Bangladesh Securities and Exchange Commission (BSEC) has decided to take legal action against United Airways (BD) Limited’s previous board of directors.
This approval was given in a commission meeting held on Thursday with BSEC Chairman Professor Shibli Rubayat Ul Islam in the chair, according to a circular signed by BSEC Executive Director Rezaul Karim.
In the commission meeting, it was announced that a decision has been made to take legal action as per the recommendation of the investigation committee report on the activities of the previous Board of Directors of United Airways.
Established in 2005, United Airways previously announced to hold their annual general meeting (AGM) after six years. The publicly traded company’s annual general meeting for 2022, as well as the pending AGMs for the last six years, would be held on January 3, 2023.
But no information about the AGM being held on the scheduled date was found on the Dhaka Stock Exchange (DSE) website.
The commission also intended to conduct an investigation into the issues regarding the suspension of operations, the reconstruction of the board of directors, recommencement of operations, and the trading pattern of United Airways securities since its debut on the exchanges.
In 2022, the BSEC decided to appoint a special auditor at the company to conduct special audits for the period of 2012 to 2021.
The company got listed on the DSE in 2010. In February 2016, it ceased flight operations without any announcement amidst losses caused by massive irregularities and corruption by its directors and remained out of operation since 2015.
The BSEC took a series of measures to revive the airlines. Its board was also restructured on February 28, 2021, and later eight independent directors were appointed.
The board held its last meeting on August 1, 2022, where the new directors proposed that the company can be revived only after the existing dues are waived.
In January 2021, the company was sent to the over-the-counter (OTC) market due to its poor performance.
According to the BSEC, United Airways owes different fees to the Civil Aviation Authority of Bangladesh (CAAB). Its net due was around Tk 56.87 crore, with a value-added tax of Tk 5.65 crore and an income tax of Tk 2 lakh.
The remaining Tk 292.81 crore was counted as a surcharge at an annual rate of 72 per cent. The debt was swelling every year due to the compound surcharge method. The BSEC said the airline company cannot pay the debt as it currently has nothing but a few unusable aircrafts.
In this situation, United Airways requested the government to waive its debt and make necessary arrangements for the airline’s Air Operator Certificate (AOC) renewal in order to protect the interests of its 1.6 lakh investors.