BSEC asks DSE, CDBL to comply with WPPF law

Key Points:

• CSE disbursed its WPPF contribution for FY20
• DSE is yet to disburse Tk2.66 crore for FY20 as it is waiting for government opinion
• CDBL employees were deprived of Tk19.77 crore over years
• Unlike CDBL, DSE has provision for the undisbursed amount

Based on an audit objection from the Commercial Audit Directorate, the Bangladesh Securities and Exchange Commission (BSEC) has asked the Dhaka Stock Exchange (DSE) and Central Depository Bangladesh Ltd (CDBL) to comply with the relevant provision of Labour Act 2006 which says profitable companies have to share their annual profits with their employees.

In its letter on Thursday, the capital market regulator asked the two bourses and the depository company to accomplish the tasks regarding the compliance, if it is yet to be done, and report to the BSEC within the next three working days.

Managing directors of each of the three organisations have received the letter.

Of them, Chittagong Stock Exchange (CSE) has already given 5% of its last fiscal year's net profit to the Workers Profit Participation Fund (WPPF).

According to the Commercial Audit Directorate's letter to the BSEC, the DSE has set aside Tk2.66 crore payable to its WPPF for the 2019-20 fiscal year but did not disburse it yet. This is because the DSE is waiting for an opinion from the government whether the stock exchange is eligible for exemption from complying with WPPF related law, similar to what the country's banks are enjoying.

DSE employees received their profit shares from the 2014-15 fiscal year to the 2018-19 fiscal year.

On the other hand, CDBL employees have been deprived of Tk19.77 crore in their shares in the company's annual profits over years, according to the Commercial Audit Directorate.

A former employee had filed a case against CDBL in this regard and won in the lower court but the firm filed an appeal petition which is now under the High Court's consideration.

In its letter to the BSEC, the Commercial Audit Directorate said according to the Labour Act the two stock exchanges and the depository company must share 5% of their annual profits with their employees.

The government auditors requested the BSEC to get answers from the DSE and CDBL on why they did not share profits with employees despite having specific law, and what effective steps will be taken to disburse the amount.

The directorate also requested the BSEC to forward the respective answers to them.

Being contacted, DSE Managing Director (in charge) Abdul Matin Patwari told The Business Standard, "We have a board meeting scheduled on 1 March – one day ahead of BSEC deadline. We will raise the topic there and reply to the BSEC letter in time."

Meanwhile, CDBL Chairman Sheikh Kabir Hossain is yet to know about the BSEC letter and its Managing Director Shuvro Kanti Chowdhury could not be reached over telephone for comment while the report was being prepared on Saturday evening.