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The Financial Express

Regulator threatens listed companies to recast boards

Tk 5.0 billion SIBL mudaraba perpetual bond approved


| Updated: November 26, 2020 16:40:37


Evaly and Fianancial Express Evaly and Fianancial Express
Regulator threatens listed companies to recast boards

The securities regulator will restructure the boards of the listed companies if the sponsor-directors fail to hold minimum 30 per cent shares jointly by November 30, 2020.

The Bangladesh Securities and Exchange Commission (BSEC) considered a work-plan at its meeting at the BSEC office in the capital on Wednesday. The work-plan would, however, be finalised following the deadline.

In July last, the sponsor-directors of 42 listed companies were found non-compliant in case of holding minimum 30 per cent shares compared to their respective paid-up capitals.

As a consequence, the regulator gave them an ultimatum to comply it within 60 working days. The deadline expired on October 28 which was later extended until November 30 due to requests from some of the companies.

Asked, a BSEC official concerned said the sponsor-directors of nine companies, out of the 42, have already met the compliance while four others would be able to comply as the sponsor-directors in the meantime declared purchasing or receiving shares through transfer.

He said nine other companies have applied for extension of the timeframe to comply with it. "But, the regulator is no more interested to consider the extension anymore," the official said.

Asked about the work-plan, he said the number of independent directors might be increased to meet the compliance requirement.

"The regulator has also a plan to include individuals having 2.0 per cent shares in the boards. Things will be cleared after November 30," the official added.

In 2010, the securities regulator issued a directive for holding minimum 2.0 per cent shares individually and 30 per cent shares jointly by the sponsor-directors of the listed companies.

The previous commission, led by the then chairman Prof M. Khairul Hossain, issued the directive but could not implement it fully during the three consecutive terms.

After taking charge, the incumbent commission, led by its chairman Prof. Shibli Rubayat Ul Islam, took stern actions against the non-compliant sponsor-directors.

Presently, there is no director in the boards of listed companies without holding the minimum 2.0 per cent shares individually.

Initially, the BSEC asked the non-compliant sponsor-directors to hold minimum 2.0 per cent shares.

After offering several timeframe, the regulator on September 20 declared vacant the posts of 17 directors of nine separate listed companies for their failure to hold the minimum shares each.

The BSEC also directed the respective boards to fill up the vacancy from any shareholders having 2.0 per cent or more shares of the paid-up capital within 30 working days of issuing the order.

The majority of the non-compliant directors, who lost their directorships, were in the boards of insurance companies.

At the Wednesday's meeting, the regulator also approved a proposal of Tk 5.0 billion mudaraba perpetual bond to be issued by Social Islami Bank Limited (SIBL).

The bond will be issued to local financial institutions, insurers, different funds, corporate entities and eligible investors through private placements. The offer price of the bond is Tk 1.0 million per unit.

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