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  • SEC mandates 30pc stake clause
    SEC mandates 30pc stake clause FrontierDesk
    FrontierDesk on Tuesday, November 22, 2011
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    National [802]
    Sponsors, promoters and directors must hold 30pc stake in listed companies and reach that level in six months, the SEC has decided in a meeting

    The Securities and Exchange Commission (SEC) was quick to respond to the DSE board proposals that came from Monday evening's meeting.

    After clearing the DSE proposals at a meeting on Tuesday, SEC spokesman Saifur Rahman told reporters that the condition has been imposed in line with the Securities and Exchange Ordinance 1969.

    He, however, said the SEC was already working on the issue.

    Saifur said a gazette will be published in this regard within days.

    He also said the 'incentive package', aimed at boosting the capital market and compensation to the victims of continuous fall in share prices, will be announced on Wednesday afternoon.

    According to a notification undersigned by SEC chairman M Khairul Hossain, the sponsors, promoters and directors will not be able to sell or transfer existing shares and also the bonus issues until they reach the stipulated level.

    Moreover, the respective companies will not be able to declare rights share and raise capital through repeat public offers, it added.

    After the SEC announcement making 30pc stake must for sponsors, promoters and directors, several major companies would have to buy back shares they had sold at high profits at the prevailing 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 a 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.

    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.
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