Bourses can approve 'Z-category' share transfers in default, death cases

The Bangladesh Securities and Exchange Commission (BSEC) has relaxed a stringent rule regarding the transfer of shares held by sponsors and directors of "Z-category" companies, shifting administrative authority directly to stock exchanges.

In a commission meeting held today (1 September), the regulator decided that its prior approval will no longer be required for specific equity security transactions involving these troubled firms.

According to the amendment, the commission has specifically waived the need for direct BSEC permission in cases involving the confiscation of shares due to loan defaults and the transmission of shares following a shareholder's death.

This decision follows a thorough review of a previous directive issued on 20 May 2024, which had imposed a blanket restriction on all forms of share transactions – whether on the trading platform or off-market – for sponsors and directors of non-financial companies listed in the junk category.

Under the revised framework, the country's bourses will now be empowered to facilitate and execute such transfers in accordance with existing listing regulations.

Market analysts believe this shift toward deregulation will eliminate unnecessary bureaucratic hurdles and expedite legal processes, particularly for lenders seeking to recover defaulted dues or legal heirs managing inheritance matters.

The 2024 directive was originally implemented to prevent sponsors and directors of poorly performing or non-compliant companies from dumping their holdings without regulatory oversight. While monitoring remains intact, the commission aims to streamline operations by delegating specific responsibilities directly to the stock exchanges.

The move marks another step in the commission's broader push to simplify market operations and reduce excessive intervention, according to officials.