Verdict likely within Nov 28

Final result of another legal fight on the securities regulator's much-talked about notifications on mandatory 2.0 per cent share holding requirement is expected to come out within November 28, 2013.

The Appellate Division has set the timeframe for the High Court (HC) Division to dispose of the year-long legal battle, initiated by a NCC Bank sponsor-shareholder against the securities regulator and bank management, a lawyer concerned told the FE.

"Operation of the notifications remains 'stayed' at the HC Division for the sponsor-shareholder, Mostafizur Rahman", his lawyer told the FE.

 "Apart from Mr Rahman, the notifications also remain 'stayed' for some other sponsor-shareholders of so far four listed banks at the Appellate Division," Advocate Shah Mohammad Ahsanur Rahman said.

The Bangladesh Securities and Exchange Commission (BSEC) on November 22 in 2011 imposed the mandatory provision for the sponsor-directors, other than the independent ones, for holding individually, at least, two per cent of their companies' paid-up capital.

Challenging the BSEC's notifications, a section of the sponsor-directors filed writ petitions with the HC.

In May, 2012, a number of such writ petitions were rejected by a HC bench. In December of 2012, another writ on the same issue was also rejected so far.

Mr Mostafizur Rahman started the this particular legal fight through sending a legal notice in November, 2012 and then filing a writ petition with the HC in December of the same year.

Upon his writ petition, the HC on December 12, 2012 issued a rule and gave 'status quo' on the BSEC's notifications for him.

The 'status quo' order was later modified as 'stay order', which was extended two times till October 6, 2013.

On April 30, 2013, the HC directed the bank to publish its last year's Annual Report and Audit Report before this year's AGM showing names of the petitioner and others concerned as directors.

Challenging the HC direction, the bank authority filed the leave-to-appeal petition with the Appellate Division that stayed the HC direction on May 20, 2013.

After hearing both parties on the leave petition on October 10, 2013, the Appellate Division set the timeframe (November 28, 2013) for the HC to dispose of the December 12 rule.

Disposing of the leave petition, a four-member bench of the Appellate Division opined, "The ends of justice would be best served, if the rule itself is disposed of on merit by the High Court Division."

 "Let this rule be heard and disposed of by the Division Bench presided by Justice Quazi Reza-Ul Hoque by November 28, 2013," the Appellate Division said, according its order's certified copy, received recently.

However, the May 20 order of stay granted by the Appellate Division on the HC's April 30 direction be continued till disposal of the rule.

The apex court passed the order on mainly two grounds, Mr Ahsanur Rahman said. One of them is: implementation of the BSEC's notifications is impracticable because-- the Controller of Capital Issues gave clear distribution of shares to the sponsor-director (50 percent), and the rest to the government (five per cent) and general public (45 per cent).

Mentioning the number of the bank's sponsor-shareholders as 48 and sponsor-director as 26, he said it's simply impossible and absurd to hold 2.0 per cent shares each because it then would come to 98 per cent, exceeding the shares specified for the sponsor-directors.

Another ground is, he said, his client's bank (NCC) was and is established and run under the Parliament Act namely "the Capital Issues (Continuity of Control) Act-1947, the Companies Act-1913 and 1994, the Bank Companies Act-1991, but the SEC's notifications are nothing but subordinate legislation. Such subordinate legislation cannot override the provision of the superior law.