Fareast Finance board dissolved
The Bangladesh Securities and Exchange Commission (BSEC) has dissolved the board of directors of Fareast Finance due to the non-bank financial institution's (NBFI) failure to make profits, pay dividends or take any effective steps to address the issues.
This is the first time that the stock market regulator has had to fully restructure an NBFI's board of directors for non-performance.
Earlier, the BSEC had reformed the boards of six listed companies -- C&A Textile, Ring Shine Textiles, United Airways, Familytex (BD), Alhaj Textile, and Emerald Oil -- for non-performance over the years.
On March 29, the BSEC issued a letter to Fareast Finance stating that its board was dissolved and that new independent directors had been appointed.
The company was placed in Z-category on April 19 2018, and its shares have been trading under the junk category ever since.
However, the board of directors did not take action to rectify the situation and failed to improve the company's performance, the BSEC letter said.
"Besides, the board has failed to declare dividends since 2017," it added.
The NBFI's auditor said that the company's going concern is at risk due to huge losses.
Fareast Finance sustained losses of Tk 152 crore as of December 31, 2019, which includes net loss after tax of Tk 71 crore for that year.
Its net asset value per share fell from Tk 7.22 to Tk 2.85 from the year 2018 to 2019.
Fareast Finance's net liability exceeds its assets within one year by Tk 153 crore.
Against this backdrop, the auditor indicates that the company's going concern is at risk, the BSEC letter said.
Besides, it appears that Fareast Finance is not growing appropriately and its shareholders have not been given any dividends for an extended period, which is detrimental to the interest of its investors and undesirable to the commission.
Under these circumstances, the commission has nominated six independent directors and three sponsor shareholders for the new board of directors.
Md Ashraful Moqbul, former chairman of Sonali Bank, is proposed to be the chairman of Fareast Finance while the other independent directors who were nominated are: Ihsanul Aziz, Sheikh Nazmul Hoque Saikot, Md Sajib Hossain, Md Mosharraf Hossain and AKM Shahiduzzaman.
The sponsors include Md Shamsul Islam Varosha, Khadiza Waheeda Jahan and Rimsha BD, who would be board members.
The independent directors will submit a report to the BSEC regarding the company's compliance and progress for the previous month within the 10th day of each month as per the Gregorian calendar.
Stocks of Fareast Finance closed 2.56 per cent lower at Tk 3.80 yesterday.