BSEC seeks share buyback opportunity in Company Law

The Bangladesh Securities and Exchange Commission (BSEC), the capital market regulator, has demanded that the draft amendment to the Companies Act, 1994 include a provision allowing listed companies to buy back their own shares (share buyback).

BSEC also want to modernize the company annual reporting system, to consult the regulatory authority in cases of mergers or restructuring of listed and unlisted companies, and to extend the validity period for using financial statements in a prospectus. Proposals have been prepared to this end.

These proposals were presented by the BSEC at an exchange meeting on the draft amendment to the Companies Act, 1994, held today (Monday) at the FBCCI board room in the capital. The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) organized the meeting.

The meeting was presided over by FBCCI Administrator Md. Fazlul Haque, with Commerce Minister Khandakar Abdul Muktadir attending as the chief guest.

During the meeting, BSEC Executive Director Abul Kalam said on behalf of the commission that to make the Companies Act contemporary, not only major changes but also some minor amendments to various sections are necessary. If these amendments are made, the law will become more aligned with the modern business system.

The BSEC Executive Director stated that some proposals regarding the amendment of the Companies Act were submitted on December 18, 2025. However, several of those proposals were not reflected in the proposed amendments. Among these, he specifically mentioned the opportunity for companies to buy back their own shares.

Section 58 of the current law imposes restrictions on a company buying its own shares. In this regard, a proposal has been made to allow at least listed companies to buy back their own shares under specific conditions. The meeting noted that a detailed framework on how this system could be implemented was also provided in the earlier proposal.

Abul Kalam further said that if listed companies are given the opportunity for share buybacks, new avenues could be created for capital management and protecting shareholders' interests. He therefore called for the matter to be reconsidered in the amendment.

Referring to Section 183 of the Companies Act, he mentioned that various terminologies in the law also need modernization. Currently, the term "Balance Sheet" has been replaced by "Annual Financial Statements," and "Board Report" has been replaced by "Annual Report" in common practice. Therefore, the language of the law needs to be aligned with the current system of business and corporate reporting.

He also proposed allowing the publication and distribution of annual reports through digital methods. He opined that this would make it easier for companies to publish their reports and disseminate information to relevant stakeholders.

During the meeting, the BSEC representative also demanded that the commission be involved in the process of mergers, acquisitions, demergers, and restructuring between listed and unlisted companies.

Abul Kalam stated that amendments to Sections 228 and 229 of the Companies Act have been proposed in this regard. However, the provision for including the relevant regulatory authority in cases of merger or restructuring between listed and unlisted companies was not included.

"If a listed company merges with an unlisted company, or vice versa, the interests of the investors of the listed company are involved. Therefore, the regulatory authority's opinion is necessary in such decisions," he added.

Abul Kalam proposed following the Indian model, where the securities regulator (SEC) is made a party in such matters.

Abul Kalam further said that it is the regulatory authority's responsibility to protect the interests of investors in listed companies. Therefore, in important decisions such as mergers, demergers, or restructuring, the regulatory authority should have a formal role to ensure investors' interests are considered.

Additionally, Abul Kalam proposed extending the validity period for using financial statements in a prospectus under Schedule-3. He said that according to the current Companies Act provisions, financial statements older than 180 days cannot be included in a prospectus. In practice, when a company applies to issue any type of securities—whether IPO, rights shares, or bonds—the audit and approval process takes a long time. In some cases, auditing the financial statements alone takes nearly 120 days. Subsequently, the process of submitting applications, obtaining approvals, and depositing necessary documents with the Registrar's office (RJSC) exceeds the 180-day limit.

For this reason, the BSEC representative proposed extending the validity period for using financial statements in a prospectus from 180 days to 270 days. He also requested that their written opinion on this matter be taken into consideration.

Abul Kalam believes that amending the Companies Act can resolve several long-standing complexities in the country's corporate sector. Therefore, he opined that before finalizing the amendments, the proposals from businesses, investors, and regulatory bodies should be carefully considered.

During the meeting, Barrister Nihad Kabir presented the proposals on behalf of the FBCCI. Among her proposals, Abul Kalam suggested mandatory appointment of company secretaries for companies with annual revenue exceeding Tk 50 crore. He also expressed support for not allowing professionals from service professions such as Chartered Accountants, Cost Management Accountants, and Company Secretaries to represent companies.

He also supported introducing a provision requiring a minimum of 21 days' notice to shareholders after announcing the date of the Annual General Meeting (AGM). Additionally, a proposal was made to allow flexibility in appointing independent directors in public limited companies other than listed ones.

Later, a businessman present at the meeting suggested reducing the minimum notice period for AGMs from 21 days to 14 days. Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), agreed with the 14-day proposal.