BSEC drops approval hurdle for defaulted, inherited shares

The Bangladesh Securities and Exchange Commission (BSEC) has scrapped the requirement for prior regulatory approval to forfeit shares over loan defaults or transfer shares to legal heirs after a shareholder’s death, removing a major procedural hurdle in the capital market.

The relaxation, approved at a commission meeting on Tuesday chaired by BSEC Chairman Masud Khan, applies to shares and equity securities held by sponsors or directors of ‘Z’ category companies in specific circumstances.

The move is expected to speed up share settlement in cases that have often been held up by regulatory procedures, particularly the transfer of securities to heirs following the death of a shareholder.

According to the BSEC, the commission reviewed provisions of its directive issued on May 20, 2024, and approved amendments to ease the approval requirement.

Under the revised provision, sponsors or directors of ‘Z’ category companies will no longer need prior BSEC approval to trade or transfer their shares or equity securities when the transaction arises from the forfeiture of shares following a loan default or the transfer or transmission of shares belonging to a deceased shareholder to his or her legal heirs.

The relevant stock exchanges will take necessary action in such cases in accordance with their applicable listing regulations, the BSEC said.
Market stakeholders welcomed the decision, saying it could simplify the settlement and transfer of shares in narrowly defined circumstances and reduce regulatory delays surrounding ‘Z’ category companies.

They said the change would be particularly helpful for families seeking to transfer shares to legal heirs after the death of a shareholder, where lengthy approval procedures could previously delay the process.

The latest relaxation came alongside a series of broader capital-market reforms approved by the commission at Tuesday’s meeting.

The BSEC approved the draft Bangladesh Securities and Exchange Commission (Direct Listing of Securities by Stock Exchange) Rules, 2026, opening the door for eligible companies to obtain stock exchange listings without going through the traditional initial public offering (IPO) route.

The proposed direct-listing framework is expected to provide companies with an alternative route to the capital market while potentially widening the pipeline of listed securities.

The commission also approved a framework prescribing a specific timeline for remitting dividends to foreign shareholders, aimed at making dividend payments more predictable and efficient for overseas investors.