The Bangladesh Securities and Exchange Commission has asked 61 directors of 22 listed companies to ensure holding of minimum 2 per cent shares in their respective firms in 45 days to continue their directorship in the entities.
The BSEC sent a letter to all the companies on July 2, asking them to ensure compliance of mandatory 2 per cent shareholding by each director other than the independent one, BSEC officials said.
There are some more non-compliant directors in the other listed companies, who would also be asked later to ensure holding of 2 per cent shares, they said.
The BSEC made it mandatory for each sponsor-director to hold minimum 2 per cent shares of a company’s paid-up capital by issuing a directive on November 22, 2011. The directive was amended on May 21, 2019, imposing more restrictions.
According to the rules, if any director fails to comply with the 2-per cent shareholding rules, his/her position would be automatically vacated.
Despite repeated warnings from the regulator, many directors continue holding their position without complying with the rules.
As per shareholding data in February 2020, 22 companies had 61 directors who held less than 2 per cent shares.
Of the 22 companies, 14 companies are from the insurance sector, which have 49 non-compliant directors. Of the 61 non-compliant directors, 12 became directors after 2018 and the others have continued ignoring the minimum shareholding rules for years.
Besides, 31 of the 61 directors held less than 0.1 per cent shares each in their respective companies.
Earlier in 2017, the BSEC listed 219 directors of 79 companies who were non-compliant with the 2-per cent shareholding rules to take legal action against them.
But, no action has been taken so far that encouraged more directors to hold their position ignoring the securities rules, market experts said.
The directors of Bangladesh National Insurance Company were compliant in 2017, but now, as per the latest BSEC data, the company has five directors who hold zero per cent shares in the company.
The five directors are Shaiful Azman, Ruhul Amin, Hasina Rajib Prodhan, Naim Akhter and Mazaffar Hossain.
Sharmin Nasir, Dilruba Sharmin and UmmeKhadiza Meghna have been holding directorship post in both Karnaphuli Insurance Company and Meghna Life Insurance Company with less than 2 per cent shares for years.
Prime Islami Life Insurance Company appointed five new directors who held less than 0.1 per cent shares of the company though the BSEC had asked the company in 2017 to ensure holding of 2 per cent shares by its former five directors.
The directors are Fazlul Karim, Arif Hossain, Muhammad Moniruzzaman, ATM Enayetur Rahman and Hasina Mamtaz.
As per the amended rules, a company must appoint directors who hold 2 per cent or more shares of the company in place of the non-compliant directors, but the 22 companies did not comply with the rules.
Mohammad Ali Khokon, who is also president of the Bangladesh Textile Mills Association, and Tarik Sujat, representative of Bay Leasing and Investment, have been enjoying directorship in Asia Insurance Company with holding less than 0.5 per cent shares.
Shahdika Mahbub, Md Anisuzzzaman and ATM Mahbubul Alam have remained as directors of Intech Limited despite holding less than 2 per cent shares.
Bangladesh General Insurance Company director Sohail Humayun, Standard Insurance director Kaiser Ahmed, Wata Chemicals directors AHM Abdullah and Mahmudul Hasan, and Progressive Life Insurance Company directors Nazim Tazik Chowdhury and Nahid Chowdhury do not hold 2 per cent shares in their companies.
Six directors in each of Continental Insurance and Purabi General Insurance have continued holding their position without having mandatory percentage of shares.
The non-compliant Continental Insurance directors are Jahangir Hussain, Salman Habib, Imtiaz Bin Musa, Ishnad Iqbal, Abrar Rahman Khan and Syed Sakib Naimuddin while the non-compliant Purabi General Insurance directors are Mona Garments, Md Iqbal, SM Imtiaz Khan, Anisul Haque, Aminur Rahman Khan and Jesmin Ara.
Besides, Paramount Insurance Company directors Parvez Ahmed, Munira Sheemu and Sandip Das, Provati Insurance directors Badlur Rahman Khan and Habib E Alam Chowdhury, Eastern Insurance directors Prioneer Dresses, Zakia Rahman, Nayeemur Rahman and Uttara Properties, Mercantile Insurance directors Aziz Mohammed Ershad Ullah, Farhana Islam Sonia, Azad Mustafa, Shafiqul Ahmed and Saad Quadir Bin Solaiman do not hold the required percentage of shares, the data showed.
Kay & Que directors Tajear M Awal and Pragati Insurance, Dulamia Cotton director Mahbub Anam, and Imam Button Industries director Lokman Chowdhury are also holding their directorship posts with holding less than 2 per cent shares in their respective companies.
Market experts said that lapses in the rules and lack of punishment and accountability encouraged the companies to continue with their errant practices.
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