Directors' disregard

Some 219 directors of 78 listed companies have failed to hold the requisite minimum 2 percent shares of their companies and yet no actions were taken against them in the last seven years.

With a view to enhancing the directors' commitment towards the companies, the Bangladesh Securities and Exchange Commission in 2011 instructed them to hold at least 2 percent shares of the companies' paid-up capital. The independent directors were spared from the directive.

Though the 219 directors are not following the directive, the BSEC did not remove them from their boards.

Most of the companies where the directors do not have the requisite shareholding are performing below par or incurring losses, ultimately affecting small investors, a BSEC official said.

Last year, the High Court asked the regulator to explain why the directors were not removed from the boards. This prompted the BSEC to send a letter to the Dhaka Stock Exchange seeking a list of directors who were violating the 2011 directive.

“BSEC should take proper and strict measures,” said AB Mirza Azizul Islam, a former chairman of the stockmarket regulator.

However, some directors have good stakes in their firms and yet the companies do not perform well, he said, while calling upon the regulator to also highlight this matter so that they maintain good corporate governance.

“We are taking initiatives against these directors who are not holding minimum share as per the directive,” said Saifur Rahman, spokesman of the BSEC.

According to a BSEC notification, there will be a casual vacancy of a director if anyone does not hold the minimum 2 percent share.

“DSE will take initiatives to be compliant with the BSEC's directives,” said KAM Majedur Rahman, managing director of the DSE, adding that the premier bourse's concerned department is working on the matter.

A senior official of the department said a total of 219 names have been jotted down. The list has already been forwarded to the BSEC, he added.