The entire commission of the securities regulator will be replaced within two weeks by non-political professionals with adequate knowledge of the capital market, the finance minister said.
The changes in the regulatory body, along with legal reforms, will help make the market vibrant, he said on Tuesday at a seminar organised by the Economic Reporters' Forum (ERF) at its office in the capital.
"We are completely reorganising the Securities and Exchange Commission (SEC) with professionals rather than politicians - people who understand the market," said Finance Minister Amir Khosru Mahmud Chowdhury.
He further asserted that no politicians had been involved in the selection process for the new chairman and four new commissioners of the commission.
The minister, however, did not disclose who would be appointed as commissioners at the BSEC.
According to industry insiders and sources close to the government, the appointment of Masud Khan, current chairman of Unilever Consumer Care, as BSEC chief has already been finalised. His appointment is yet to be announced, they said, due to delays in selecting individuals for the commissioner posts.
Following the fall of the Awami League-led government on August 5, 2024, the interim government appointed economist Dr M Masrur Reaz as BSEC chairman, but he declined to join. The government subsequently appointed Khondoker Rashed Maqsood as head of the securities commission, along with three new commissioners.
The capital market has long been rattled by global economic tensions, scams, mismanagement by market players and inefficiency of regulatory bodies.
On Tuesday, the finance minister said, "I assure you the capital market will be functional very quickly. We are also changing laws to attract reputable listed companies that want to be on a legitimate stock exchange rather than a casino."
These reforms will reduce pressure on banks, Mr Chowdhury added. Companies will be able to raise funds through initial public offerings (IPOs) and issue bonds in the stock market instead of relying solely on banks, amid high interest rates of 12-13 per cent. Currently, there is a mismatch - deposits are short-term but are being used for long-term working capital.
The minister said the government did not have enough money to support the capital market.
Ideally, a government is supposed to inject its own funds to stabilise a struggling capital market or other industries. The minister said support from the Treasury was not enough for the market and struggling industries.
Of foreign lenders, IFC invests in developing countries to fuel economic growth while JP Morgan, a giant investment bank in the US, and other global fund managers hold billions of dollars in global capital.
"I have invited the IFC (International Finance Corporation), a private-sector arm of the World Bank, and international fund managers, including JP Morgan, and other large investment companies," said the minister.
At Tuesday's seminar, Azam J Chowdhury, chairman of East Coast Group and managing director of listed company MJL Bangladesh, drew attention to tax policies that hinder industrial growth.
He highlighted the burden of double taxation on corporate dividends, arguing that a cumulative tax rate exceeding 42 per cent severely limits a company's ability to reinvest profits. Mr Azam stressed that while the business community supported taxation, the current system stifled capital formation and long-term expansion.
"Many people think businessmen just want to avoid taxes. We are talking about structuring - we want to reinvest dividends, and there are sector policies regarding this problem," said Mr Azam.
He also spoke about legal loopholes that render the Workers' Profit Participation Fund (WPPF) ineffective. The fund is entitled to receive 1.5 per cent - in the case of foreign energy companies - to 5 per cent of corporate profits, but the targeted workers do not benefit as intended due to the absence of a clear definition of "worker" in the relevant law, the Bangladesh Labour Act.
These legal ambiguities also create problems for listed companies during audits, as auditors often qualify financial statements based on compliance with the WPPF requirement.
"Approximately 85 per cent of the fund goes to company officers rather than actual workers," Mr Azam said.
Of the total distribution, 80 per cent is intended for workers, 10 per cent goes to a government reserve fund and another 10 per cent to the Workers' Welfare Fund.
The disparity in profit-sharing affects business competitiveness. The Bank Companies Act, meanwhile, exempts banks and financial institutions from allocating profits to the WPPF, allowing them to avoid scrutiny on this front during audits.
Mr Azam urged the minister to ensure a clear definition of "worker" is enshrined in the law.
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