BANGLADESH

Dhaka Stock Exchange has agreed to a proposal of sponsors and directors buying their own company shares at a fixed price to stop market slide.

Following a meeting of the DSE executive board Wednesday evening, senior vice-president Ahsanul Alam Tito told reporters, "DSE has agreed to the proposal of sponsors and directors buying their shares."

"Now the proposal will be sent to the Securities and Exchange Commission (SEC) for approval," he added.

The proposal was put forth by the Bangladesh Association of Publicly Listed Companies (BAPLC), saying that the ailing capital market could be revamped if the sponsors and directors were allowed to buy the shares of their own companies. It also urged SEC to amend the relevant law.

BAPLC president Salman F Rahman, a DSE director, had said the proposal was an effort to stall the freefall of prices.

"Shareholders and the companies both suffer losses when share prices fall," he had said.

He emphasised however, that the proposal was not that of a 'buy-back'.

The meeting over, Rahman told reporters: "Several decisions have been made at the meeting. We are trying to give investors a bailout in margin loans."

He said the decisions will hopefully be unveiled at a news conference at FBCCI headquarters on Thursday at 1pm.

Investors who took margin loans from merchant banks and bought shares faced a crisis when the prices fell drastically. They are unable to sell the shares even as their interest rates grow, while merchant banks cannot recover their assets, leading to a gridlock in the market.

The BAPLC has proposed a separate board for dealing Z category, overvalued stocks and stocks with small paid-up capitals.

Tito said these proposals would be discussed in the next meeting of DSE.

DSE president Shakil Rizvi, FBCCI president A K Azad and members of the executive board were present at the meeting.