Listed BEXIMCO firms halt board meetings as legal stalemate drags on

All three listed companies of the BEXIMCO Group have not held board meetings since March last year, as a writ petition over the appointment of independent directors remains pending.

The Bangladesh Securities and Exchange Commission (BSEC) appointed 25 independent directors to BEXIMCO Ltd, Beximco Pharmaceuticals, and Shinepukur Ceramics between December 2024 and January 2025, following a directive from the finance ministry.

The interim government moved to deploy independent directors for a three-year term after BEXIMCO became embroiled in labour unrest, non-payment of wages and salaries, and loan defaults. While the post-uprising government extended financial support to help clear workers' dues, it tasked the independent directors with addressing the group's remaining operational and governance issues within the stipulated timeframe.

Immediately after the appointments, BEXIMCO filed a writ petition challenging the move. Since then, the companies' boards have not met to approve or discuss financial results, nor have they disclosed quarterly performance, annual reports, or monthly shareholding statements.

BSEC spokesperson Md Abul Kalam said the companies had been using the pending writ petition as an excuse to evade regulatory compliance. On the other hand, BEXIMCO officials told The Financial Express that they were unable to hold board meetings as long as the petition remained unresolved.

In the meantime, the securities regulator issued an order on Thursday directing the companies to hold board meetings within the next 12 days

Under the BSEC's corporate governance code, at least one-fifth of a listed company's board members must be independent directors.

Before the regulator's intervention, Shinepukur Ceramics had seven directors, including independent directors, in compliance with the governance code. The BSEC later appointed seven additional independent directors to its board.

Similarly, BEXIMCO Ltd previously had nine directors, after which the BSEC appointed another nine independent directors. Beximco Pharmaceuticals now has 18 directors, including nine independent directors appointed by the government.

A senior BEXIMCO Group official, speaking on condition of anonymity, alleged that the regulator had appointed an excessive number of independent directors "in breach of its own rules." However, he could not explain how the appointments violated the governance code, which sets only a minimum requirement for independent directors. He added that the companies' articles of memorandum do not permit boards of such size.

In response to the writ petition, the High Court initially issued a stay on the BSEC decision and asked the regulator to explain why the move should not be declared unlawful. The BSEC later appealed the order.

The Appellate Division lifted the stay and sent the matter back to a High Court bench to discharge the rule after hearing. By December last year, the petition was returned to the Appellate Division, which is now expected to refer it to another High Court bench for a full hearing.

Mr Kalam said the companies' boards remained legally functional and that, as listed entities, they were obligated to hold board meetings, publish financial statements, and convene annual general meetings in the interest of shareholders.

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