The demutualisation scheme of the Chittagong Stock Exchange is likely to be approved by its board of directors at a meeting today in line with the implementation of the Demutualisation Act.
Demutualisation is the process of separating a bourse’s management from its ownership in a bid to bring more transparency in the function of a bourse.‘The demutualisation scheme of the CSE will be placed before its board on Saturday to make it final to submit to the Bangladesh Securities and Exchange Commission in a bid to maintain the specified timeframe of the Demutualisation Act,’ CSE president Al Maruf Khan told New Age on Thursday.
‘We are hopeful that the board will approve the scheme on the day [Saturday],’ the CSE president said.
‘After the board approval, a presentation will be offered to the members of the bourse to let them know about the scheme though the members were informed about the progress of the scheme in times, Maruf said.
‘We have also planned to submit the scheme to the regulator on July 29, one day before the deadline specified by the regulator,’ Maruf said.
‘We will propose that the size of our board of directors will be reduced to 19 members from 24 members, of which 10 directors will be from independent criteria and 9 directors from the member criteria,’ he added.
According to the Demutualisation Act, which was passed in the parliament on April 29, the stock exchanges are bound to submit their demutualisation schemes to the securities regulator within 90 days of the day when the Act comes into effect and the regulator will approve the schemes within the next 60 days.
Among others the demutualisation scheme will include the governance of the exchange, Board and Administration Regulations, business plan, the members’ shareholding status, valuation of the bourse and its member house and the procedures of completing the demutualisation.
‘We have prepared three types of business plan — three years, five years and seven years — for the bourse. The board will decide which one they will accept, although three-year business plan is mandatory in the Demutualisation Act,’ CSE chief executive officer Syed Sajid Husain told New Age on Thursday.
The Act also said that stock exchange members or brokerage houses would hold 40 per cent shares after the demutualisation of a bourse.
The rest 60 per cent will be kept for trading right entitlement certificate holders, strategic investors and individuals, it said.
Strategic investors will not be allowed to hold more than 25 per cent shares of a stock exchange, while no individual will hold more than 5 per cent, the Act said.
The Act has paved the way for separating the bourses’ management from ownership to ensure transparency and accountability in the stock market.
The Demutualisation Act says independent experts will hold the posts of chairmen of the Dhaka and Chittagong stock exchanges, not the owners-cum-directors of the bourses.
On July 22 the board of directors of Dhaka Stock Exchange along with the demutualisation scheme approved the valuation of the bourse at around Tk 4,000 crore while the value of each brokerage house, without premium, was set at Tk 7.21 crore.
The tangible asset of the bourse is around Tk 527 crore, fixed deposit is Tk 1,000 crore and share capital of 250-member bourse is worth Tk 1,800 crore.
The Dhaka Stock Exchange also plans to submit the scheme to its regulator on July 29.
-With New Age input
