DSE faces leadership vacuum as power struggle delays MD appointment

DSE MD Appointment Stalled Amid Power Struggles and Governance Concerns

In 2020, shareholder directors of the Dhaka Stock Exchange (DSE) pushed for the approval of Best Holdings’ IPO, urging a green signal regardless of red flags raised during internal assessments.

While a favourable review from the DSE management could have helped secure regulatory approval, then-Managing Director (MD) Kazi Sanaul Hoq led the team in submitting a critical report to the Bangladesh Securities and Exchange Commission (BSEC), highlighting compliance concerns.

Mr Hoq later said he felt cornered—caught between pressure from DSE board members and lobbying by the issuer. It wasn’t just the IPO process; he also experienced interference from shareholder directors in daily operations and regulatory matters.

Unable to withstand the pressures, Mr Hoq resigned just 11 months into his three-year term.

His case was not an exception. Between 1998 and 2024, 11 chief executives of the premier bourse resigned prematurely. Since the 2013 demutualisation, which separated ownership and management, only two MDs and one CEO completed their full terms.

The MD post has remained vacant since May 2024, after Dr ATM Tariquzzaman left to join the BSEC as a commissioner. Aware of the entrenched pressures that come with the job, qualified candidates are increasingly hesitant to apply. Despite two job circulars since May, the DSE concluded that none of the applicants were suitable.

The CFO and CRO positions have also remained unfilled for over a month, also due to a lack of “qualified applicants.”

Former MD KAM Mazedur Rahman attributed the ongoing leadership crisis to the board’s failure to secure competent professionals. “The MD faces pressure from both the regulator and the shareholder directors, which deters capable candidates,” he said.

Board Interests Undermine Governance

Conversations with half a dozen former MDs reveal that statutory authority often could not be exercised due to board interference.

As per the demutualisation act, the MD is responsible for investor protection and ensuring transparency. But in practice, former executives say they struggled to implement independent decisions.

Mr Tariquzzaman noted that MDs are frequently squeezed between the DSE board and the BSEC. “Independent directors, often appointed through political influence, tend to speak with their personal investments in mind,” he said.

The most visible breach was by former independent director Dr Abdullah Al Mahmud, who executed substantial trades using insider information during his tenure.

MD Role Undermined by Structural Loopholes

While demutualisation aimed to separate ownership and operations, in practice the CRO bypasses the MD and reports directly to the BSEC—undermining internal accountability.

One former MD, requesting anonymity, said board members frequently intervened in matters such as IT infrastructure. Shareholder directors also used DSE employees to obtain market information, often without the knowledge of the chief executive.

“I left for the sake of my career,” said Mr Hoq.

The Best Holdings IPO, which Mr Hoq and his team opposed, was suspended until June 2023 due to non-compliance. The main issue was a violation of IPO rules—the company had increased its paid-up capital in the two years preceding the application.

However, in July 2023, the BSEC approved the IPO, allowing the company to raise Tk 3.5 billion, overlooking the regulatory breach.

DSE Without a Permanent MD

Since the MD’s post fell vacant, DSE has been run by acting MDs. Former chiefs say this allows the board to retain control without accountability.

“Acting MDs don’t sign contracts, have no KPIs, and can’t be held responsible,” said one. “Yet the DSE continues to operate under interim leadership.”

Acting MDs are promoted internally, are more compliant to directors, and cost less, which some believe suits the board’s preferences.

Director Md Shakil Rizvi said 20 candidates were interviewed but none were found qualified. “We are now turning to renowned recruitment agencies to help find a suitable MD.”

One applicant, Nizam U Ahmed, questioned the DSE’s selection criteria. A former deputy general manager at the bourse, Mr Ahmed moved to Singapore-based FLEX TRADE as a senior project manager and also worked as a World Bank consultant to improve BSEC operations.

“I promised to float DSE shares within a year if selected,” he said. “The bourse was supposed to go public in 2018. I really don’t know what more they’re looking for.”