The High Court (HC) Sunday issued a rule upon the government to explain as to why the Securities and Exchange Commission's order--- asking directors to hold minimum 2 per cent stakes in their own firms listed with stock exchanges---should not be declared illegal.

After hearing a writ petition filed by the National Credit and Commerce (NCC) Bank director Sheikh Abdul Monim, the HC bench comprised of Justice Farid Ahammad and Justice Sheikh Hasan served the SEC the show-cause notice.

A bunch of institutions and people, such as, secretaries of finance and commerce, SEC chairman, Bangladesh Bank governor, NCC Bank managing director, registrar of Joint Stock Companies and farm, and Dhaka Stock Exchange and Chittagong Stock Exchange have been asked to reply within four weeks.

Petitioner's lawyer Reaz Uddin said as per the SEC directives issued on November 22 last year, directors of listed companies would lose their position unless they hold minimum 2 percent of their own companies’ stakes by May 22.

The SEC in its order had said sponsors, directors and promoters of a company listed with any stock exchange will have to individually hold minimum 2 per cent stake in the firm for all time.

Meanwhile, DSE in an emergency board meeting Sunday evening discussed about possible fallout of the writ petition on the stock market.

Senior vice president of DSE Ahmad Rashid said since the High Court did not issue stay order against the SEC directive, share purchase by the directors will continue and that it is legitimate.

The Independent/Bangladesh/ 9th April 2012