The Bangladesh Securities and Exchange Commission on Wednesday approved the Dhaka Stock Exchange board’s controversial selection of Kazi Sanaul Hoq as its managing director despite opposition of a number of DSE directors.
A commission meeting presided over by BSEC chairman M Khairul Hossain approved the selection of Sanaul, a former managing director of the Investment Corporation of Bangladesh, ignoring a number of observations by four DSE directors against the selection of Sanaul.
On January 8, the board of directors of DSE selected Sanaul amid a heated debate with strong opposition from three shareholding directors and an independent director who questioned the selection process and competency of Sanaul.
DSE officials had earlier said that it would be another controversial move by the BSEC to approve Sanaul as DSE managing director for a three-year term as the commission had earlier rejected a DSE board proposal to reappoint the then managing director, Majedur Rahman, to take ‘revenge’ on him for his strong stance against the listing of a controversial company.
Many investors have demanded the ouster of the current commission, led by Khairul, blaming them for taking controversial decisions like approving initial public offerings of fundamentally weak companies.
The approval of Sanaul as DSE managing director came at a time when the capital market is in turmoil because of lack of investors’ confidence in the BSEC.
The DSE directors in their notes opposing Sanaul, mentioned that the selection process did not maintain due diligence and regular practices of the bourse.
The DSE’s board of directors failed to check compliance of regulation 10 of the DSE (board and administration) regulations, 2013 as the DSE did not submit any statement of criteria or other related documents regarding appointment of Sanaul before board meeting as per regulation.
Sanaul does not have professional designation like CFA, CA, CMA, CS, CPA including not less than 10 years professional experience as per 10 (2) (b) of the regulation.
He has no international exposure in the capital market or relevant field, which is an alternative requirement referred under 10 (2) (c) of the regulation.
Sources said that there was a fierce argument about the selection in the board meeting as one DSE director ‘illogically’ favoured Sanaul and was able to have a decision in his favour.
A number of DSE members said that appointment of Sanaul would be violation of the rules.
The DSE needs an efficient, skilled and internationally exposed person for its MD position to enrich the bourse on the global platform.
The DSE nomination and remuneration committee and the majority of the independent directors of the bourse approved his appointment considering his experience in banks and capital market, DSE officials said.
The board finally submitted its proposal to appoint Sanaul to the BSEC, mentioning all the disputes to the market regulator and urged it to approve the selection after assessing the arguments.
There are concerns on the market that the approval of weak companies’ IPOs might be easy as an influential quarter allegedly ensured Sanaul’s appointment for upholding their interest.
DSE officials said that Sanaul failed to play his due role while serving
the ICB as the entity was not effective in stabilising the capital market and the performance of the state-run company also declined.
Profits of the ICB declined by almost 87 per cent to Tk 60 crore in the financial year 2018-19 compared with that of Tk 461 crore in the previous year.
Sanaul left the ICB on August 21, 2019.
Moreover, the DSE’s board of directors had to choose an applicant without seeing or speaking with the candidate, as the applicants were not called that was happened for the first time in the bourse’s history, they said.
The directors who opposed Sanaul’s selection said that there was negative news about him when he was serving the ICB and the Bangladesh Development Bank.
DSE officials said it was immaterial to discuss whether the allegations against him were true or false until those were proven.
‘But, why the DSE has to select such a controversial figure for its MD post in this current situation of the market?’ they questioned.
The BSEC at Wednesday’s meeting also approved former Standard Bank managing director Mamun-Ur-Rashid as managing director of the Chittagong Stock Exchange is accordance with the bourse’s proposal.
The regulator at the meeting also approved the draft BSEC (Debt Securities) Rules, 2020 and would seek public opinions on the rules soon.
The BSEC also appointed seven persons as independent directors of the Central Counterparty Bangladesh for the next three years.
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