The High Court yesterday scrapped a provision imposed by the Securities and Exchange Commission for sponsor-directors to individually hold at least 2 percent shares in listed companies.
Hearing a petition filed by a sponsor shareholder of NCC Bank, the HC said the provision has superseded Banking Companies Act 1940 that governs the banking sector.
The court observed that the parliament's power of making laws cannot always be delegated to an agency.
The judgment is effective for all concerned, and there is no need for sponsor-directors to hold the minimum 2 percent shares of the paid-up capital of the listed companies, Shah Mohammad Ahsanur Rahman, the petitioner's counsel, told The Daily Star.
Justice Quazi Reza-Ul Hoque and Justice ABM Altaf Hossain passed the verdict after hearing the writ petition filed by Mostafizur Rahman, a sponsor shareholder of NCC Bank.
Rahman filed the petition with the HC in December 2012 challenging the legality of a notice issued by the SEC on November 22, 2011, making it compulsory for sponsors, directors and promoters of listed companies to hold at least 2 percent stakes individually in their own companies.