HC cancels BSEC rule on 2pc share for directors

bdnews24.com :
The High Court has declared illegal the Bangladesh Securities and Exchange Commission’s order telling public company directors to acquire two percent stake in their companies.
The bench of Justice Kazi Rezaul Haque and Justice ABM Altaf Hossain issued the verdict on Wednesday on a 2012 petition by the National Credit and Commerce Bank Sponsor-Director Mostafizur Rahman.
Petitioner’s lawyer Shah Md Ahsanur Rahman said they had challenged Sections D and E of the BSEC rule, saying they were contradictory.
“We argued that the rules contradicted each other. Besides, how would it work if a company has 40-45 directors? The court ruling is based on this argument,” he said.
The NCC Bank has 49 sponsor shareholders.
In November 2011, the SEC issued an order, saying sponsor-directors of every listed company must together hold at least 30 percent of the paid-up capital. The minimum share holding by individual directors was set at two percent.
In May next year, 24 directors of the NCC Bank, Mercantile Bank, Southeast Bank, National Life Insurance and Prime Finance filed five writs at the High Court against a Section in the 1969 Securities and Exchange Commission Ordinance authorising the SEC to give such directive.
The High Court later threw out all the writs.
Miaznur Rashid Chowdhury, the president of the investors’ association, said this ruling would hurt small investors.