The securities regulator on Wednesday ordered dissolution of the board of directors of the scam-hit Fareast Islami Life Insurance Company, and appointed 10 independent directors to run it.
The Bangladesh Securities and Exchange Commission took the decision at a meeting on the day.
"The securities regulator has appointed the independent directors to protect the interests of the investors and policy-holders," said BSEC officials.
According to the BSEC order, the restructured board will select Dr. Muhammad Rahamat Ullah its chairman.
Besides, the board will form two committees namely audit committee and nomination and remuneration committee comprising independent directors in compliance with the BSEC's corporate-governance code.
The restructured board will also reconstitute the company's top management while bringing back corporate cash and assets within six months.
"The board will also take legal measures against the persons having involvement in financial crimes and money laundering," according to the BSEC's order.
The restructured board will ensure that they have no personal interest in the company, the BSEC said.
"The board will also comply with the corporate governance code, insurance act and other securities rules," said the BSEC officials.
In September, 2020 the securities regulator appointed special auditor at the company following its failure to resolve claims and disclose annual performance. The company's premium earning from policies also declined significantly in 2019.
BSEC sources alleged that the company officials had been involved in the embezzlement of a substantial amount of fund that belong to the policy holders.
They said the company disbursed loans worth Tk 1.91 billion to Fareast Islami Life Employees Cooperatives and Prime Islami Life Insurance Employees Cooperatives.
"These cooperatives purchased land at low cost, but, later, that land was sold to the Fareast Islami Life Insurance Company at higher price. The company's managing director had involvement in that deal," said a BSEC official.
He said the Fareast Islami Life Insurance kept Mudaraba Term Deposits (MTBs) worth Tk 16.82 billion with nine banks and financial institutions.
"Abdul Khaleque, the then sponsor-director of the company, took bank loan keeping MTBs worth Tk 3.79 billion as lien. Later, the bank took control over such MTBs as Mr. Khaleque failed to repay his loans," the BSEC official said.
The BSEC official said the company officials might have laundered the policy holders' money.
Fareast Islami Life Insurance began its journey in 2000 and listed on the bourses in 2005. It is now 'A' category company. The company has an authorised capital of Tk.1000 million and paid-up capital Tk.747 million.
The company's sponsor-directors hold 30.55 per cent shares, institutes 41.22 per cent shares, foreigners 0.81 per cent and general public 27.42 per cent as on June 31, 2021.
The company's per share price closed at Tk 67.40 each on Wednesday with a loss of 0.44 per cent or Tk 0.3.
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