BSEC gets tough on minimum shareholding
Issues ultimatum to 61 non-compliant directors
The stock market regulator has asked 61 directors of 22 listed companies to ensure a minimum 2.0 per cent shares in their own companies within 45 days to continue their directorship.
The Bangladesh Securities and Exchange Commission (BSEC) sent a letter to all the companies on July 2, asking them to ensure mandatory 2.0 per cent stake by each director other than the independent one.
In 2011, the regulator issued a circular, ordering sponsors and directors to hold a minimum 2.0 per cent of shares of a company individually and 30 per cent jointly. The directive was amended on May 21, 2019, imposing more restrictions.
According to the rules, if any director fails to comply with the 2.0 per cent shareholding rules, his/her position would be automatically vacated.
Despite repeated warnings from the regulator, many directors continue holding their position without complying with the rules.
As per shareholding data in February 2020, 22 companies had 61 directors who held less than 2.0 per cent shares.
Of the 22 companies, 14 companies are from the insurance sector, which have 49 non-compliant directors.
Of the 61 non-compliant directors, 12 became directors after 2018 and the others have continued ignoring the minimum shareholding rules for years.
Five directors with no shares in Bangladesh National Insurance Company were served notices for holding the minimum shares by the time,
Six directors each of Continental Insurance and Purabi General Insurance, and five each of Prime Islami Life Insurance and Mercantile Insurance Company were also given notices to comply with the directive.
Other directors belonging to insurance companies are: Asia Insurance, Bangladesh General Insurance, Eastern Insurance, Karnaphuli Insurance, Meghna Life Insurance, Progresive Life Insurance, Purabi General Insurance, Standard Insurance and Paramount Insurance Limited.
Besides, directors of Wata Chemical, Fu-Wang Ceramic, United Airways, Kay & Que (Bangladesh), Intech Ltd, Imam Button and Dulamia Cotton and Exim Bank were also asked to comply with the shareholding rules.
Earlier in 2017, the BSEC listed 219 directors of 79 companies who were non-compliant with the 2.0 per cent shareholding rules to take legal action against them.
But, no action has been taken so far that encouraged more directors to hold their position ignoring the securities rules, market experts said.
Lapses in the rules and lack of punishment and accountability encouraged the companies to continue with their errant practices, they said.