Private sector cable manufacturer BRB Cables Ltd has bought around 30 per cent of shares of its competitor, state-run Eastern Cable Ltd, with the aim of securing a berth in the board of ECL, sending the industries ministry to scramble to halt the move.
Officials of the industries ministry and BRB Cables said that the company bought around 70-75 lakh shares of ECL, a listed company, in late last year from general investors through the stock exchange.
The number of total shares of ECL is 2.4 crore, of which the government holds 51 per cent of the shares while it offloaded the rest 49 per cent on the capital market.
Industries ministry officials said BRB, being a competitor, bought most of the offloaded shares of ECL ‘unethically’.
They said that BRB was trying to get in the board of directors of ECL.
The ministry fears leakage of business information and strategies of ECL if BRB Cables’ representatives hold directorship post in the company.
Losing of business privacy could reduce the ECL’s strength in the cable industry and the company might incur losses, officials said.
The ministry on December 28 last year asked the Bangladesh Securities and Exchange Commission to take necessary steps so that officials of BRB Cables couldn’t hold any directorship post in ECL.
The ministry became concerned about the issue after the BSEC directed ECL to reform its board as a number of its directors were not holding mandatory minimum 2 per cent shares of the company individually.
The BSEC directive made the path easy for BRB Cables to attain its purpose of holding ECL directorship.
BRB Cables chairman Mozibar Rahman recently told New Age that if all the circumstances including the government remained in favour, officials of the company were keen to take the responsibility to revive the ECL.
There is no possibility of data leakage as BRB Cables would also own ECL as shareholder and the company holds firmer position than any other companies in the cable industry, he said.
The ministry also sent the same request of not giving BRB Cables any directorship post in ECL to the BSEC through the finance ministry on January 28 this year.
In reply to the ministry on February 8, the BSEC rejected the request saying that the matter was out of the commission’s jurisdiction and suggested amending the company’s memorandum in accordance with the Company Act.
Moreover, ECL had to vacate two directorship positions as the directors did not hold mandatory minimum shareholdings of the companies’ paid-up capital.
The directors were Bangladesh Merchant Bankers Association president Nasir Uddin Chowdhury and Mahbubul Anam. They were holding 0.07 per cent and 1.05 per cent shares of the company respectively. ECL on April 15 informed the BSEC about the removal in a letter.
The commission took the step after an ECL shareholder having alleged link with BRB Cables filed writ petition with the High Court seeking a directive to vacate the posts of directors in ECL, said an official of the BSEC.
The BSEC on February 11 this year directed ECL to reshuffle its board of directors by appointing directors from shareholders who hold 2 per cent shares of the company.
In the April 15 letter, ECL also informed the BSEC that the company could not make decision about a director, AS Shahudul Huque Bulbul, who held just 0.01 per cent shares of the company’s paid-up capital as the High Court on January 23 stayed the matter for six months after the director filed a writ petition in this connection.
ECL also informed that the company could not reform the board right now as it did not get replies from related offices to which the industries ministry issued letter asking not to allow BRB Cables directorship post in ECL.
The three directors were among the 219 directors of the listed companies who were found not holding minimum 2 per cent shares as per securities laws.
According to the BSEC directive, each director other than independent director (s) of any listed company must hold minimum 2 per cent shares of the paid up capital of his/her company, otherwise there will be a casual vacancy of director.
In case of a casual vacancy of director, any individual holding 5 per cent or more shares of the paid up capital of the entity will be entitled to be a director of the company in the next annual general meeting, it said.
ECL has postponed its AGM that was supposed to be held in January this year for the year ended June, 2017 to mitigate
The company maintained its efforts to keep BRB Cables away from its board, ECL officials said.
ECL managing director Ushamoy Chakma told New Age that the company was yet to appoint any shareholding director and the board would decide in this regard soon that would be approved in the next AGM.
About BRB Cables’ intention, he refused to speak, mentioning it as an internal matter.
In ECL, there are nine directorship posts. Five are appointed by the government and the rest four are shareholding directors.
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