The gazette notification of the much-talked about Demutualisation Act-2013 that will separate the bourses’ management from the ownership was published on Wednesday,
said Bangladesh Securities and Exchange Commission officials.
The BSEC got the gazette notification of the act, which was passed in the parliament on April 29, on Wednesday from the Bangladesh Government Press, the BSEC officials told New Age.
According to the act, which got president’s approval on May 2, the bourses will be demutualised within the next six months and 21 days. The bourses will have to form a demutualised board including 60 per cent independent directors within the next 90 days’ of demutualisation.
Earlier in 2011, the capital market probe committee headed by former Krishi Bank chairman Ibrahim Khaled strongly recommended demutualisation of the bourses to avoid conflict of interest.
After the recommendation of the committee the Bangladesh Securities and Exchange Commission asked proposals to the stock exchanges for demutualisation of the stock exchanges and drafted the demutualisation act on September 26, 2012.
The cabinet approved the proposed demutualisation act on October 9, 2012.
‘Obviously the demutualisation will bring some good results for the capital market but, the demutualisation will not be totally done through the act,’ Khaled had told New Age earlier about the act.
‘We, in our investigation report, recommended for total separation of the management from the market players. But, according to the proposed act, 40 per cent directors of the board will take part in the board on behalf of the stock brokers, who are market players. So, it could not be termed as total demutualisation of the stock exchanges,’ he said.
‘But, it could be termed as better than nothing. If it does not work properly, then it could be solved by further amendment to the act,’ Khaled added.
As per the act, the DSE will have to submit the scheme and business plan to the regulator within 90 days of gazette notification.
The scheme includes memorandum of article including the qualification of the directors, primary shareholders’ list and allocation of shares from them, board and administration regulations, proposal for the first board of directors, revaluation of the assets and liabilities of the stock exchanges, fixing the number of shares on the basis of face value of Tk 10 each share and minimum three years of business plan.
The Dhaka Stock Exchange, however, on Monday started the process of demutualisation as they decided to appoint consultant to prepare the scheme.
The DSE board on Tuesday also decided to appoint A Qasem and Company as auditor of the bourse and Rahman and Rahman Haq for revaluation of the bourse.
Earlier, the Chittagong Stock Exchange also started the process of appointing a consultant to prepare the scheme for demutualisation.
If any stock exchange fails to fulfil any procedure within the timeframe, the BSEC will complete the requirement and issue order the exchange to comply with the order, according to the act.
-With New Age input