Bangladesh Bank has introduced new limits on share ownership in bank companies, requiring companies holding shares above the prescribed limit to sell the excess within six months.
Under a circular issued by the Banking Regulation and Policy Department-2 on Thursday (September 17), a company will not be allowed to hold shares in one or more bank companies worth more than its net assets.
If a company currently holds bank shares exceeding the prescribed limit, it must sell the excess shares within six months from the date of issuance of the circular.
The central bank has also introduced new requirements for appointing a representative director to a bank’s board on behalf of a shareholder company.
Under the new rules, the nominee must be the managing director or a director of the shareholder company and must also hold shares in that company in their own name.
For listed public limited companies, the representative director must hold at least 2% of the company’s paid-up capital. For other companies, the required ownership is at least 20%. The nominee must maintain the required shareholding throughout their tenure as a representative director.
Bangladesh Bank’s prior approval will also be required for the appointment, reappointment or replacement of a representative director nominated by a shareholder company. Applications for approval must include documents proving the nominee’s required shareholding in the shareholder company.
Representative directors appointed before the new circular came into effect will also have to comply with the new requirements when they are reappointed or replaced.
Bangladesh Bank said the measures aim to ensure greater transparency and stability in banks’ ownership structures, limit excessive investment in bank shares relative to a shareholder company’s financial capacity, and strengthen transparency and accountability in board representation.
The central bank also instructed scheduled banks to place the new requirements before their boards and inform their officials and shareholders.
The circular, issued under Section 45 of the Bank Company Act, 1991, took effect immediately.
