The independent directors of both the Dhaka and Chittagong stock exchanges resigned in the last two days on instructions of the securities regulator.
In a situation like this, the appointment of independent directors is urgent to restore the functions of the boards as the existing shareholder directors are forbidden from taking any big decisions.
Insiders said the securities regulator had assured the bourses of deploying new independent directors to overcome the crisis.
But there is no scope of forming a new board in compliance with the Exchanges' Demutualisation Act 2013 in absence of an existing board, brokers said.
As per the act, an exchange's NRC (Nomination and Remuneration Committee) is to place a list of competent independent directors to its board.
After getting the board's approval, the exchange has to send the list of recommended directors to the securities regulator for final approval.
Since there is no NRC committee now, which comprises three independent directors, the securities regulator itself will have to pick candidates for the positions of independent directors.
A section of the DSE shareholders and the DSE Brokers Association (DBA) on Thursday held separate meetings to find a way to select independent directors.
They said the Bangladesh Securities and Exchange Commission (BSEC) does not have the authority to select independent directors. Although there is no NRC committee, the exchanges should be allowed to decide independent directors in consideration of "special circumstances".
"Under the situation, we have sought a legal opinion as to how the exchanges can propose independent directors," said Saiful Islam, president of the DBA.
A commissioner of the securities regulator, requesting anonymity, said the relevant law offers a solution, allowing the BSEC to choose independent directors.
Md Ashequr Rahman, managing director of Midway Securities, however, said, "The exchanges should be able to propose competent independent directors from the trade bodies and different organisations."
Market stakeholders would give their opinions at a press briefing to be held on Saturday, he added.
As per the demutualization act, the board of an exchange comprises 13 members. Of them, seven, including the chairman, are independent directors.
A quorum requiring one third of the directors need to attend board meetings for making decisions. Independent directors must constitute the majority in the quorum.
"It's not possible to follow conventional rules strictly especially after any drastic changes in the state organs," said former chairman of the securities regulator Faruq Ahmad Siddiqi.
"The BSEC will have to do something to solve the problem."
Apart from asking independent directors to resign, the securities regulator on Wednesday formed two separate committees to look into the affairs of the bourses.
The four-member committees have been asked to submit a report to the commission within 20 working days.
The inquiry committees would look into overall activities, including issues of compliance of both the stock exchanges.
Mr. Rahaman said the investigations might divert the attention from the controversial decisions of the previous commission, including the approval of IPOs of companies with weak fundamentals.
The then BSEC bypassed the stock exchanges in bringing the companies to the secondary market.
"There were malpractices on the part of the BSEC too. An audit of the exchanges will bring about no meaningful change unless the BSEC is also subjected to an audit through an independent commission," Mr Rahman added.
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