The Dhaka Stock Exchange (DSE) has submitted a list of seven nominees for appointment as independent directors to its board, aiming to make it functional, as suggested by the securities regulator after six independent directors resigned in the wake of political change in the country.
The premier bourse sent the names to Bangladesh Securities and Exchange Commission (BSEC) on Thursday last. The names of some other aspirant candidates will be sent to the commission today (Sunday).
The boards of both the demutualised stock exchanges -- DSE and Chittagong Stock Exchange (CSE) -- are comprised of 13 members each. Seven of them, including the chairman, are independent directors, four are shareholder directors, one strategic investor and the other is bourse's managing director.
The posts of independent directors and chairmen of the bourses fell vacant as they resigned from the boards on August 20 and 21.
A shareholder director of the DSE, who declined to be named, said they have submitted the names of aspirant independent directors in line with a regulatory instruction.
"The existing shareholder directors have selected the names at a discussion held with the exchange's other shareholders and the representatives of brokers' association," he added.
The candidates' names have been selected from among chartered accountants, representatives of chambers and trade bodies, and respected individuals with expertise in the capital market, he said.
However, Managing Director of Chittagong Stock Exchange (CSE) M Shaifur Rahman Mazumdar said the port city bourse has not yet selected any names for the posts of independent directors.
The CSE's shareholder directors are working on it, he added.
The boards of both the bourses became dysfunctional since August 20 amid a quorum crisis as all independent directors resigned from the boards following a regulatory instruction after a change in political regime.
Following the resignation of independent directors, now there is no Nomination and Remuneration Committee (NRC), as it comprises a majority number of independent directors. This committee nominates the names of independent directors.
So, the DSE shareholders were in apprehension that the regulator could select independent directors, including political persons, for their board on its own.
In response, the securities regulator proposed a legal solution allowing exchanges to appoint their own independent directors, thereby removing controversy.
The BSEC said a section of the exchange's Boards and Administration Regulations, 2013 allows the stock exchange to recommend the names of independent directors even though there is no NRC.
This section also allows the shareholder directors to carry out the functions of the board.
"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 Boards and Administration Regulations.
The bourse can nominate at least two names against one independent director and the securities regulator finally approves the appointment of independent directors nominated by the stock exchanges.
As per the rules, the existing shareholders directors of DSE initially selected seven names of independent directors and now they are searching for more names.
As per the existing practice, the Brigadier General of 46 Brigade has been playing a role of independent director in the DSE board for around two decades.
That's why the DSE needs six more independent directors, out of seven, to make the board completely functional.
Talking to the FE, a DSE shareholder director said the independent directors who will now be appointed must play proactive roles in the interest of investors and the capital market as well.
"We will urge the new independent directors at the first board meeting to act independently," he added.
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