Alhaj Textile chairman removed after ousted MD's lawsuit
The Bangladesh Securities and Exchange Commission (BSEC) removed three of the five independent directors at Alhaj Textile Mills Ltd, including its Chairman Khondoker Kamaluzzaman, on Monday.
The two other removed independent directors are MD Zikrul Hoque and AFM Abdul Moyeen—both, alongside Kamaluzzaman and three other shareholder directors, were made respondents to a recent suit by the company's ousted managing director (MD) Md Mizanur Rahman.
Retired Bangladesh Bank executive director Syed Tariquzzaman, Novartis Bangladesh Chief Financial Officer Fahmid Wasik Ali have been appointed as the new independent directors, while two of the previous independent directors — Bangladesh Academy for Securities Markets' Senior Faculty Member Md Selim, Dhaka University's Associate Professor of Finance Dr Muhammad Saifuddin Khan to remain with their assignment to bring back the company into the regular track.
Alhaj Textile, a listed company, was expected to solve its problems and improve in business under the previously appointed board, BSEC Commissioner Dr Shaikh Shamsuddin Ahmed told The Business Standard.
Keep updated, follow The Business Standard's Google news channel
"Unfortunately, conflicts emerged within the company that created an operational deadlock, eroding shareholders' value," he said, adding that the commission hopes the reconstructed board will properly steer the company towards solving default loan problems and regaining strengths in business.
According to sources, the newly appointed independent director Syed Tariquzzaman would be chairing the board of directors of the oldest textile company on the Dhaka Stock Exchange (DSE).
A tug of war
Amid internal conflict among the directors from the sponsor family, the company's board under the chairmanship of independent director Khondoker Kamaluzzaman went divided earlier this year over how much to bargain or fight with the lender in settling default loans as instructed by the BSEC alongside many other issues regarding control over the management.
On 22 May, the company's board terminated the company's Managing Director (MD) and CEO Md Mizanur Rahman, who is the second largest shareholder and a director of the company, citing non-obeisance and non-perusal of the board instructions on what to do for the company.
Previously, Mizanur removed the company secretary, believed to be an ally of his opponents.
Mizanur's cousin and shareholder Director Md Bakhtiar Rahman was appointed the MD and CEO.
On 25 May, Mizanur filed a lawsuit before the fifth joint district judge's court, Dhaka seeking its directives over the 'illegal' replacement of MD and for blocking the new management to continue banking transactions, according to the legal documents seen by The Business Standard.
He accused the board of illegally removing him from the executive post, alongside taking away his joint authority to sign for the company's banking transactions.
The two groups of directors, both from the Alhaj family, were having at least one representative in the pair to sign in the banking transaction documents, Mizanur told the regulator, the banks and the court, adding that after his removal from the executive position, but not from the board, both the signatories were picked from his opponent groups and he alleged that it was a conspiracy to embezzle the company's assets that include over Tk71 crore in cash and inventory.
The court is set to hear the case next week.
The BSEC on Monday also asked the new board of Alhaj Textile to appoint one or more directors out of the shareholders having 2% or more stake in the company.
Alhaj Textile has been contesting a money loan court case filed by its banker Agrani Bank over years and due to the defaulted loan, it cannot open a letter of credit (LC) to import raw materials. And the complexities dragged the asset-heavy company into either losses or poor profits.
Alhaj Textile shares, having a face value of Tk10 apiece, closed at 2.56% higher at Tk168.1 on the DSE on Monday.
