The securities regulator has ordered all companies to clearly mention the reasons behind their partial distribution or non-distribution of profit in every annual general meeting (AGM) resolution, officials said.
The order said the issuer will have to mention its plan, with schedule, for utilisation of undistributed profit.
Besides, as per the fresh directive, the listed companies will not be allowed to appoint any chartered accountancy firm as their statutory auditors for a consecutive period exceeding three years.
The same condition will also be applicable in case of auditors who will have consecutively audited for three years upon the completion of their current assignments.
Chairman of the Securities and Exchange Commission (SEC) Professor M Khairul Hossain Wednesday issued the order under Section 2CC of the Securities and Exchange Ordinance, 1969.
A top official of the SEC said the move has been taken so that shareholders can be informed of the companies' future plan regarding their undistributed profit.
"The shareholders will be relieved of confusion, if the companies clearly mention the reasons for partial distribution and non-distribution of profit," the official told the FE.
As per the regulatory order, the board of directors of such companies must submit a detailed report on planned utilisation of undistributed profit in their AGMs for the shareholders' consideration.
However, the condition of mentioning the plan for utilisation of undistributed profit will not be applicable for the companies recommending at least 10 per cent dividend on the face value/paid-up capital or 7.5 per cent on the net worth, whichever is higher for the relevant financial year.
According to another condition, the companies will have to submit an unedited audio-visual copy of their AGMs' proceedings to the SEC and the stock exchanges. In such cases, the audio-visual copy must contain continuous and uninterrupted visual recording of the entire AGM proceedings.
Meanwhile, the SEC's commission meeting fined Dandy Dying Tk 0.5 million (5.0 lakh), as the company did not comply with the rules regarding appointment of auditor.
The Financial Express, 29 July 2011
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