BSEC makes physical presence of chairman, MD mandatory at AGMs

To ensure accountability to the shareholders, the stock market regulator has 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.

On 28 December last year, the Bangladesh Securities and Exchange Commission (BSEC) decided to instruct listed firms to conduct their annual general meetings (AGMs) and extraordinary general meetings (EGMs) in the physical presence of shareholders.

The commission made this decision 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.

BSEC spokesperson Rezaul Karim told The Business Standard, "According to commission rules, every company is required to conduct its general meetings through both physical and online platforms. Shareholders who prefer physical attendance should have the opportunity to do so, and those opting for online participation must also be accommodated."

"Furthermore, shareholders should be given the chance to express their views during the AGM, ensuring corporate governance within the company. Companies failing to comply with BSEC instructions will face necessary actions," he added.

On 10 March 2021, the BSEC issued guidelines for holding AGMs and EGMs, introducing a hybrid system through which listed firms can conduct meetings with the physical presence and online participation of directors and shareholders.

BSEC sources said that due to the lack of supervision of the stock exchanges, the commission feels that the companies are holding general meetings without following the hybrid system. Therefore, the commission is going to ask both Dhaka and Chattogram bourses to explain their negligence.

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.

Because if the meeting is organised in person, the company has to face questions from shareholders on various issues.

To avoid facing such questions, companies are disregarding the guidelines set by the BSEC. This trend is particularly notable among companies accused of various manipulations in the capital market, where the misuse of this opportunity is most apparent.

Earlier, in 2020, the regulatory body had ordered companies to organise any type of meeting, including AGM and EGM, by using an online platform following the outbreak of coronavirus in the country.

Seeking anonymity, a member of the Bangladesh Association of Publicly Listed Companies said shareholders can easily participate in general meetings when they are organised on a digital platform. In addition, it is also cost-effective for the company.

"When a company holds a meeting on a hybrid system, the cost shoots up, and many of the companies cannot afford it," he told TBS.

He also said many companies pass agendas without giving shareholders an opportunity to express their views by using digital platforms.

"But it is not possible to avoid shareholders' participation when the meeting is held in person," he asserted.