B Mirror Report: The Bangladesh Securities and Exchange Commission (BSEC) has called for a special compensation package for ordinary investors of listed and soon-to-be-liquidated non-bank financial institutions (NBFIs). Just before the 13th national elections, a BSEC delegation met with officials of Bangladesh Bank and submitted a letter containing a set of recommendations aimed at protecting investors’ interests. The regulator stated that these institutions cannot be delisted from the market without ensuring proper compensation.

Although initially nine financial institutions were slated for liquidation, after hearings, Prime Finance, GSP Finance, and BIFC were granted 3 to 6 months to improve their financial conditions. However, FAS Finance, Premier Leasing, Fareast Finance, Aviva Finance, Peoples Leasing, and International Leasing are now quickly entering the liquidation process. Except for Aviva Finance, all others in this list are publicly listed on the stock market. BSEC spokesperson Md. Abul Kalam confirmed the matter, emphasizing that safeguarding ordinary investors is now their primary focus.

According to the market regulator, strict application of the conventional liquidation law is not desirable in this case. Normally, if an institution’s net asset value (NAV) is negative, depositors receive nothing after liquidation. But in the case of these financial institutions, a promise has been made to return depositors’ money, which may require around BDT 50 billion (5,000 crore taka). BSEC’s argument is that if depositors are compensated, it would be unfair to deprive ordinary shareholders as well. Therefore, their 10-point recommendation states that the payable value for each share should be determined before liquidation begins.

BSEC has recommended that sponsors or directors involved in embezzlement should not receive any compensation; only ordinary investors should benefit. The proposed compensation for shareholders would be the higher of the share’s face value (BDT 10) or the current market price. Additionally, the regulator has emphasized maintaining transparency throughout the liquidation process, providing accurate information regarding trade cancellations on the DSE, and timely disclosure of price-sensitive information (PSI). BSEC warned that if the central bank fails to compensate investors, the stock market could face a major crisis of confidence in the future.