Topic: Describe the legal process of incorporating a company in Bangladesh. Explore if they are effective in holding the company responsible if it causes hazardous impact on the environment.
1. LEGAL PROCEDURE FOR INCORPORATING A BUSINESS:
1.1 Introduction:
Incorporating business is the process of turning a business in to a corporation. A corporation, under the law, is an independent entity with tax liabilities and responsibilities equal to those of its owners. On the other hand, legal procedure of incorporating a business refers to the registration of the company with the Companies Registrar and the obtaining of all the incorporation documents. Business in Bangladesh may be carried on by a company formed and incorporated locally by the registrar of Joint Stock Company[1] and firms (RJSC&F) under the prevention of the companies’ act 1994[2]. Two types of company can be incorporated:
Ø Private Limited Company
Ø Public Limited Company
Basically, there are three ways to incorporate a business:
§ The business “sells” its assets to the corporation in exchange for corporate stock, which the firm then distributes to its members when the old business is liquidated
§ The business liquidates, distributes its assets to its members, and the members “sell” their interests to the corporation in exchange for stock
§ The business members “sell” their ownership interests directly to the corporation in exchange for stock
There are many ways to set up a business, but in most cases everyone wants the one that protects its own assets and personal property the best. Even if the business has been bought only a partnership[3] or sole proprietorship[4], it isn’t too late to set up a corporation by itself.
2. Bangladesh and its Law to Protect Environment from the Hazardous Activities:
Bangladesh is recognized to be one of the most susceptible countries in the world, highly vulnerable to climatic manifestations (short-term and long-term impacts of climate change) due to its unique geographic location, hydro-geological characters like dominance of floodplains, low elevation from the sea and lastly the socio-economical characters like high population density, high levels of poverty, and overwhelming dependence on nature.
In the context of the environment, the Government of Bangladesh formulated an Environment Policy in 1992[5]. The objectives of Environment Policy are to:
- maintain ecological balance and overall development through protection and improvement of the environment;
- protect the country against natural disasters;
- identify and regulate activities which pollute and degrade the environment;
- ensure environmentally sound development in all sectors;
- ensure sustainable, long term and environmentally sound use of all national resources; and
- actively remain associated with all international environmental initiatives to the maximum possible extent.
3. Major features of the environment policy:
The policy covered all geographical regions and 15 development sectors like Agriculture, Industry, Health & Sanitation, Energy and Fuel, Water Development, Flood Control and Irrigation, Land, Forest, Wildlife and Bio-diversity, Fisheries and Livestock, Food, Coastal and Marine Environment, Transport and Communication, Housing and Urbanization, Population, Education and Public Awareness, Science, Technology and Research, Legal Framework and Institutional Arrangements.
The policy mentioned the suitability of environmentally sound development on proper changes in production management and relations of production of agriculture sector to guaranteeing improvement of environment and sustainable use of its resources (Section 3.1). Moreover, the policy necessitated firmly to review Environmental Impact Assessment (EIA) on industries of public and private sectors and also encompassed the necessity of integrated environmental concerns that shaped into the National Health Policy (Section 3.2.2).
In 1992 the National Environmental Policy was drawn up with the aim of providing protection and sustainable management of the environment. The National Environment Policy 1992 embraces a number of related sectors including agriculture, industry, health, energy, water, land, forest, fisheries, marine, transport, housing, population, education and science.
The central theme of the Environment Policy of 1992 is to ensure the protection and improvement of the environment. It requires the Government of Bangladesh to ratify international convention and protocols in view of its suitability. The National environment policy has introduced a number of salient environment principles like precautionary approach and Environmental Impact Assessment [6](EIA). It also assigned the Ministry of Environment and Forests[7] (MoEF) with the responsibility of coordinating the implementation of the policy. The policy has provided guidelines for the following sectors:
3.1. Agriculture: Environmentally sound agricultural practices are to be encouraged and ensured for attainment of self-sufficiency in food. Among the various specific measures, use of natural fertilizers and insecticides is encouraged as opposed to the application of agro-chemicals and artificial materials exerting adverse impact on the environment.
3.2. Industry: Environmental Impact Assessment (EIA) for new industries, corrective measures for polluting industries, ban on establishment of polluting industries and development of environmentally sound and appropriate technology is required for sustainable and efficient utilization of natural resources.
3.3. Health and Sanitation: Healthy environment for rural and urban area, prevention of activities, which are harmful to public health and healthy workplaces for workers are to be ensured.
3.4. Energy and Fuel: Reduction of the use of fuel-wood and agricultural residues, exploring alternative energy resources, precautionary measures against potentially harmful use of nuclear energy and nuclear radiation, conservation of forest fuel and development of improved energy saving technology are recommended options for the sector. Apart from these, EIA has been made mandatory before implementing projects for exploration and extraction of fuel and mineral resources.
3.5. Water: Environmentally sound water resource management is suggested in utilization and development of water resources, construction of irrigation network and embankments, dredging of watercourses and in taking measures against river pollution. EIA is required before undertaking projects related to water resource development and flood control measures.
3.6.Land: Activities that cause or result in land erosion, salinity and alkalinity, and loss of soil fertility are prohibited. Compatible land use systems for different ecosystems and environmentally sound management of newly accreted land are recommended.
3.7. Food: Hygienic and environmentally sound method of production, preservation, processing and distribution of food and measures to ensure prohibition of import of harmful food items are recommended.
3.8. Transport and Communication: Road, rail, air and water transport systems should be operated without polluting the environment. EIA is required before undertaking any projects in these sectors.
3.9. Housing and Urbanization: Environmentally sound planning and development of housing and urban centers is required. Existence of water bodies in the cities is recommended for maintaining environmental and ecosystem balance in the urban areas.
4. Bangladesh’s Environmental Laws:
The majority of environmental laws in Bangladesh were passed under substantially different population and development conditions. For example, the Factories Act of 1965 and some other health protection laws were designed before industrial pollution and hazardous substances became serious concerns.
The Environment Policy of 1992 of Bangladesh has recognized the need for a better and comprehensive approach to address environmental issues. Very few of the elements of the Environment Policy, however, are yet to be translated into laws. The only legislation which specifically deals with environment issues is the Bangladesh Environment Conservation Act[8] (ECA) 1995.
The Act was passed for conservation and improvement of environmental standards and for controlling and mitigating environmental pollution. It however, provides very few substantive obligations relating to environmental management of industries. Industries and projects would require environmental clearance from the Department of the Environment, and any person affected or likely to be affected by such activities can apply to the Director General seeking remedy of environmental pollution or degradation4.
The major limitations of the Act are its silences on the standards, parameters, emission levels and management elements based on which the environmental clearance should have been applied and obtained.
The Environmental Conservation Rules, 1997, were promulgated in furtherance of the objectives of the ECA, 1995. Regarding management of toxic and hazardous substances, the Rules have broadly defined guidelines for disposal of waste from different categories of industries. But unlike the Environmental Protection Rules of India, The Environmental Conservation Rules, 1997 have not specified the permissible extent of emissions or the obligations of corrective actions (IUCN, 2000[9]).
Among Bangladeshi sectoral laws, environmental issues are seldom referred to, and when they Section 4, 6-12 of the Bangladesh Environment Conservation Act, 1995.
Section 15 of the Act provides that the penalty for breach of any provision of the Act may extend up to five years’ imprisonment and/or one hundred thousand taka in fines… are there, those are of no real substance. For example, Article 6 of The Bangladesh Petroleum Act, 1975 provides that it shall be the duty of any person engaged in any petroleum operation to ensure that the operation is carried out
i) in proper and workmanlike manner and in accordance with good oil-field practice,
ii) In a manner that does not interfere with navigation, fishing, and conservation of resources of the sea and sea-bed, and to consider factors connected with the ecology and environment.
The Act has not defined what the factors ‘connected with the ecology and environment’ are and what management elements a company should establish and maintain to discharge its obligations under the Act.
5. Key Constraints for effective implementation of Environment Laws:
Various research studies have noted that the implementation of the Environmental policy and the Environmental Protection Act [10]have been bogged down due to some institutional and functional limitations (Khan, and Belal 1999, Hanchett, 1997). Various operational rules for effective implementation of the Policy and Act would require complementary and detailed operational rules, many of which have not yet been formulated.
Implementation of the Policy and Act demands a significant amount of funding and investment, which is hardly placed in the revenue and or development budget of Bangladesh. Besides, the following reasons which mentioned below also considered as constraints:
5.1 Lack of regulatory and Institutional capacity: Institutional capacity for implementing the various action measures identified by the environment policy is still weak. Coordination between the DOE, MOEF and line ministries is fragile. Most of the concerned ministries and departments including the MOEF lack institutional capacities in terms of human, technological and financial resources needed for proper implementation of the policies.
It lacks essential baseline data on resources and areas of environmental concern. Although it now acts as a “clearing house” for all development projects put forward by the different line ministries, it lacks the necessary basic technical expertise to effectively assess and monitor projects for their environmental impact and it suffers from a shortage of basic facilities, equipment and logistic support.
5.2. Limitations of the environment laws: Following the environment policy the Environment Conservation Act 1995[11] was adopted for the conservation, improvement of environmental standard and controlling the pollution of environment. In addition Environment Conservation Rule 1997 was passed to supplement the Act.
Under section 7 of Environmental Conservation Act “if it appears to the Director General(DG) of DOE that any act or omission is causing harm to the ecosystem the he may determine the compensation and direct the person to pay it. However though punishment has been prescribed for violation of the direction in this section but the Act or Rules of 1997 has yet to be spelled out the procedure in which to calculate environmental damage for the purpose of paying compensation. Though, the environment court enjoys the exclusive jurisdiction for trial of an offence or for compensation falling under the Environment Conservation Act and other environmental laws to be specified by the government in official notification. Moreover environment court is a special type of court and the court must have separate rules to be followed for the proper adjudication of environmental cases.
5.3. Outdated environmental laws as well as ignorance about these laws: All the important policies including the National Environmental Policy of 1992 have been formulated in the last decade and only a very few of them seem to corroborate well with the older legal instruments of the given sector. Although the need of amendment of existing laws and formulation of new laws were the main cause of having many of the policies revised or declared a fresh, only a very few laws like ECA of 1995[12], ECR of 1997[13], ECA of 2000[14] etc could be tabled in this regards.
Some of the environmental rules and related laws are outdated laws and others are improperly and incompletely updated are neither adequate to meet the present day needs of the country nor consistent with the changing environmental scenario of the world[15]. Moreover, lack of consciousness amongst the implementers and the general public as to the very existence and scope of these laws made those functionally ineffective.
6. Conclusions:
Case study of Bangladesh Environment Policy and laws as if they are effective in holding the company responsible if it causes hazardous impact on the environment reveals some institutional learning and features:
A. the Policy was drafted by a very distinguished panel of experts drawn from civil society, NGOs, academics, national and international consultants. However, the involvement of Ministry of Environment and its officials were more of supportive than active engagement and taking leadership – which ultimately had cost the political “ownership” of the Policy;
B. with frequent changes in the leadership positions of the Ministry and Department of Environment, the pace and process of the implementation of the Policy not only bogged down but also seems to have changed the directions and priorities;
C. to begin with there was some “political enthusiasm”, but with the change of regime, political commitment seems to have faded out;
D. finally, due to lack of inter-ministerial coordination, the Policy has not been translated fully in action or supported by supplementary rules, regulations and necessary amendments of other rules and policies;
The National Environmental Policy and its laws do not clarify the measures needed for integrated efforts for environmental protection. It also fails to address the need for policy guideline concerning issues like, bio-safety, intellectual property right, watershed management and Tran’s Boundary movement of hazards and environmental problems.
However with some modifications the environment laws of Bangladesh can still be considered as a good foundation to bring about necessary changes to address and mitigate the major challenges of environment and to further improvement. Therefore, a broad based consensus among various stakeholders to implement the Environment laws with necessary modifications will be crucial- with highest political will, as a pre requisite.
References
Alam, Mahbubul, Rashid, A.Z.M.Manzoor, Furukawa, Yasushi, “Policy Implications and Implementation of Environmental ICTPs in Developing States: Examples from Bangladesh, Electronic Green Journal, 1(26), 2008.
Asian Development Bank, Country Environmental Analysis Bangladesh, 2004
Baqee, Abdul Environement Degradation: Issues and Challenges, Key Note Paper presented to 13th Annual Cionference of the National Geographic Association, 17th April, 2010. BBS (2004).
Compendium of Environmental Statistics of Bangladesh, Dhaka, Bangladesh.
Bureau of Statistics. Centre for Policy Dialogue (2001), CPD Task Force Report, Policy Brief on ’’Environmental Policy”
Clemett , Alexandra, (2004) A Review of Environmental Policy and Legislation in Bangladesh, BEEL Environment Econiomics Unit (2006),Poverty and Environment in Bangladesh.
Department of Economics, School of Economics and Commercial Law, Goteborg University,
Farooque, M,Hasan, S. Rizwana, (1996) Laws Regulating Environment in Bangladesh, Dhaka: BELA.
Government of Bangladesh (1998), Fifth Five Year Plan, Planning Commission, Government of Bangladesh (2008) Economic Survey, Ministry of Finance, Dhaka
Government of Bangladesh (2009), Bangladesh Climate Change Strategy and Action Plan 2009
Hanchett, S (1997) “Participation and Policy Environment: The Case of the Bangladesh Flood Action Plan”, Development Policy Review, Vol 15, pp. 277-95 Hossain, M. Iqbal, International Environmental law Bangladesh Perspective, Ain Prokashan, Dhaka: 2004
Islam, Naznin, (2007), Dynamics of Public Policy: A Case Study of formulation of the Environment Policy of Bangladesh, Unpublished PhD dissertation, University of Dhaka, Bangladesh.
Islam, Nazrul, Isabel Martinez, Ikechi Mgbeoji and Wang Xi (2001), Environment Laws in Developing Countries: Selected Issues, IUCN, Glan, Switzerland and Cambridge UK.
IUCN-Bangladesh (2000), Review of the Laws and Policies Concerning Natural Resources Management in Bangladesh.
Khan, Niaz Ahmed, Belal, Ataur Rahman (1999), “The Politics of the Bangladesh Environment Protection Act”, Environment Politics, Vol. 8, 311-317.
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[1] A joint-stock company (JSC) is a type of corporation or partnership involving two or more individuals that own shares of stock in the company. Certificates of ownership (“shares”) are issued by the company in return for each financial contribution, and the shareholders are free to transfer their ownership interest at any time by selling their stockholding to others.
[2] Section 404, Published by: Notification No. SRO 177-law dated 1-10-95. of Ministry of Commerce; Act No. 18 of 1994
[3] A partnership is an arrangement where entities and/or individuals agree to cooperate to advance their interests. In the most frequent instance, a partnership is formed between one or more businesses in which partners (owners) co-labor to achieve and share profits or losses.
[4] A sole proprietorship, also known as a sole trader or simply a proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business.
[5] As a group of lawyers, BELA was established in 1992 with the broad objective of promoting environmental justice and contributing to the development of sound environmental jurisprudence. Environment and natural resources support the lives and livelihood of majority of the people in Bangladesh in numerous invaluable ways.
[6] An environmental impact assessment (EIA) is an assessment of the possible positive or negative impact that a proposed project may have on the environment, together consisting of the natural, social and economic aspects.
[7] Official Government of India site on planning, promotion and co-ordination of environmental and forestry programmes.
[8] Bangladesh Environment Conservation Act (BECA) is set of laws enacted by the government of Bangladesh in 1995. The Act gives operational definitions of terms that historically did not exist in the legal regime of the country, including ecosystem, pollution, waste and hazardous substance
[9] Taxonomic, conservation status, and distribution information on tax that are facing a high risk of global extinction.
[10] S.R.O. No. 197-Law/97– In exercise of the powers conferred by section 20 of the Bangladesh Environment Conservation Act, 1995 (Act 1 of 1995)
[11] On this page, environmental lawsuit means “a lawsuit where the well-being of an environmental asset or the well-being of a set of environmental assets is in dispute”. Also on this page, lawsuit with environmental relevance means “a lawsuit where a non-environmental entity or a set of non-environmental entities is in dispute, but whose outcome has relevance for an environmental asset or for a set of environmental assets”.
[12] The national Environmental legislation known as Environmental Conservation Act, 1995, is currently the main legislative document relating to Environmental protection in Bangladesh, which repealed the earlier Environmental Pollution control Ordinance of 1997 and has been promulgated in 1995.
[13] The natural ingredients in ECR were found to be indestructible, require no refrigeration and its shelf life is 12 years.
[14] ECA, like other UN offices has also designated a focal point for women who attend APC and DRP meetings as ex-officio members, to allow women have an input in the selection process.
[15] Such laws cannot play any effective role in combating environmental pollution in today’s Bangladesh, where over population, poverty and illiteracy are aggravating this crisis every day
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