Bangladesh Securities and Exchange Commission (BSEC) recently sent letters to the companies giving directions to the organisations to ensure that the directors comply with the mandatory two percent shareholding rules within 45 working days to continue their directorships
Sixty one directors of 22 listed companies have failed to comply with the mandatory rule of holding a minimum two percent of shares of their companies' paid-up capital.
Bangladesh Securities and Exchange Commission (BSEC) recently sent letters to the companies giving directions to the organisations to ensure that the directors comply with the mandatory two percent shareholding rules within 45 working days to continue their directorships.
As per the shareholding data of February 2020, 22 companies have 61 directors, who have less than 2 percent of shares.
These directors will have to buy the deficit shares within 45 working days after receiving the letter from the commission.
The purchase of shares must be announced within 15 working days.
On November 22, 2011, the BSEC issued a directive, which made it mandatory for each sponsor-director to hold a minimum of two percent shares of a company's paid-up capital.
The directive was amended on May 21, 2019, imposing more restrictions.
According to the rules, if any director fails to comply with the two percent shareholding rules, his/her position will be automatically vacated.
Despite repeated warnings from the regulator, many directors have held their positions without complying with the rules.
Of the 22 companies, 14 are insurance companies.
Six directors of Continental Insurance Ltd, six directors of Purabi General Insurance Company Ltd, five directors of Bangladesh National Insurance Company, five of Prime Islami Life Insurance and five of Mercantile Insurance Company do not have a minimum of two percent share of the paid-up capital of their respective companies.
Apart from them, Asia Insurance, Bangladesh General Insurance, Karnaphuli Insurance, Eastern Insurance, Progressive Life Insurance, Meghna Life Insurance, Purabi General Insurance, Standard Insurance and Paramount Insurance Limited have also been given the letters by the BSEC.
The other companies are Fu-Wang Ceramic, Wata Chemical, United Airways (BD), Intech Ltd, Imam Button, Kay & Que (Bangladesh), Dulamia Cotton and Exim Bank Ltd.