Summary: 

The Bangladesh Securities and Exchange Commission (BSEC), which oversees the stock market, has taken the lead in establishing a pool of impartial service providers to oversee and closely monitor general meetings, including extraordinary general meetings (EGMs) and annual general meetings (AGMs). The BSEC now requests that companies choose their service provider from a list of ISPs for monitoring AGMs and EGMs.

Context: 

Three years ago, during the COVID-19 epidemic in March 2021, the stock market regulator let publicly traded companies have AGMs and EGMs under a hybrid method that included in-person attendance with virtual or online participation. However, some people disobeyed the order by using the digital platform exclusively. According to market experts, it is well known that many businesses are using the chance to attend meetings virtually in order to hide their irregularities. This is because, according to the insiders, if the meeting is held in person, the corporation will have to respond to inquiries from shareholders regarding a range of topics.

Therefore, they continued, businesses are disobeying the BSEC’s recommendations in order to avoid having to answer such queries. Also, companies’ boards of directors occasionally appoint individuals who attend meetings in order to further the board’s objectives. The procedure deters regular investors from using their right to vote in those meetings. According to BSEC officials, corporations used digital technology to conduct the general meetings, but some companies did not properly protect the rights of their investors.  In light of this, the Bangladesh Securities and Exchange Commission (BSEC) steps up to guarantee voting process openness. Issuer businesses must designate a software vendor to serve as an independent service provider (ISP) in the hybrid system in order to construct the digital infrastructure required for online voting and meeting transmission. Business entities are to choose the service provider from a list of ISPs provided by the BSEC. A list of impartial scrutinizers, or organizations that verify the election process and provide a report to the Commission within 48 hours after the meetings, will also be created by the Securities Regulator. In order for the members of the Institute of Cost and Management of Bangladesh (ICMAB), the Institute of Chartered Accountants of Bangladesh (ICAB), and the Institute of Chartered Secretaries of Bangladesh (ICSB) to apply to be included in the panel, the BSEC issued a letter directing them to notify their members of the regulatory action. As per the BSEC sources, approximately 37 firms have expressed interest in offering their services to the commission for managing general meeting operations for enterprises. The committee will now compile a list of qualified service providers and review each one to ensure they are qualified to carry out their assigned duties. The purpose of Annual General Meetings (AGMs) is to hold the management of a firm responsible to and liable to investors. However, interested parties have managed to evade their responsibilities and sway the meeting’s conclusion. The strict monitoring measures are expected to seal the loopholes.

Picture and Article Sources: The Business Standard The Financial Express