Any information having notable impact on the operation, financial or otherwise, of a listed company is considered important as far as the interests of investors are concerned. However, the controlling shareholders and management personnel -- described as company insiders -- enjoy the privilege of knowing such information first and the outside investors would know about it only when the company management decides to make the information public. If the insiders have an evil intention, they might withhold the information for sometime or kill it for their own gains, pecuniary or otherwise. But the securities' regulators are usually expected to make it mandatory for the listed companies to disclose immediately the information that concerns the interest of the general investors.
But the insiders of many listed companies in Bangladesh allegedly withhold information to cheat general shareholders. Experts at a seminar held in Dhaka early this week pointed out the violation of reporting regulations relating to disclosure of information that are considered useful to the general investors. They have alleged that the dividing line between the ownership and the management, in many cases, gets blurred mainly because of weak enforcement of relevant laws and dominance of family control over the affairs of the listed companies. The issue of poor quality of financials of the listed companies has also been raised by them.
There is no denying that state of corporate governance in most listed companies in Bangladesh is poor. In many cases, the controlling shareholders or the shareholder directors still call the shot and they control the information. The management of most listed companies is yet to work independently and it remains subservient to the board. The regulator concerned has made provisions for the appointment of independent directors with a view to placing competent people on the boards who would look into company affairs dispassionately. The move might have produced better results in the case of some listed companies. But the situation in many other companies has not changed much.
The rules provide for immediate public disclosure of decisions that are price sensitive by the companies listed with the country's two bourses. But there are important developments that are only known to the so-called insiders. Other shareholders and investors are kept in the dark about such developments. In many countries the companies are required by law to explain the situation on their own when the prices of their shares behave abnormally on the back of rumours. The bourses are not required to seek any information from them. But here the bourses have to ask the companies to explain the reasons for abnormal rise or fall in the prices of their shares. The securities' regulator is only occasionally found to be trying to make a probe into such abnormal behaviour of particular stocks.
Undeniably, regulatory failure to monitor the stock market seriously and take necessary corrective measures and the government's reluctance to punish the manipulators, have led to a situation where the market remains weak and disorganised, to a great extent. One can hardly differ with the experts' observation that had the scammers of 1996 stock market bubble been punished duly, there would not have been another crash in 2010. Four years on from the latest crash, it is still difficult to say that there would not be another one in the near future since the 2010 scammers have so far gone unscathed.
Controlling shareholders\\\' undue dominance over listed cos
FE Team | Published: January 22, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
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