Confusion over the selection of independent directors has been removed as the securities regulator finally found a legal solution.
Talking to the FE, officials of the Bangladesh Securities and Exchange Commission (BSEC) said the exchanges' Board and Administration Regulations, 2013 allows selection of independent directors by the bourses even when the boards do not have the quorum.
The quorum of both the bourses comprises one third of the 13 directors, who need to attend board meetings for making decisions. Independent directors must constitute a majority in the quorum.
"The existing board members will be able to select independent directors in line with a provision set in this regulation," said ATM Tariquzzaman, a BSEC commissioner.
"Any vacancy in any particular category of directors shall not affect the continuation of the Board and the Board shall be entitled to carry out its functions and otherwise act in accordance with its powers under the Articles of Association and in law notwithstanding such vacancy," reads the 2013 boards and administration regulations.
Tariquzzaman said the boards would also be able to take other decisions in tackling the prevailing crisis.
A critical situation emerged following the resignation of all independent directors on instructions of the securities regulator in a changed political landscape.
Both the bourses were worried that the securities regulator would select independent directors to be working on the exchanges' boards.
They said that deciding independent directors by the regulator would not be rational as the rules and regulations empower them (exchanges) to do so.
As per the exchanges' demutualization act 2013, a five-member NRC (Nomination and Remuneration Committee) with a majority of independent directors proposes candidates for the position of independent director.
On receiving approval from the exchanges' boards, the lists are sent to the securities regulator for final approval.
Since all independent directors have resigned, now there is no NRC committee in the bourses to propose the names for the posts of independent directors.
Under the situation, the shareholders of the Dhaka Stock Exchange (DSE) and DSE Brokers Association (DBA) expressed their concern over the possibility of deployment of political persons on the boards.
The DSE's shareholder directors also held a meeting with the BSEC chairman and two commissioners on Sunday.
"The BSEC chairman assured us that the bourses will be able to give inputs," said Sharif Anwar Hossain, a shareholder director of the DSE.
Whatever the shareholder directors decide would be good and rational for all parties, he added.
DBA President Saiful Islam said they were yet to get any clear indication from the securities regulator regarding appointment of independent directors.
Meanwhile, the DBA and the DSE shareholders have jointly submitted a proposal to the finance adviser for hiring of independent directors from different bodies, such as trade bodies, the central bank, and the income tax department.
Managing Director of Midway Securities Md. Ashequr Rahman said the vacuum created in the exchanges' boards should not be left unattended for a long time.
"The DSE is a private limited company and its shareholders should have a say in the appointment of independent directors who ultimately will be responsible for governing the organisation," Mr Rahman said.
BSEC Commissioner Mr. Tariquzzaman said the exchanges would be allowed to propose two names for each post of independent director.
As per the demutualisation act, the exchanges' boards have 13 members each. Of them, seven are independent directors, five are shareholders including a strategic partner, and the remaining one is the managing director.
[email protected]
