BSEC allows it, subsidiaries to buy or sell directors’ shares without notice
Despite having directorship in several listed companies Investment Corporation of Bangladesh is getting the opportunity of trading shares without any declaration for years, creating uneven field in the business, experts said.
The ICB and its subsidiaries are shareholder-directors of more than 15 listed companies but the Bangladesh Securities and Exchange Commission is allowing them to purchase or sell shares of the listed companies without giving any declaration, sources in the stock exchanges said.
The BSEC on December 28, 2005 exempted the ICB and its subsidiaries from giving any declaration before buying or selling shares.
On the other hand, giving declaration in purchasing and selling shares of own company is mandatory for the sponsors-directors of all listed companies.
A BSEC notification issued on March 25, 2001, said that every sponsor or director of a company listed with any stock exchange would simultaneously submit a written report to the commission and the stock exchange with which the company is listed about his/her intention to buy shares of that company or sell or otherwise dispose off the shares held by him/her.
Experts said that the BSEC’s waiver to the ICB and its subsidiaries was not a standard practice of law.
The BSEC should take immediate step to stop such waiver, as it is helping ICB to get insider information from the boards of the listed companies and use such information for its stock market-related business, they said.
All the three subsidiaries of the ICB — ICB Securities Trading Company Limited, ICB Asset Management Company Limited and ICB Capital Management Limited — are active participants in the capital market business.
Insider trading issue came to light again when Wata Chemical, an over the counter market company, came at the main market on May 14 after it was in the OTC market for four years. The ICB and its subsidiaries hold around 30 per cent shares in the company.
ICB deputy general manager Md Moshiur Rahman holds directorship post in the company.
Not a single share of the company was traded on the day of relisting against more than 1 lakh share purchase order.
The share price of the company increased to Tk 488 on June 2 from Tk 59 in the previous day after the company declared 30 per cent stock dividend for its shareholders after reenlistment with the stock exchanges. Each share of Wata was traded at Tk 211.60 on Tuesday.
‘The ICB is getting the opportunity of insider trading to some extent with the waiver provided to the entity,’ Mahmood Osman Imam, a finance teacher at Dhaka University, told New Age.
The waiver is discriminatory and against the more disclosure-based market nature, said Mahmood adding that investors were deprived of getting signal of buying and selling by the ICB and its subsidiaries.
Former Bangladesh Merchant Bankers Association president Mohammad A Hafiz said, ‘If there is any inequality, it should be removed as each and every entity is supposed to get equal opportunity.’
Asked, a BSEC senior official denied making any comment in this regard.
ICB managing director Md Faykuzzaman told New Age, ‘Despite getting the opportunity to attend the board meetings of the companies, ICB does not buy or sell shares in the prohibited period.’
‘As the ICB and its subsidiaries do not buy or sell shares during that period, there is no scope of abusing the waiver.’
But, the ICB (including other state-owned entities) enjoyed the opportunity of buying and selling shares of companies during the prohibited period from January 2008 to December 2013.
The ICB and its subsidiaries handle hundreds of crores of capital market investment fund of their own and clients.
On May 28 this year, the BSEC waived some conditions of the corporate governance guidelines for the ICB, virtually making the independent directors in the state-owned financial institution ineffective.
The conditions are 1.2, 1.3, 1.4, 3.2(i) and 4(ix) of the corporate governance guidelines.
Current BSEC chairman M Khairul Hossain earlier worked as the chairman of the ICB.
The BSEC earlier had extended tenure of the ICB-operated mutual funds for several times after end of their regular time-limit.
-With New Age input
