Stalemate over transfer of IIDFC shares
Monday, 6 April 2009
Sheikh Shahariar Zaman
Three large financial entities are now in the midst of a bitter dispute over a share transfer deal.
One of the parties involved has even gone to the higher court and got verdict in its favour.
According to sources, the Alliance Holdings Limited (AHL) bought shares of the Industrial and Infrastructure Development Finance Company (IIDFC), a leading non-banking financial institution from the AB Bank in 2006.
But the transfer of the shares in question is yet to be materialized as the IIDFC, allegedly, refuses to rectify its share registrar in favour of the AHL on the plea that shares of the former is held by 14 financial institutions and an individual and the article of the association restricts transfer of anyone outside the original shareholders.
The AB Bank claims that it had sold its stakes in IIFDC to the AHL when there had been no such restriction.
Talking to the FE, the Managing Director of the AB Bank Kaiser A Chowdhuty said they had sent a letter to the IIDFC informing about the sale of stocks held by the bank on February 12, 2007 but the IIDFC showed the date of receiving the letter on February 25, the day on which the latter held an extra-ordinary general meeting of the shareholders to impose restriction on transfer of its shares to 'outsiders'.
"Interestingly, the distance between the offices of the AB Bank and the IIDFC is not even half a kilometre and it took two weeks to reach a letter," he said.
The IIDFC on March 06, 2007 informed the AB Bank that it was not allowed to sell its shares to any outsiders because of the February 25 amendment to the article of association of the company.
Accordingly, the AB Bank expressed its inability to sell share to the AHL and refunded the money it had taken from AHL along with compensation. However, the AHL, though received the amount, had claimed more compensation from the AB Bank.
At one stage the AHL changed its mind and went to the High Court seeking transfer of the IIDFC shares in its favour and rectify the shares register of the company concerned. The court issued a verdict in favour of the AHL, a holding company, incorporated in 1998, which have stakes in a number of entities in manufacturing, financial, IT and dairy sectors.
When contacted IIDFC managing director Md Asaduzzaman Khan said the company is yet to receive the certified copy of the High Court verdict.
"We will lodge an appeal before the Appellate Division on receipt of the certified copy of the verdict," he said.
The IIDFC has 14 financial institutions as its shareholders and the article of association of the company restricts any of them to sell shares to outsiders, he said.
He, however, admitted that the article of association was amended after the AB Bank sold the shares to the AHL.
"But we follow the policy of having financial institutions as shareholders and we don't want any private limited company as shareholder," he said.
When asked how an individual, Mr Matiul Islam, is the chairman of the company, he said, "He is the promoter of the company. He is the first finance secretary of Bangladesh, a promoter and first chairman of AB Bank and many other reputed institutions and he himself is an institution."
The Managing director of AB Bank said the bank would decide on its next course of action after getting the certified copy of the verdict of the case instituted by the AHL.
Managing director of AHL Syed Ali Jowher Rizvi said, "It is true we received the money refunded by the AB Bank but the amount was far less than the compensation we had claimed."
AHL, a holding company in nature, does not want any compensation and has asked for the transfer the IIDFC shares in its name, he said adding the company would pay back the entire amount to the AB Bank as soon the transfer takes place, he said.
"My lawyers have informed Bangladesh Bank and Securities and Exchange Commission about the issue and we are waiting for their response," he said.
In the event of not having any satisfactory result, AHL would decide its next course of action, he said.
Three large financial entities are now in the midst of a bitter dispute over a share transfer deal.
One of the parties involved has even gone to the higher court and got verdict in its favour.
According to sources, the Alliance Holdings Limited (AHL) bought shares of the Industrial and Infrastructure Development Finance Company (IIDFC), a leading non-banking financial institution from the AB Bank in 2006.
But the transfer of the shares in question is yet to be materialized as the IIDFC, allegedly, refuses to rectify its share registrar in favour of the AHL on the plea that shares of the former is held by 14 financial institutions and an individual and the article of the association restricts transfer of anyone outside the original shareholders.
The AB Bank claims that it had sold its stakes in IIFDC to the AHL when there had been no such restriction.
Talking to the FE, the Managing Director of the AB Bank Kaiser A Chowdhuty said they had sent a letter to the IIDFC informing about the sale of stocks held by the bank on February 12, 2007 but the IIDFC showed the date of receiving the letter on February 25, the day on which the latter held an extra-ordinary general meeting of the shareholders to impose restriction on transfer of its shares to 'outsiders'.
"Interestingly, the distance between the offices of the AB Bank and the IIDFC is not even half a kilometre and it took two weeks to reach a letter," he said.
The IIDFC on March 06, 2007 informed the AB Bank that it was not allowed to sell its shares to any outsiders because of the February 25 amendment to the article of association of the company.
Accordingly, the AB Bank expressed its inability to sell share to the AHL and refunded the money it had taken from AHL along with compensation. However, the AHL, though received the amount, had claimed more compensation from the AB Bank.
At one stage the AHL changed its mind and went to the High Court seeking transfer of the IIDFC shares in its favour and rectify the shares register of the company concerned. The court issued a verdict in favour of the AHL, a holding company, incorporated in 1998, which have stakes in a number of entities in manufacturing, financial, IT and dairy sectors.
When contacted IIDFC managing director Md Asaduzzaman Khan said the company is yet to receive the certified copy of the High Court verdict.
"We will lodge an appeal before the Appellate Division on receipt of the certified copy of the verdict," he said.
The IIDFC has 14 financial institutions as its shareholders and the article of association of the company restricts any of them to sell shares to outsiders, he said.
He, however, admitted that the article of association was amended after the AB Bank sold the shares to the AHL.
"But we follow the policy of having financial institutions as shareholders and we don't want any private limited company as shareholder," he said.
When asked how an individual, Mr Matiul Islam, is the chairman of the company, he said, "He is the promoter of the company. He is the first finance secretary of Bangladesh, a promoter and first chairman of AB Bank and many other reputed institutions and he himself is an institution."
The Managing director of AB Bank said the bank would decide on its next course of action after getting the certified copy of the verdict of the case instituted by the AHL.
Managing director of AHL Syed Ali Jowher Rizvi said, "It is true we received the money refunded by the AB Bank but the amount was far less than the compensation we had claimed."
AHL, a holding company in nature, does not want any compensation and has asked for the transfer the IIDFC shares in its name, he said adding the company would pay back the entire amount to the AB Bank as soon the transfer takes place, he said.
"My lawyers have informed Bangladesh Bank and Securities and Exchange Commission about the issue and we are waiting for their response," he said.
In the event of not having any satisfactory result, AHL would decide its next course of action, he said.