BSEC opens probe into NRBC Bank’s AGM ‘irregularities’
The commission appointed two of its officials to the committee and instructed them to submit the report within 60 days
The stock market regulator has formed a committee to investigate allegations of irregularities, including claims that NRB Commercial (NRBC) Bank did not comply with rules when holding its annual general meeting (AGM) earlier this month.
Acting on allegations made by a shareholder, the Bangladesh Securities and Exchange Commission (BSEC) issued an inquiry order on 14 July, stating that, in the interest of the capital market and general investors, it is necessary to conduct an investigation to properly verify the irregularities related to the bank's AGM.
The commission appointed two of its officials – Additional Director Ohidul Islam and Deputy Director Shahrier Perves – to the committee and instructed them to submit the report within 60 days from the date of this order.
According to the bank, it earlier on 13 June at 12pm held its AGM using a hybrid system that combined digital and physical platforms. The physical venue for the AGM was the Grace 21 Smart Hotel in Nikunja, accommodating shareholders who attended in person.
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The bank announced in a press release that its 11th AGM was held punctually. Shareholders at the AGM approved an 11% cash dividend for the year 2023.
The meeting also endorsed the audited financial report for the previous year, the directors' report, as well as the appointment or re-appointment of directors and auditors.
The event, chaired by SM Parvez Tamal, the bank's chairman, was conducted in a hybrid format with participation from directors, executives, and shareholders both in person and via an online platform, according to the press release.
However, Sunahwar Ali, son of the bank's sponsor shareholder Wajid Ali, wrote to the commission, alleging that he was unable to attend the AGM in person as a shareholder.
He cited the bank's failure to arrange a physical platform for shareholders, as reported by the BSEC source. He alleged that a digital AGM allows those present in person to gain an undue advantage.
Rezaul Karim, spokesperson and executive director of the BSEC, told The Business Standard that the commission will scrutinise the bank's AGM to ensure compliance with shareholder allegations.
He emphasised that if the allegations prove to be true, the commission will take punitive action against the bank in accordance with the rules.
Speaking to The Business Standard on the matter, SM Parvez Tamal, chairman of the bank, said, "We had conducted the AGM using digital and physical platforms following the rules and regulations set by the BSEC. Over 247 shareholders participated in the meeting physically, where BSEC and stock exchange observers were present. Why a shareholder has complained over alleged irregularities in AGM we don't know."
Earlier, on June 12, the High Court postponed the AGM for four weeks in response to a writ petition filed by Sunahwar Ali. The court also directed the BSEC to justify why it should not be required to send a number of its senior officials as observers to ensure the AGM's transparent conduct.
Challenging the validity of this decision, NRBC Bank appealed to the Appellate Division's Chamber Court, which subsequently stayed the High Court's order.
On 11 November 2020, the bank received approval from the BSEC to raise Tk120 crore in capital through an initial public offering (IPO) on a fixed price basis.
The bank had used Tk110 crore of this fund in government securities, Tk6.05 crore for investing in the secondary market, and Tk3.95 crore as IPO expenses.
As of March 2024, the lender's total classified loans stood at Tk1,156 crore, which was 7.24% of the bank's total disbursement.Its non-performing loan jumped by 49% during the March quarter compared to the last year.
According to an audited report of the year that ended on 31 December 2023, the bank's consolidated net profit was Tk198 crore, which was slightly higher than the previous year.
In the January-March period of 2024, NRBC Bank's net profit was Tk36 crore and its earnings per share (EPS) stood at Tk0.44, which was 55% lower than the previous year at the same time.
The bank's authorised capital is Tk1,000 crore, while its paid-up capital is Tk828 crore.
Its share closed at Tk10.80 on Monday at the Dhaka Stock Exchange.
Out of total shares, its sponsors and directors hold 66.94%, while institutional investors have 3.03% and general shareholders have 30.03%.
