Directors of listed companies having not minimum 2.0 per cent shares must lose their directorship if they fail to hold the said amount of shares as per the latest directive.
The chairman of the securities regulator Prof. Shibli Rubayat Ul Islam said this in the backdrop of issuing the latest directive for holding minimum 2.0 per cent shares by the directors of listed companies.
"The securities regulator has no scope of allowing a director at a listed company if he/she does not hold minimum two per cent shares," Mr. Islam told the FE.
He said the issues of non-compliances are being addressed as per law and many of the non-compliant directors have already acquired minimum 2.0 per cent shares.
"Some directors are facing pressure to hold 2.0 per cent shares within stipulated timeframe. That's why we are giving them some extra time on case to case basis," Mr. Islam said.
As per the information of the Bangladesh Securities and Exchange Commission (BSEC), 61 directors of 22 listed companies had not minimum 2.0 per cent shares as of July, 2020.
The BSEC asked those directors to hold a minimum 2.0 per cent shares in their own companies within 45 days to continue their directorship.
BSEC chairman Mr. Islam said the securities regulator is facilitating the directors to comply with the rules.
"We have not yet imposed penalty on any director having not 2.0 per cent shares. But they have no option other than holding stipulated amount of shares," the BSEC chairman added.
Asked, another BSEC official said many of the non-compliant directors have already held 2.0 per cent shares following the latest directive.
"Some directors have sought more time to comply with the regulatory directive. The regulator is likely to consider their demand for the sake of their directorship," the BSEC official said.
The securities regulator has also directed the listed companies and their board of directors to comply with the directive regarding holding minimum 30 per cent shares jointly by the directors, other than independent ones, within 60 working days from July 29, 2020.
Otherwise, the commission will take necessary measures as per securities laws, said the directive posted on the website of Dhaka Stock Exchange (DSE) on Monday.
To facilitate the companies in holding 30 per cent shares, the securities regulator has exempted all existing sponsors, directors and proposed directors from the Sub-Rule (2) of Rule 4 of Securities and Exchange Commission (Prohibition of Insider Trading) Rules, 1995.
As per the BSEC information, 42 listed companies have not yet complied with the directive of holding minimum 30 per cent shares by their directors jointly.
The directive of holding stipulated amount of shares by directors of listed companies individually and jointly was issued in 2010 following the stock market debacle.
But many directors continued their position in listed companies without holding stipulated amount of shares as the previous commission was not able to bring the non-compliant directors under the law.
Asked about addressing pending issues, incumbent chairman Mr. Islam said good governance will not be ensured if all compliances are not fulfilled.
"Trust of investors depends on the stakeholders' compliances. We should ensure the safety of their hard-earned money invested in the capital market," the BSEC chairman added.