Investors\\\' rights not well-protected in listed companies

Protection of investors' rights in listed companies is being affected due to influence of controlling shareholders over the company affairs and annual general meeting (AGM), a study report said.
The study report also blamed the functional departments of the regulatory and quasi regulatory bodies of the capital market for not protecting investors' rights properly.
 "Functional departments of the securities regulator and stocks exchanges do not have proper human capital. Their hiring and selection process is often influenced by political pressure of controlling shareholders and brokers," the report said.
The report titled 'Ownership Concentration and Corporate Disclosure in Bangladesh' and conducted under the Academic Innovation Fund (AIF) of the University Grants Commission (UGC) of Bangladesh and the World Bank (WB) has been conducted by selecting 94 non-financial listed companies of different industries.
A total of 18 were selected from Textile, 16 from Pharmaceuticals, three from Ceramics, four from Cement, 18 from Engineering, eight from Fuel and Power, 13 from Food, eight from IT and Telecommunications and six from Services.
 "Purpose of minority of number controlling shareholders is mostly considered while taking decisions in the listed companies' AGM as majority number of general shareholders are not organised and most of them do not attend the AGM," Mr. Mizan told the FE.
The study report also said protection of investors' rights requires radical reform of legal system in Bangladesh.
"If the observed pattern of increasing ownership concentration and prevalence of insider trading is an optimal behaviour, rules of the game need to be changed. New equilibrium behaviour should emerge whereby expropriation via insider trading becomes costlier than its potential benefits," the report said.
Without mentioning the name, Mr. Mizan said the sponsor-directors of a pharmaceutical company own below 15 per cent shares of the company but the AGM is dominated by the instructions of such minority shareholders.
When asked, commissioner of the Bangladesh Securities and Exchange Commission (BSEC) Arif Khan stressed some revision in Companies Act to reduce the influence of controlling shareholders in companies' affairs.
"Companies have to submit uninterrupted video on the AGM to the securities regulator. The regulator takes measures if something unusual is observed by reviewing the video," Khan said.
He said the Company's' AGM is the largest forum to raise investors' opinion.
"But it's heard that investors having one or two shares attend the AGM whereas institutional investors and others having huge amount of shares do not attend the general meeting," Mr. Khan said.
He said investors can send his opinion in written form without attending the company's general meeting. "They can file complaints if their written opinion is not place at the company's AGM."
A former president of Dhaka Stock Exchange (DSE) said on the condition of anonymity that a group titled 'AGM Party' earlier 'supplies human resources' in the companies' AGM.
"Investors should always remember that they are attending the general meeting of the company in which they have stakes. So, they should raise their opinion without giving concentration to gifts and food," the former DSE president said.
Recently, the securities regulator restricted the supply of gifts and food in the company AGMs.
Nevertheless, later a group of investors urged the regulator to restore the supply of gifts and food in the AGMs.
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