CDBL moves to restrict sponsors' share sale | The Daily Star
12:00 AM, February 14, 2019 / LAST MODIFIED: 12:06 AM, February 14, 2019

CDBL moves to restrict sponsors' share sale

The stock settlement service provider is set to block sponsors' stocks with the view to checking their stealthy share-selling.

The move comes after many sponsors were found to have disposed off their huge number of shares without any announcement -- breaching the rules and dragging the company's share price down.

For instance, in 2010 many sponsors washed their hands off all their share holdings without any announcement, causing the market to crash.

As per the listing regulations, there is a three-year lock-in period on shares of sponsor-directors of newly listed companies. After three years they can offload their shares but they have to announce their intent to sell through the stock exchanges.

The Central Depository Bangladesh Ltd (CDBL) is hoping the system would be ready within four months, said its Managing Director Shuvra Kanti Choudhury.

“This is a good initiative,” said Rakibur Rahman, director of the Dhaka Stock Exchange (DSE), adding that the move will boost investor confidence. It is tough to trace when sponsors are offloading their shares as there is no system to bar their selling, said a top official of the Bangladesh Securities and Exchange Commission (BSEC) requesting anonymity.

“Only when they inform us willingly that we can know.”

With the view to bringing discipline to the stock markets, the BSEC has instructed the CDBL to initiate a system so that the regulations can be enforced.

The sponsors though would be able to sell other companies' shares that are available on their beneficiary accounts.

“Only their own companies' shares would be blocked,” said Choudhury, also a former executive director of the BSEC.

The new system has already been approved by the BSEC and the Bangladesh Association of Publicly Listed.

“So, we have no problem with the new module.”

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