BSEC issues ultimatum to 25 firms to comply

Bangladesh Securities and Exchange Commission (BSEC) has ordered 25 listed companies to comply with the minimum 30 per cent shareholding rules by their sponsors and directors within the next 30 days.

On Monday, the regulator wrote separately to the companies to meet the rules made mandatory for the listed firms in 2011 after the market crashed in 2010.

“Otherwise, the commission will take necessary legal actions against them,” said the letter.

All sponsors or promoters and directors of a listed company must jointly hold a minimum 30 per cent share of the paid-up capital of the company at all times, according to the rules.

The rules were framed to hold the directors responsible and loyal to small investors, as many directors during the market crash sold off their holdings right before the crash, which was considered one of the reasons behind the market’s boom and bust.

BSEC spokesperson Mohammad Rezaul Karim told the Business Post that the commission had repeatedly instructed to follow the rules but to no avail.

On July 29, 2020, the BSEC ordered 44 listed companies to follow the rules within 60 days. Among the companies, 19 companies so far complied with the rules.

But the 25 companies failed to do so. They are FAS Finance, Familytex (BD), IFIC Bank, Fine Foods, Fu Wang Food, Agni Systems, Shurwid Industries, Active Fine Chemicals, Al-Haj Textile Mills, Generation Next Fashions, Northern Jute, Mithun Knitting, Delta Spinners, Appollo Ispat, Fu-Wang Ceramic, Information Services, C&A
Textiles, Salvo Chemical Industry, Peoples Leasing, Aziz Pipes, Pharma Aids, Olympic Accessories, Central Pharmaceuticals, Prime insurance, and Advent Pharma.

Market insiders said if the mandatory 30 per cent shareholding could be enforced, it could help ease the
ongoing liquidity crisis in the capital markets through the release of a substantial amount of funds in the stock market.

On top of that, corporate governance would be established in the company, they observed.

Earlier, the commission striped 17 directors of 10 listed companies from their posts for not holding a minimum of 2 per cent shares in their own companies.

Before, the securities regulator asked 61 directors of 22 listed companies to ensure a minimum 2 per cent shareholding in their own companies within 45 days to continue their directorship.