33

Chapter-6 : Recommendations
After completing the research following recommendations have been made to ensure the practice of
corporate governance codes in Grameenphone and to increase sustainability of the business:

The corporation should focus more on corporate governance training programs to make everyone
in the organization aware of its practices.

Complete resume of directors of every organization should be disclosed to enable shareholders

to judge their qualification and skills.

Customers should be treated more fairly and provided with detailed information about their
banking activities and costs involved.

More detailed information on major shareholders equity and ownership should be disclosed.
Minor shareholders should not be neglected by any means.

The effectiveness of independent directors should be increased in the organization to bring more
transparency.

The performance of Board of directors should be evaluated more strictly and timely to bring the
accountability in the organization.

Adequate time and scope should be given to the shareholders for asking questions and placing
issues in the Annual General Meetings (AGM).

Employees should be encouraged to participate in decision making and bring forward their ideas
and viewpoints about the organization.

34

Chapter-7 : References
Berle, A. A. and Means, G. C. (1932), The Modern Corporation and Private Property,Macmillan, NY.
Becher. D. A., and Campbell. T.L (2004), Corporate governance of bank mergers.Core, J. E.,
Holthausen, R.W. and Larcker, D. F. (1999), Corporate governance, chief executive officer
compensation, and firm
Kowalewski . O, Stetsyuk. I. and Talavera. O (2007), Corporate Governance and Dividend Policy in
Poland.
La Porta, R., Lopez-De-Silanes, F., Shleifer, A. and Vishny, R. W. (2002), Investor Protection and
Corporate
Valuation, The Journal of Finance, vol. 57, no. 3, pp. 1147-1170.
www.ipedr.com/vol25/1-ICEME2011-A10015
Afroze, Sadia and Jahan, Mosammet Asma (2005), Corporate Governance Practices in Bangladesh,
Dhaka University Journal of Business Studies, Vol. XXVI, No.2, and December.
Cadbury, Sir Adrian., 2000, The Corporate Governance Agenda, Vol. 8, No. 1 page 7-15 (9), Blackwell
Publishing ,UK
Allen F., Gale D., Corporate Governance and Competition in Corporate Governance: Theoretical And
Empirical Perspectives, 2000

www.grameenphone.com
Annual Reports of Grameenphone

35

Chapter-8
Appendix

36

Questionnaire for Customers:

Appendix
Questionnaire:
Name:
Contact Number:
Profession:
Age:
3

Yes

No

No Idea

Corporate governance is applied in all aspects of the customer care

operations.
Corporate governance is corrupt free in Grameen Phone.
The employees at GP are cooperative with the customers.
The grameen phones employee treats the customers fairly.
The organization clearly informs the customers about the costs
involved.
The GP has no hidden cost on their offers.
The terms and conditions of the corporate system are fair with
customers.
GP contributes in the welfare of the society.

37

Questionnaire for Shareholders:

Name:
Contact Number:
Profession:
Age:
3

Yes

No

No Idea

Annual General Meetings are held as per the legislation

All shareholders are properly notified about the general meetings.
The shareholders are well informed about the agenda of the general
meetings.
The outcomes of the general meetings are communicated to the
shareholders.
Extraordinary general meetings have been held by the organization in
the last two years.
Shareholders have the right to call for extraordinary general
meetings.
Shareholders have right to question the decisions of the meetings.
Shareholders participation is encouraged to bring forward any idea
for improving the system.
Remuneration of members of the Board of Directors is disclosed to
the shareholders.
The meetings of the B.O.D. are just a formality and the decisions are
from before.
The members are selected through voting by all major shareholders.

38

Questionnaire for Employees:

Appendix
Questionnaire:
Name:
Contact Number:
Profession:
Age:
3

Yes

No

No Idea

I am aware of the Corporate Governance System of Grameen Phone.

The Corporate Governance Principles of the GP are properly
communicated among all employees and stakeholders.
The management of the GP is largely represented by few important
people.
There is a separate code of corporate governance in the GP.
There is a written performance evaluation system of CEO.
Self-directed teams are encouraged to motivate employees.
Job rotation and cross training are encouraged to improve employee
performance.
There is employee stock ownership plans.
Annual General Meetings are held as per the legislation.
Employees and shareholders have right to question the decisions of
the meetings.
The GP has Committee of Corporate Governance.
The Board of Directors( B.O.D.) meet at least once in every quarter.
Employees participation is encouraged to bring forward any idea for
improving the system.

39

The outcomes of the general meetings are communicated to the

employees.
The executive body is selected by the B.O.D.
Grameen Phone discloses only information which must be disclosed in
accordance with legislation.
The disclosures of information are easily available to all employees.

40