30% shareholding: Board restructuring through E-voting

The stock market regulator has finalised a proposed action plan to restructure the boards of the companies where sponsors and directors fail to jointly hold a 30% stake within 30 November this year.

A Bangladesh Securities and Exchange Commission (BSEC) official said the commission wants to restructure the companies' boards through E-voting systems by the Central Depository of Bangladesh.

He said a shareholder holding 2% of shares will be able to be a candidate in E-voting if he is interested in joining the board.

The commission also wants to appoint independent directors in those companies' boards. As a result, nobody will be able to hold directorship illegally and forcefully.

The BSEC official said investors would elect directors from the interested shareholders during the annual general meeting.

Sources said 11 companies have already complied with the 30% shareholding rule and four to five firms will comply by the end of this month.

Some companies could not comply as they have cases pending in court and nine have applied to the commission seeking more time, added sources. 

As per the securities regulator's directive, sponsors or promoters and directors must jointly hold a minimum of 30% shares of the paid-up capital of a company all the time.

The sponsors and directors of the companies in question are holding their positions in violation of a 2011 directive issued by the BSEC. The regulator came up with the order in the wake of the stock market crash in 2010.

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

On 29 July this year, the new leadership of the securities regulator asked 44 listed companies to ensure that their sponsors and directors jointly hold at least 30% of shares in their own firms within the next 60 days.