DSE clarifies IFIC Bank’s shareholding structure is compliant

The Dhaka Stock Exchange (DSE) has clarified the shareholding structure of IFIC Bank Ltd to clear up investors' confusion.

Prior to that, general investors had been confused as to whether bank directors needed to buy more shares from the market to comply with the related regulatory directive of 2011 on mandatory minimum shareholding.

The Bangladesh Securities and Exchange Commission said the directive requires that a listed company sponsor and director hold at least 30 percent of their respective companies' shares collectively; alongside an obligation that each shareholder director hold two percent shares.

Otherwise, the company cannot collect capital from shareholders further through right shares, bonus shares or repeated public offerings.

On August 20, the DSE said that sponsors and directors hold 4.4 percent shares of IFIC Bank as of July 31 while the Bangladesh government holds 32.75 percent shares of the listed commercial bank.

As the government has three representatives in the bank's board of directors, the combined shareholding by sponsors and directors stands at 37.16 percent if the government shares are included.

It means the bank has already complied with the BSEC directive, and its directors are not bound to buy any further shares. Also, the bank can pursue its plan to increase its paid-up capital.

What misled investors

DSE officials told The Business Standard that they report on the shareholding pattern of each listed company every month in a format that breaks down shareholding by: sponsors and directors together, the Bangladesh government, institutional investors, foreign portfolio investors, and general or public investors.

As they followed the same reporting structure in the case of IFIC Bank, it created confusion among people who missed the information that government representatives were on the bank's board.

The clarification is intended to end all confusion, the officials added.

Meanwhile, as the BSEC is in the hard-line to enforce its 30- and two-percent shareholding directive, some investors had been expecting that IFIC directors would need to buy shares from the market and it might increase demand for the stock.

They were also surprised to see a mid-August disclosure that New Dacca Industries Ltd, a corporate director of the bank, was selling over 48 lakh shares of IFIC Bank.

The bank's plan to offer 20 percent right shares was also creating confusion among investors.

In the meantime, some investors, counting on directors' potential share purchases, were annoyed with the DSE for "presenting the shareholding pattern in a misleading way."

Rafikul Islam, a retail stock investor in Dhaka, told The Business Standard, "IFIC Bank's share price was rising as people thought the directors might have to buy more shares. But as soon as the DSE came up with delayed clarification, the price began to fall."

"Stock exchanges should be clearer and more cautious about disseminating such important information," he added.

IFIC Bank's share price began to rise from Tk8.6 each on August 9, which went up to Tk13.3 on the morning of August 20.

The last price of the share was around Tk11.7 on the DSE.