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THANKS to Mr. Mahbubur Rahman for his valued comments published in the letter column of the daily "The Financial Express" in its issue of 23/2/06 under the above heading. I would like to add some more points to the opinion expressed by the writer. In fact, Securities and Exchange Commission (SEC) has a very limited scope to safeguard the small investors' interest under the existing rules because of the fact that some actions being taken by the SEC go against the interest of such investors. The companies which have to postpone Annual General Meeting (AGM) on Court's order cannot give dividend to the investors although they are earning profit at a high rate. For failure in holding AGM, SEC degrades such companies to "Z" Group.
The action taken by the SEC ultimately led the prices of those companies' shares to decline. On the other hand, the management operate their business profitably as usual only with a difference that they are not required to pay dividend to the investors for years together. This situation may be termed as an opportunity for the management as they are free from any obligation to those who have provided capital for their business. Secondly, SEC approves right shares with high rate of premium in spite of the fact that the concerned company does not declare dividend at such rate at which right share may be acceptable at the offered rate. This is done without adopting proper mechanism to ascertain as to whether the issuance of right share with high rate of premium has been approved in the EGM. Thirdly, life insurance companies do not show the profit earned per share, instead they show a big amount as "life fund" e.g. Delta Life Insurance announces that their life fund stands at Tk 10 billion crores against the share capital of Tk 0.3 billion only. Disclosure of the fund helped the share price to jump upto Tk.4600/- per share of Tk.100/-. As this company is not in a position to hold AGM due to filing a petition in the Court, the small investors purchasing share of this company at a very high rate are not getting any dividend nor they can sell the shares at the purchased rate.
Unscrupulous management of some of the public limited companies deceive the small investors in many ways. It may be mentioned here that committing theft, dacoity and deceiving people are all criminal offences but the offenders of theft and dacoity are afraid of being punished by the law enforcing agencies or by the public if the situation turns so. But the person(s) playing a foul game in a public limited company deceiving the small investors are safe in all respects, rather they are treated as the elite and some of them are also honoured with CIP status by the government.
Md Abdus Salam
House No 1, Road No 28
Banani, Dhaka-1213
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