Rupali Insurance's alleged use of dead director's shares as collateral prompts regulatory probe

The securities regulator has been probing into the allegation that Rupali Insurance kept a deceased director's shares as guarantee while taking out a loan from another listed non-bank financial institution.
The loan was allegedly secured from Uttara Finance & Investment, using shares of Md Nazim Uddin Khan, a sponsor-director of Rupali Insurance, as collateral three years after his death in 2012.
The matter drew attention after a report was published on this by an online financial news portal in May this year.
The loan amount was nearly Tk 30 million, according to the report.
The media report says Md Nazim Uddin opened a beneficiary owner's account (BO account) with EBL Securities in 2010.
The account had nearly 2.12 million shares of Rupali Insurance, of which 1.82 million shares were kept as collateral. The allegation is that the shares were transferred to Uttara Finance Capital, a subsidiary of Uttara Finance & Investment.
The company secretary of Rupali Insurance, Mohammad Atiqur Rahman acknowledged that the securities regulator was investigating the matter but declined to say any further on the matter.
A four-member enquiry committee has been working since July 18 and will submit a report on the findings to the Bangladesh Securities and Exchange Commission (BSEC) in 60 working days since then.
The BSEC has asked the committee to look into some specific issues, as per an official order. The Financial Express obtained a copy of the order.
It demands a comprehensive investigation into irregularities in the granting of the loan by Uttara Finance.
The committee also has to identify the people responsible of Rupali Insurance, who presented Nazim Uddin as a Rupali Insurance director even after his death.
Moreover, it has been tasked with identifying officials of EBL Securities who were involved in pledging shares of the deceased as guarantee.
According to the company website, Nazim Uddin is still a sponsor-director of Rupali Insurance.
The company's financial statement for 2022 also cited his shares being set aside as collateral against the loan from Uttara Finance & Investment, said the media report.
A BSEC official said that if the enquiry committee found any one guilty, the commission would take measures as per the securities rules.

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