Why is DSE board still non-functional

The Bangladesh Securities and Exchange Commission (BSEC) appointed seven independent directors to the Dhaka bourse on September 1, but none have joined yet, leaving the board of the country's premier stock exchange non-functional for over a month.

Earlier, in August, after the Sheikh Hasina-led government's fall, all seven independent directors of the Dhaka Stock Exchange (DSE) resigned following the verbal order from the securities regulator.

Subsequently, the newly formed commission under the interim government appointed the seven independent directors using special powers granted by the Demutualization Act, bypassing the DSE's proposal list.

Out of 15 directors, the DSE has seven independent directors and six directors. The detectors include four shareholder representatives, one representative from the strategic partner, and the managing director.

According to the Dhaka Stock Exchange (Board and Administration) regulations, a quorum requires one-third of the board members, with the majority of those present being independent directors.

A senior official at the DSE, speaking to The Business Standard on condition of anonymity, said one of the BSEC-appointed independent directors, Mominul Islam, was found to have negative CIB (Credit Information Bureau) clearance from the Bangladesh Bank. 

As a result, he cannot join the DSE, preventing the board from achieving the required majority of independent directors, said the official.

He further said the DSE will arrange a board meeting and send notices to the newly appointed independent directors to join. 

"However, the meeting has yet to be scheduled. In the first meeting, the board members will elect the chairman of the DSE," he added.

Previously, the commission violated the rules by appointing KAM Majedur Rahman, AF Nesaruddin, Syeda Zakerin Bakht Nasir, and Helal Uddin. After two revisions, the commission ultimately appointed Mominul Islam and Shahnaz Sultana.

Mominul said there was a misunderstanding regarding him being listed as a loan defaulter by the central bank. 

"The central bank actually didn't identify me as a defaulter, rather it is a company linked to me that has been identified as the defaulter," he explained.

Mominul mentioned that the company is Confidence Salt Limited. "I was on the company's board as the managing director of IPDC Finance, representing the Investment Corporation of Bangladesh (ICB), since Confidence Salt had received funding from the Equity and Entrepreneurship Fund (EEF) managed by ICB."

Mominul further said he has completed his tenure at IPDC Finance and has not been the managing director since January this year. 

"Moreover, as per central bank rules, if the EEF recipient defaults, the financial institution's representative on behalf of ICB will not be considered a defaulter. I have since sent a letter to the central bank on 30 September, requesting an update to my status in the CIB report," he added.

Confidence Salt Limited has defaulted loans from Prime Finance, Islami Bank, and Fareast Finance, according to Mominul's letter. 

A senior member of the DSE told TBS that the mistakes made by the BSEC in appointing independent directors are a clear indication of their inefficiency and incompetence.

Meanwhile, the DSE Brokers Association, in a press release, urged the independent directors to join as soon as possible, as the Dhaka bourse's board has been dysfunctional for over a month.