The High Court yesterday asked the Securities and Exchange Commission to reply within one month to a bank director who sought more time to comply with the rules of holding at least 2 percent stakes in his company.

The HC also issued a rule asking the regulator to explain to the court within four weeks why the director's application on time extension would not be settled.

The SEC directive on minimum shareholding was meant to stop sales of shares by sponsors and directors and to create a buying pressure in the market for the benefit of general investors.

In a circular issued on November 22 last year, the stock regulator made it compulsory for the sponsors, directors and promoters to acquire at least a 2 percent stake individually and a 30 percent stake jointly in their firms within six months that ended yesterday.

A bench of Justice Farid Ahmed and Justice Sheikh Hassan Arif issued the rule after hearing a petition filed by Nurul Islam, a director of NCC Bank.

Islam in a letter to the SEC on April 14 sought a time extension for up to six years, instead of six months, to comply with the regulatory directive on minimum shareholding, Deputy Attorney General Motahar Hossain Saju told journalists after the hearing.

But the SEC had not replied to the letter of Islam, he said.

Earlier on Monday, the HC in a verdict upheld the SEC directive after rejecting petitions filed by some directors and aspirant directors of three listed firms. The petitioners had challenged the legality of the SEC circular.

The latest developments also left negative impact on share prices, as the indices witnessed a sharp decline yesterday.

CHIEF JUSTICE TO DECIDE ON FIVE PETITIONS

Meanwhile, the HC yesterday sent to the chief justice five separate writ petitions challenging a law that empowered the SEC to impose conditions on the stockmarket.

After hearing arguments from the attorney general and the petitioners' counsels, the HC bench of Justice Mirza Hussain Haider and Justice Muhammad Khurshid Alam Sarkar forwarded the petitions to Chief Justice Md Muzammel Hossain for a decision.

Owners and directors of five private companies filed the petitions on May 21 against the Section 2CC of SEC Ordinance 1969, claiming the section illegal and unconstitutional as it has given unlimited power to the commission.

Under the 2CC, the SEC can impose any condition, if it seems fit, no matter what is in other existing laws including companies act.

The five companies are NCC Bank Ltd, Abeco Industries Ltd, Mercantile Bank Ltd, Southeast Bank Ltd and National Life Insurance Ltd.

They also prayed to the HC to stay the SEC notifications which made compulsory for the sponsors, directors and promoters to acquire at least a 2 percent stake individually and a 30 percent stake jointly in their firms within six months.

Earlier on May 21, another HC bench of Justice Farid Ahmed and Justice Sheikh Hassan Arif rejected three separate writ petitions that had challenged the SEC notifications.

After HC passed the order yesterday, Attorney General Mahbubey Alam told The Daily Star that the chief justice may now constitute a bench for final disposal of the five writ petition or may wait for the written judgement delivered by the HC bench led by Justice Farid Ahmed for a decision.

He also said the yesterday's order of the HC bench led by Justice Mirza Hussain Haider will not affect the verdict of the bench led by Justice Farid Ahmed.

Senior counsels Dr Kamal Hossain, Mahmudul Islam, Rokanuddin Mahmud and Akther Imam argued for the petitioners, saying that unfettered jurisdiction has been given to the SEC through the Section 2CC of SEC ordinance damaging the petitioners' fundamental rights.

A large number of directors

will loss directorships if the SEC notifications remain in force, they argued.

The attorney general opposed the petitions, saying the HC in its May 21 verdict had discussed in detail the Section 2CC of SEC act, and therefore the court should not pass any order further on this issue without seeing the full text of the verdict.