Dhaka Stock Exchange (DSE) has rejected the proposal by some sponsor-directors who want to meet the requirement of the Securities and Exchange Commission (SEC) about their minimum shareholding, by obtaining or transferring the shares of others outside the trading floor, officials said Wednesday.
At the same time, the DSE has also said 'no' to the proposal of some sponsor-directors who want to sell off their shares to quit the board as they will not be able to fulfil the minimum quota required to maintain their "directorship", as set by the SEC.
The DSE has not agreed with the proposals as such sponsor-directors are now in the 'insider-trading category' because of the time framework that applies in their case.
DSE officials said some sponsor-directors of a chemical company had made proposals to transfer a significant volume of shares outside the trading floor at market price. But the DSE authorities turned down the proposal.
"Only the members of a family can transfer shares to one another outside the trading floor. But such sponsor-directors have intended to acquire the shares of others, who have no blood relation with them (sponsor-directors)," the officials said.
That is why the DSE rejected the proposals of transferring shares outside the trading floor, the official said.
"We have told them to transfer the shares through trading on the floor of the exchange at the prevailing market prices," he added.
On November 22, 2011 the SEC issued an order, stating that the sponsor-directors of any company listed with the stock exchanges will have to jointly hold at least 30 per cent of its stake. And individually each sponsor-director must hold at least two per cent of the stake.
Some sponsor-directors also approached the DSE to sell their shares as they will not be able to comply with the decision of the regulatory body, through purchasing the remaining volume of shares to meet the shortfall in their required amount of share-holding.
"The respective board of directors has also approved the decisions of such sponsor-directors to quit the board by selling out their shares. But such 'directors' will not now be allowed to sell out their shares as their year-end financial statements are yet to be approved by their boards," the DSE official said.
He said after the timeframe criterion relating to, what is known as, insider trading, such persons will be allowed to sell out their shares.
Under the insider trading rules, the sponsor-directors are not allowed to sell out the shares of their respective companies two months' prior to completion of the financial statements of such companies. They will be allowed to sell shares only after the approval of the financial statements by their respective board of directors.
Source: thefinancialexpress-bd.com
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