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BSEC bars non-compliant companies from raising fund

  • Published at 09:42 pm May 21st, 2019
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File photo of Bangladesh Securities and Exchange Commission Office in Dhaka Syed Zakir Hossain/Dhaka Tribune

The decision came after 47 companies listed with the stock exchanges lacked compliance with the minimum shareholding requirement by their sponsors and directors

Companies, the sponsors and directors of which will not hold at least 30% shares of paid-up capital will not be allowed to raise fund in any form, including rights share issue, bonus shares and company amalgamation.

The Bangladesh Securities and Exchange Commission (BSEC) made the decision at a meeting held at its office in Dhaka on Tuesday. BSEC Chairman M Khairul Hossain presided over the meeting, said a press release.

The decision came after 47 companies listed with the stock exchanges lacked compliance with the minimum shareholding requirement by their sponsors and directors.

The sponsors and directors of the companies in question are holding their positions in violation of a 2011 Bangladesh Securities and Exchange Commission directive, which came in the aftermath of the stock market crash in 2010.

The move was aimed to make the directors responsible and loyal to small investors, as it was seen that many directors sold off their shares right before the debacle.

Tuesday’s meeting also decided that the companies which would fail to comply with the directive would form a separate category on the trading board in both the stock exchanges and their directors and sponsor would not be allowed to sell or transfer or mortgage the shares.

Meanwhile, if directors of listed companies fail to hold at least 2% share of paid-up capital individually vacancy should be completed within 30 working days.

The BSEC also decided to impose restriction on the announcement of bonus shares. From now on, the expansion, balancing, acquisition, reconstruction and expansion of the company and bonus shares will not be declared without quality improvement.

The commission also decided to take necessary steps to cancel or suspend registration certificates of Alliance Securities and Management for securities rules violation.