Demutualisation Scheme
BSEC likely to cut DSE, CSE board size
Bangladesh Securities and Exchange Commission is likely to reduce the number of directors in the boards of the demutualised Dhaka and Chittagong stock exchanges to 10-12 from 19 as proposed by the bourses, said commission sources.
The bourses in the demutualisation scheme submitted on July 29 had proposed separate 19-member boards.
According to the proposed scheme, 10 among the 19 board members of a bourse will be independent directors while the other 9 positions will be filled up by the bourse’s members.
The bourses in the proposed scheme kept the previous criteria for the selection of independent directors.
‘We might limit the number of board members to 10 with 6 being independent directors and 4 being from the members or shareholders of the bourse,’ a BSEC official told New Age.
‘We have visited several demutualised stock exchanges in different countries. Most of them have a board of around 8-12 members,’ he said.
‘We will also review the criteria for being an independent director of a bourse. Since they will be running the bourse they must have the ability to make it a smooth journey,’ he said.
It cannot be said that full demutualisation of the stock exchanges would be done because the criteria set for choosing independent directors are not acceptable, said a DSE board member.
They won’t be able to run the stock exchange smoothly, he apprehended.
‘After the demutualisation takes place independent directors will run the stock exchange. That’s why we should choose the most capable persons for being the directors of the bourses so that they could run the business smoothly,’ said the DSE board member.
‘We have made the proposals regarding the board’s size of the DSE as per the companies act and corporate governance guideline in our country,’ DSE president Ahasanul Islam told New Age.
‘After the demutualisation takes place the bourse will be a company and it will follow the rules and regulations like the other companies,’ he said.
Presently both the bourses have 25 board members. Among them, 12 are elected and 12 are nominated by different business bodies while the chief executive officer of the bourse is the other one.
According to the Exchanges Demutualisation Act 2013, 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 after the act comes into effect and the regulator will approve the schemes within the next 60 days.
The demutualisation act also said that the stock exchange members or brokerage houses will hold 40 per cent shares after the demutualisation of a bourse.
The rest 60 per cent will be kept for trading by right entitlement certificate holders, strategic investors and individuals, the act says.
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 says.
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.
-With New Age input
