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A group of thugs impersonating investors blackmail listed companies into paying them money.
They are known as "AGM parties" among stakeholders of the secondary market for they create undue nuisance, if money is not paid, in annual general meetings held by listed companies for shareholders' approval of their yearly recommendations.
Recently, one such incident has been officially reported to the Dhaka Stock Exchange (DSE).
National Feed Mill Ltd (NFML) filed a complaint about being harassed by AGM parties in its annual general meeting on February 10.
"Those shareholders demanded money before the start of the AGM but the company refused to fulfill their wish," said Md. Jahidul Islam, acting company secretary of the NFML.
That meeting was dragged on for more than eight hours whereas it usually takes three hours, according to company officials, to finish an AGM. AGM party members gave long speeches complaining about not receiving any return on investment from the company.
In its complaint filed with the DSE, the NFML said the AGM started at 11.30am on the day and finished 8.50 hours later.
The company's managing director said they could finish the meeting within the stipulated time had they paid the purported shareholders.
On condition of anonymity, a DSE official said the prime bourse had found evidence of the "undue interference" in the AGM of National Feed Mill.
The case of National Feed Mill is not a lone example.
Talking to The FE, several listed companies shared their bitter experience of interference of rogue shareholders in their meetings.
Rupali Haque Chowdhury, managing director of Berger Paints Bangladesh, said both shareholders and representatives of listed companies have the scope of giving opinions in AGMs but AGM parties have ill motives.
The stock exchanges and the securities regulator are responsible for taking actions against AGM parties, said Ms Chowdhury, also president of the Bangladesh Association of Publicly Listed Companies (BAPLC).
The extortion of AGM parties is often cited as a reason behind the reluctance of many companies to go public.
Recently, the managing director of a company owned by a leading business group showed frustration in a meeting with officials of the securities regulator and said he would like to delist his firm to avoid the nuisance of AGM parties.
Md. Abul Kalam, spokesperson of the Bangladesh Securities and Exchange Commission (BSEC), said the regulator would look into the complaint filed by the NFML and take measures in line with the existing rules.
"The regulator has been working to bring reforms to rules and regulations. We hope the companies' AGMs will be subjected to a more structured framework," he added.
How menacing are AGM parties?
Industry insiders said the same group of people with each having nominal shares of listed companies issue threats to company representatives for money.
After the removal of the obligation to buy shares in lots, individuals can purchase even a single share of any stock. Many unscrupulous individuals take advantage of that and become shareholders of a good number of companies.
They are allowed to attend AGMs as investors even if they have, for example, just one share.
"They communicate with companies' top officials ahead of a meeting and demand money," said a top official of a listed company.
The AGM parties help expedite the meeting if their demands are met. Otherwise, they create chaos.
National Polymer Industries (NPI) paid AGM parties until 2019 and then it stopped paying even under huge pressure from AGM parties.
"After the latest AGM, they [AGM parities] called on us and demanded money, saying they had played a supportive role at the meeting," said Md. Abdul Maleque, company secretary of National Polymer.
Having been refused, AGM parties threatened the company's officials with revenge in the next AGM.
"Investors with large amounts of shares don't attend AGMs. But those who make undue interference in AGMs have nominal shares," said Syed Saiful Haque, company secretary of Malek Spinning Mills.
"But companies can't do anything about them. They are also investors."
Asked if the company informed law enforcement agencies of the extortion attempts, Mr Haque said, "It's an open secret. Listed companies have been dealing with them out of shame or fear."
However, the presence of AGM parties declined after the outbreak of Covid when companies started conducting virtual annual meetings.
As normalcy was restored, companies, except for those belonging to 'A' category, were made obliged to hold hybrid meetings.
AGM parties again became active in their thuggish activities.
Secretaries of some companies have received texts on their mobile phones, saying there were payments pending for the pandemic period.