In reference to the article published in the Financial Express on 15th May 15, 2012 titled, SECs notification needs

serious reconsideration on legal, moral and ethical grounds, the Dhaka Stock Exchange would like to mention the following points: The Security and Exchange Commission being the regulator of Capital Market is empowered to put qualification of Directors/sponsors of Listed companies. The SEC by issuing the said impugned Notification dated November 22nd 2011 has not intended to create a vacancy in the post of a Director of a Listed company; rather a non-compliance by the sponsors/directors of a Listed company may result in a vacancy. There is no bar for anyone to become a Director of any particular company; rather he has 6 months to comply with the impugned Notification to become eligible to be a Director. It should be noted that just before the crash of the share and capital market in 2010 when the market was bullish, many sponsor-directors sold off their majority portion of their respective stakes in their companies at high price but still remained directors of their companies. Specially, this phenomenon took place after the stock split was enforced. From July 2009 to December 05, 2010 (the day when the collapse began), 81% growth in the total market capitalization was caused by a group of companies with one thing in common. The common factor was decisions made in stages to convert face values of companies from Taka 100 per share to Taka 10. This 81% growth was contributed by 63 companies alone out of more than 250 companies and other securities. Out of these 63 only 45 had success fully completed the conversion process with making series of news one after another each creating a hike in the prices of the companys share prices, thereby adversely influencing the capital market. As can be seen from past market data, roughly, directors on average sold 10 shares against buy of each single share i.e. the buy volume was 10% of that of the sale volume. The result of such sale can be easily seen in the current holding position of the directors who are still controlling the companies without even holding 2% shares in the companies individually. The sponsor-directors were hugely benefited from the market bubble initially created by themselves through spreading of various misguiding company-information and simultaneous mass off-loading of their shares when the general investors, unaware of this plan, were still buying more and more shares causing a circular effect contributing to the bubble. Despite the massive profit-taking by the sponsordirectors during the bubble, no support came from them during or after the debacle to stabilise the Market when the price went down heavily. The impugned notifications are attempting to address the problems created by the activities as stated above by increasing accountability, transparency, liquidity and demand. Lack of these severely affected investors confidence in the capital market. Imposing a minimum holding requirement on sponsor-directors will help to bring stability in the market as these measures will create a satisfaction and confidence among shareholders in that the controlling group in the respective companies individually and collectively hold a substantial portion of share at their disposal and cannot sell beyond a set minimum holding level which means that any and all decisions made by them will be for the true benefit of the company and not their personal benefits only making them strive to improve the performance of their companies.