Shareholding By Directors
Aviation ministry lobbies with BSEC to relax bar for United Airways
The civil aviation and truism ministry has asked the capital market regulator to relax the company directors’ shareholding rules for United Airways Ltd as the rules bars the company from issuing rights shares. The aviation ministry letter, signed by assistant secretary Abdur Rashid, asked the Bangladesh Securities and Exchange Commission on Wednesday to waive a provision in favour of United Airways.
The provision makes 30 per cent joint shareholding mandatory for the listed company directors.
The aviation ministry latter said United Airways should get the waiver as its paid-up capital is ‘huge’.
It also suggested that the BSEC should design slab-based mandatory shareholding requirement considering the nature of different industry.
The BSEC in November 2011 issued a directive which made jointly 30 per cent shareholding by the listed company directors mandatory as during the market bubble in 2009 many directors sold off the majority of their shares at high prices.
The Dhaka Stock Exchange data showed that the sponsor-directors of United Airways hold only 12.34 per cent shares of the company.
‘In the existing legal framework there is no scope to endorse such proposal. The commission will hold a meeting to discuss the issue soon,’ a high BSEC official told New Age on Thursday.
BSEC officials said United Airways had earlier tried to push the BSEC in the same issue through the finance ministry.
‘United Airways wanted to issue rights shares but due to the rules they could not. So they are now
trying to push the BSEC through the aviation and tourism ministry,’ another BSEC official told
New Age.
After the stock market crash in 2010-2011, the BSEC on November 22, 2011, imposed the mandatory provision for the sponsor-directors, other than independent ones, under 2CC for holding in their individual capacity, up to, at least, two per cent of their companies’ paid-up capital.
The directive also said that any of the listed company would not be eligible to issue any rights shares for their shareholders without holding the stipulated amount of shares.
The BSEC after issuing the directive under its special power had faced several writ petitions which challenged the legality of the issuance of such directive by the capital market regulator.
In May 2012, the High Court upheld the BSEC directive and asked the sponsor-directors of the companies to follow the BSEC directive.
After the HC verdict, the BSEC on September 19, 2012, declared 359 posts of sponsors-directors of 103 listed firms vacant as they failed to hold at least two per cent shares in their respective companies in line with the directive.
The capital market regulator then also asked the listed companies to restructure their boards and submit to it certified copies of the newly-formed boards.
-With New Age input
