HC curbs on sponsor directors with less than 2.0pc shares

---

FE Report The High Court (HC) has asked the sponsor-directors of the listed companies having less than 2.0 per cent shares not to be involved in any affairs of their firms till March 13, lawyers said. The HC on Monday also asked them not to spend money of their respective companies till the date that the court fixed for next hearing on the matter. Following a writ petition, a HC bench issued a rule upon the authorities concerned to explain as to why their failure to exercise legal power in executing the securities regulator's earlier directive on vacating directorships of the sponsor-shareholders, who failed to hold 2.0 per cent shares. In the rule, the court also asked the authorities to explain within 10 days as to why they will be not directed to take effective measures to execute the regulatory directive issued by Bangladesh Securities and Exchange Commission (BSEC). The HC bench comprising Justice Mirza Hussain Haider and Justice Muhammad Khurshid Alam Sarkar passed the order. Five petitioners including a shareholder of different listed companies filed the writ petition, their lawyer Morshed Ahmed Khan told the FE. The Secretary of the Finance Ministry, the Bangladesh Bank governor, the BSEC chairman, Dhaka and Chittagong Stock Exchanges, Mercantile Bank, Social Islami Bank and four others were made respondents to reply to the rule, the lawyer said, adding that they will not have to appear before the court. On November 22, 2011, BSEC, regulator of the capital market, imposed the mandatory provision for the sponsor-directors, other than the independent ones, for holding individually, at least, two per cent of their companies' paid-up capital. Then, a section of the sponsor-directors took the BSEC's notifications to the HC. However, another part of the notifications on jointly holding 30 per cent company share by the sponsor-directors remain unchallenged. In May, 2012, a number of writ petitions filed challenging the notifications were rejected by a HC bench. In December of 2012, another writ on the same issue was also rejected. However, some sponsor-directors of the listed companies later obtained orders from both the HC Division and the Appellate Division (Chamber Judge) that stayed operation of the securities regulator's notifications on mandatory 2.0 per cent shares holding requirement.