The existing directors and sponsors will not be allowed to represent or be elected as a director and their shares will remain blocked until further notice
The capital market regulator has moved at restructuring the board of three non-performing companies United Airways, C&A Textiles and Familytex in its effort to protect the interest of general shareholders.
According to the directives issued by the Bangladesh Securities and Exchange Commission (BSEC), the existing directors and sponsors will not be allowed to represent or be elected as a director and their shares will remain blocked until further notice.
The companies will not be able to sell, mortgage, pledge, transfer, transmit, dispose of any assets including fixed deposit receipts without prior approval of the BSEC.
For each of the companies, separate sets of independent directors have been nominated with a new chairperson from the list, as per the letters sent yesterday by BSEC Assistant Director Md. Sirajul Islam to the managing directors and the boards of the three companies.
Dhaka Tribune has a copy of the letters.
Kazi Wahid Ul Alam, the editor of The Bangladesh Monitor, has been proposed as the chairman of the board of directors of United Airways, which has been grounded since March 7, 2016.
The other nominated independent directors are: M Sadiqul Islam, a professor of the Dhaka University’s department of finance; Md Maksudur Rahman Sarker; ATM Nazrul Islam; Md. Badruzzaman Bhuiyan; professor and chairman of the Dhaka University’s department of tourism and hospitality management; Mohammed Younus, a director of the Bangladesh Chamber of Industries; and Mohammad Shah Newaz.
This comes after the BSEC in January kicked out United Airways from the mainboard, where it was listed in 2010, and sent it to the over-the-counter market.
The shares of United Airways have been trading in the Z-category for more than four years.
“You and your board of directors failed to improve the performance during this period,” said the BSEC letter.
The company has failed to declare a cash dividend since 2010 and has not been in operation for than four years now.
Besides, the joint holding of shares by sponsors and directors of the company is less than 5 per cent of the paid-up capital.
“Moreover, it appears that the company is not appropriately growing and the shareholders other than directors of the company are not getting dividends for a long period, which is detrimental to the interest of the investors of the company and undesirable to the commission,” the letter added.
Over at Familytex, Kazi Aminul Haq has been proposed as the chairman of the newly formed board of directors.
The other nominated independent directors are: Samir Kumar Sheel; Gazi Mohammad Hassan Jamil, a professor of finance of the faculty of Business Studies of the Dhaka University; Md Jamil Sharif, an associate professor of the Dhaka University’s Department of Accounting & Information Systems; Sharif Ahsan and Foroz Ali.
The sponsor-directors of Familytex had increased their holdings up to 2016 by declaring huge stock dividend (100 per cent stock immediately after listing in 2013) and most of them disposed of their shares in 2017 without declaration, which violates rules, said the BSEC letter.
The company’s profit drastically increased in 2012 from 2011 (i.e. about 438 per cent and 76 per cent increase in 2013), which sustained up to 2014.
In 2016, the profit plummeted, when most of the sponsors including the managing director and chairman disposed of their holdings, which indicates the financial performance may be intentionally exaggerated to take financial benefits from the market, the letter said.
Since then, the company’s performance has been deteriorating.
The sponsors and directors disposed of their holding shares at a high price ignoring the requirement of holding of 30 per cent shares by its sponsors and directors collectively as per the commission’s order.
The joint holding of shares by the sponsors is less than 5 per cent at present.
Moreover, the company has not complied with the regulatory submissions and other requirements for long.
All the developments are “undesirable” to the commission, said the letter sent to the MD and board of Familytex, the letter.
Similarly, Narayan Chandra Debnath, an additional secretary, has been proposed as the chairman of the directors’ board of C&A Textiles.
The other nominated independent directors are: Mohammad Shariat Ullah, ABM Shahidul Islam, RezwanulHuque Khan, ABM Asrafuzzaman, Dr Toufiq and Sharif Ahsan.
Like in Familytex, the sponsors and directors of C&A Textiles disposed of their holdings at a high price -- and the MD sold all her shares -- ignoring the regulatory requirement of holding 30 per cent shares at all times.
Now, the joint holding of shares by sponsors and directors is less than 22.14 per cent of paid-up capital.
The three companies could not be reached for comment.