The DSE has recommended that sponsor directors of all listed companies hold at least 30 percent stake, and those below the level buy back in six months their shares.
In a meeting on Monday evening, the board of directors of the Dhaka Stock Exchange took decisions that would have an impact on some of Bangladesh's biggest players in the business.
Shakil Rizvi, the DSE president, told reporters after the meeting that the board had decided to dissolve all but audit and demutualisation committees.
The listing committee, perhaps the most powerful one with authority to virtually approve IPO process, was one of the dozen or so DSE wings that stood dissolved after the Monday evening's meeting.
Rizvi only read out a written statement and did not take any questions.
The DSE meeting came after the indices plunged to new lows over the past week leading to streets protests and then intervention from the prime minister. On Wednesday night, Sheikh Hasina chaired a high-profile meeting that resulted in decisions to prop up the prices.
The DSE board decided to recommend that there be a mandatory provision for all company sponsor directors that they hold at least 30pc stake.
According to the DSE proposals meant for SEC clearance, those holding below 30 percent in any listed company should bring their holding up to 15 percent in three months, and the rest in six months.
This would mean sponsor directors of many major companies would have to buy back shares they had sold at high profits at the current market prices.
Failing to do so, these sponsor directors would lose their control on management of companies they own not even 15 percent in many cases.
Currently, the sponsor directors of Beximco Limited hold only 13.25pc shares of the company, retail investors 76.45pc and foreigners the rest, while sponsor directors of Beximco Pharma hold 12.97pc shares, retail investors 52.8pc, foreigners 23.02pc and institutional investors 11.21pc, according to the DSE website.
In case of Uttara Bank, sponsor directors hold meagre 8.13pc shares, retail investors 88.62pc and institutional investors 3.19pc.
Sponsor directors of City Bank own 12.88pc stake, Southeast Bank 28.14pc, National Bank Limited (NBL) 29.21pc and AB Bank a low 13.9pc. Prime Bank sponsor directors hold 43.25pc shares of the bank.
According to the DSE proposals, any investor holding at least five percent shares—by acquisition or otherwise—will be eligible for a seat on the board of directors of that company.
Each company will have to nominate at least one director from among general shareholders.
From now on, the sponsor directors should only be allowed to sell shares through 'block market', and not through public market.
The companies which sold shares through direct listing must buy back if the prices of those securities fell below the issue price.
Another proposal talks of the companies raising capital through the placement route, instead of going for listing on the bourses.
The DSE recommends that such companies settle the issue of status of their investors within three months.
The proposals would now require regulatory approval.
The DSE also proposed to relax certain rules for commercial banks trading in the stock market. When calculating the banks' exposure, the board suggested that the market price or cost price –whichever would be lower—be taken into account.
At present, the cost price or market price—whichever is higher—provides the basis for such calculation.
In a meeting on Monday evening, the board of directors of the Dhaka Stock Exchange took decisions that would have an impact on some of Bangladesh's biggest players in the business.
Shakil Rizvi, the DSE president, told reporters after the meeting that the board had decided to dissolve all but audit and demutualisation committees.
The listing committee, perhaps the most powerful one with authority to virtually approve IPO process, was one of the dozen or so DSE wings that stood dissolved after the Monday evening's meeting.
Rizvi only read out a written statement and did not take any questions.
The DSE meeting came after the indices plunged to new lows over the past week leading to streets protests and then intervention from the prime minister. On Wednesday night, Sheikh Hasina chaired a high-profile meeting that resulted in decisions to prop up the prices.
The DSE board decided to recommend that there be a mandatory provision for all company sponsor directors that they hold at least 30pc stake.
According to the DSE proposals meant for SEC clearance, those holding below 30 percent in any listed company should bring their holding up to 15 percent in three months, and the rest in six months.
This would mean sponsor directors of many major companies would have to buy back shares they had sold at high profits at the current market prices.
Failing to do so, these sponsor directors would lose their control on management of companies they own not even 15 percent in many cases.
Currently, the sponsor directors of Beximco Limited hold only 13.25pc shares of the company, retail investors 76.45pc and foreigners the rest, while sponsor directors of Beximco Pharma hold 12.97pc shares, retail investors 52.8pc, foreigners 23.02pc and institutional investors 11.21pc, according to the DSE website.
In case of Uttara Bank, sponsor directors hold meagre 8.13pc shares, retail investors 88.62pc and institutional investors 3.19pc.
Sponsor directors of City Bank own 12.88pc stake, Southeast Bank 28.14pc, National Bank Limited (NBL) 29.21pc and AB Bank a low 13.9pc. Prime Bank sponsor directors hold 43.25pc shares of the bank.
According to the DSE proposals, any investor holding at least five percent shares—by acquisition or otherwise—will be eligible for a seat on the board of directors of that company.
Each company will have to nominate at least one director from among general shareholders.
From now on, the sponsor directors should only be allowed to sell shares through 'block market', and not through public market.
The companies which sold shares through direct listing must buy back if the prices of those securities fell below the issue price.
Another proposal talks of the companies raising capital through the placement route, instead of going for listing on the bourses.
The DSE recommends that such companies settle the issue of status of their investors within three months.
The proposals would now require regulatory approval.
The DSE also proposed to relax certain rules for commercial banks trading in the stock market. When calculating the banks' exposure, the board suggested that the market price or cost price –whichever would be lower—be taken into account.
At present, the cost price or market price—whichever is higher—provides the basis for such calculation.
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