BSEC issues show-cause to DSE officials over Central Pharma share transfer

The Bangladesh Securities and Exchange Commission (BSEC) has issued show-cause notices to officials of Dhaka Stock Exchange (DSE) PLC over the controversial transfer of pledged shares of Central Pharmaceuticals Limited to IDLC Investment Limited, citing alleged violations of securities laws.

According to commission sources, a recent letter was sent to the DSE seeking explanations from the officials directly involved in the transfer. Earlier, the stock exchange itself had been served with a show-cause notice, but its response was deemed unsatisfactory, prompting the commission to seek direct explanations. As of now, no formal reply has been submitted.

The controversy

The matter revolves around the transfer of 2.18 crore shares held by two sponsor-directors of Central Pharmaceuticals, Mansur Ahmed and Morsheda Ahmed, to IDLC Investment. Of these, 1.51 crore shares belong to Mansur Ahmed and 67 lakh to Morsheda Ahmed.

Allegations suggest that despite the sponsors' combined shareholding falling below the mandatory 30% threshold, the shares being pledged, and the company being classified as Z-category, the DSE approved the transfer.

The company's share price closed at Tk 9 on the Dhaka Stock Exchange yesterday.

BSEC maintains that the pledged shares were transferred without complying with applicable securities laws and rules. In the case of Z-category companies, transfers require prior approval from the commission. Additionally, shares of sponsors whose collective holding falls below 30% are non-transferable under existing regulations.

Subsequent complications

The matter became more complex when IDLC Investment rejected an application to transfer an additional 43.92 lakh pledged shares in its favor. Market insiders suggest that if the initial process had been fully compliant, the rejection of the subsequent application raises further regulatory questions.

Separately, Mansur Ahmed, Managing Director of Central Pharmaceuticals, submitted an application to BSEC alleging that the DSE had approved the transfer of his and the chairman's pledged shares in violation of rules and directives.

He cited two non-discretionary portfolio management agreements signed with IDLC in 2017, under which margin loan accounts were opened and shares pledged. Following the company's downgrade to Z-category, share transfer restrictions were imposed, which he says were ignored.

"I have applied to the BSEC seeking a fair resolution. I expect a just outcome. If I do not receive a satisfactory solution, I will soon seek legal recourse in court, as I have suffered significant losses due to this incident," Mansur told The Business Standard.

DSE and IDLC responses

A BSEC official, speaking on condition of anonymity, said that Z-category shares cannot be transferred in this manner. He added that the sponsor-directors had failed to maintain the mandatory 30% minimum shareholding, yet IDLC applied for the transfer and the DSE approved it, appearing to disregard commission directives.

On the other hand, Abul Ahsan Ahmed, Chief Operating Officer of IDLC Investment, said the company followed all legal procedures and obtained court approval before applying.

The DSE, represented by Managing Director Nuzhat Anwar, stated that the approval was granted in accordance with legal procedures and the court order.

Market impact

Market participants are closely watching the commission's next steps. Analysts say the incident highlights ongoing questions over regulatory oversight and the procedures governing share transfers of Z-category companies.

As of January 2026, sponsors and directors jointly hold 7.67%, institutional investors hold 6.94%, and the general public holds 85.39% of Central Pharmaceuticals' shares.