Stocks regulator moves for strictly monitoring AGMs, EGMs

The stock market regulator Bangladesh Securities and Exchange Commission (BSEC) has taken an initiative to create a pool of independent service providers for the strict monitoring of general meetings, including annual general meetings (AGMs) and extraordinary general meetings (EGMs), and increasing supervision.

Three years ago, during the Covid-19 pandemic in March 2021, the stock market regulator allowed the publicly listed firms to conduct AGMs and EGMs using a hybrid system, combining physical presence with digital or online participation.

But some violated the directive as they only used the digital platform. 

Now, the regulator finally moved to create a pool of independent service providers to increase supervision at the general meeting through the hybrid system, with the providers also ensuring digital services. 

All the listed firms must have to hire an independent service provider from the list formulated by the commission, according to the regulator.

In this connection, at the mid of April, the regulator formed a nine-members committee to scrutinise applications of the independent service provider, and to make a list of eligible candidates of services providers as the commission sought expression of interest (EOI) from the interested firms.

Despite the formulation of guidelines and endorsement of the hybrid system amid the pandemic, the BSEC did not formulate any panel of the service providers, which resulted in companies hiring providers as per their wish.

Before the meetings, the companies used to send a web-link to its shareholders to attend in the general meetings.

Officials at BSEC said companies conducted the general meeting through the digital system, but investors' rights have not been ensured rightly for some companies -- basically voting rights and other issues, which had led to non-compliances with the directives.

An official at BSEC related to the issues seeking anonymity told The Business Standard, "The commission wants to strictly monitor the general meetings of the listed companies, because the decisions of the general meeting are very important for a company."

"Previously, as there was no panel, companies used to hire service providers from various companies. There was a chance of preparing misleading data of the meetings by editing them later."

"If the pool of panels is finalised, the regulator will get uneditable data from the service providers, which will present proper information," he added.

In February, the regulator asked expression of interest (EOI) for enlistment in the independent service providers' panel of BSEC for providing digital platform service.

According to the sources at BSEC, so far around 37 interested firms applied to the commission to provide services to companies for conducting the general meetings.

Now, the committee will make a list of eligible service providers scrutinising their eligibility to perform job responsibility.

In December last year, the BSEC, to ensure accountability to the shareholders, had mandated the physical presence of a minimum of 25% of board members, including the chairman and managing director, at the general meeting of a listed company.

The commission had taken the decision at that time, after noting that a majority of companies were holding their general meetings exclusively through digital platforms, which was in violation of its directives, according to sources at the BSEC.

Market insiders said that it is known that many companies are taking the opportunity to cover up their irregularities by using the opportunity to hold meetings online.

This is because, if the meeting is organised in person, the company has to face questions from shareholders on various issues, the insiders said.

So to avoid facing such questions, companies are disregarding the guidelines set by the BSEC, they added.

This trend is particularly notable among companies accused of various manipulations in the capital market, where the misuse of this opportunity is most apparent.

In March, the BSEC granted permission for companies trading under the 'A' category for the past five years to hold their general meetings digitally.

On 27 March, the commission issued a letter to both the Dhaka and Chattogram stock exchanges, instructing them to take necessary steps.

According to the regulator, 'A' category companies may conduct AGMs and EGMs digitally, subject to ensuring compliance with the Companies Act, 1994, and other provisions outlined in the aforementioned directives.