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SEC may allow sponsor-directors to buy shares despite year-end

Friday, 2 December 2011


Mohammad Mufazzal The securities regulator is set to relax the condition about the purchase of shares of their respective listed companies by the sponsor-directors. Under the existing rules of the Securities and Exchange Commission (SEC), such directors are debarred from purchasing shares of their respective companies during the closing month of their annual books of accounts. The accounting year of many listed companies ends normally in December. The SEC will relax its existing rule to allow the sponsor-directors to buy shares of their respective listed companies to facilitate their compliance with its latest directive about holding of, at least, 30 per cent of paid-up capital by such directors, officials said. The SEC's move has come following the receipt of an application to the Securities and Exchange Commission (SEC) from one of the sponsor-directors of a publicly listed company, seeking a direction from the regulatory authority about whether the existing rule will permit him or not to buy shares for more than two months because of year-end closure of accounts. On November 22, the securities regulator made holding of at least 30 per cent stakes in paid-up capital of a listed company by its sponsors-directors mandatory. According to the SEC notification, the sponsors-directors holding less than 30 per cent of aggregate shares of a company will have to acquire the rest portion of shares within six months after publication of a gazette to this effect. An earlier directive of the SEC, issued on March 23, 2010 said that the sponsor-directors of a listed company would not be able to purchase shares of their respective companies for two months prior to completion of its annual financial statement. Only after the approval of the company's annual financial statement by its board of directors, the buying of such shares are allowed under the earlier directive. Presently, the sponsor-directors of 54 listed companies will have to buy more shares, as they hold their aggregate stakes at less than 30 per cent of the paid-up capital of their respective companies. As per the DSE website, December is the year-end month of annual financial accounts of 29 companies. A top SEC official said the regulator is considering the relaxation of the existing bar on purchasing shares, if the sponsor-directors of the companies, whose financial year ends in December, apply for it. The companies that complete their annual financial accounts by December 30, include In Tech Online, Beximco, Beximco Pharma, Fu Wang Foods, Apex Adelchi Footwear, Kay and Que, Eastern Bank, Uttara Bank, Meghna Life Insurance, Aziz Pipes, Pubali Bank, City Bank, BGIC, Green Delta Insurance, AB Bank, First Lease Finance and Investment, BD Thai Aluminium, Active Fine Chemicals, Monno Jute Stafflers, Karnaphuli Insurance, BD Information Services, Salvo Chemical, Social Islami Bank, Confidence Cement, Mercantile Insurance, Fareast Islami Life, Southeast Bank and National Bank.