Delisting of dud cos hits snag as BSEC not permitting

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Delisting of non-performing companies from the Dhaka Stock Exchange is in limbo as the market regulator, Bangladesh Securities and Exchange Commission, is yet to allow the country’s premier bourse to trash the dud companies and send them to the over-the-counter market, sources said.

Earlier, on February 12 this year, the board of directors of DSE decided to delist four non-performing companies — Meghna Pet Industries, Meghna Condensed Milk Industries, Imam Button and Savar Refractories — and to send them to the OTC market.

After making the decision, the bourse sought permission from the BSEC regarding the matter.

BSEC sources said the commission might not respond to the DSE request as the regulator thought that the delisting could not be a good solution to the problem.

They said the BSEC feared that delisting of companies from the market could hurt the investors’ interest and might spread panic across the market.

They said that the commission was searching for a better option like handing over the companies’ boards to competent persons.

The BSEC on April 11 formed a committee and asked it to prepare necessary proposals on its notification regarding reconstitution of boards of companies remaining in the ‘Z’ category, which groups low-profile companies, in the stock exchanges for more than a year.

The committee is yet to submit its proposals regarding the matter.

The notification issued in 2002 permits the non-performing companies to reconstitute their boards if the existing boards continuously fail to improve business of the loss-making companies. The BSEC notification to streamline the companies is in vain.

Regarding the recent BSEC move to reshuffle the junk companies’ boards, market experts said that it would be very much difficult for the commission to implement such scheme as it had failed to implement the 2002 notification.

The DSE listing regulations have given the bourse enough power to delist any company if the company fails to comply with certain rules. The DSE does not require any permission from the commission to delist companies.

However, there is no provision in the listing regulations that allows the bourse to delist companies and send them to the OTC market.

Therefore, the DSE requested the BSEC to allow it to send the non-performing companies to the OTC market, DSE sources said.

They said the bourse wanted to send them to the OTC market, keeping the investors’ interest in mind but the BSEC was yet to give it permission to do so.

Earlier, in September 2018, the bourse conducted physical investigations at the offices and factories of the four companies and found little activities there. The four companies are loss-making and failed to give any dividends to investors for years.

DSE officials said that most of the issuers had failed to declare dividend for a period of five years from the date of declaration of last dividend or the date of listing with the exchange and fell in the criteria of delisting.

The bourse also found that there was no hope that the companies could improve business and could provide dividends in near future.

The DSE is also reviewing 10 other companies to decide their fate, sources said.

The 10 companies are: ICB Islamic Bank, Dulamia Cotton Spinning Mills, Samata Leather Complex, Shyampur Sugar Mills, Zeal Bangla Sugar Mills, Beximco Synthetics, Jute Spinners, Shinepukur Ceramics,  Sonargaon Textiles and Information Services Network.

The bourse has finished investigations into most of the companies and is waiting for the BSEC’s green signal to send them to the OTC market, DSE officials said.

Kay & Que, another company which the DSE investigated for the purpose, has been cleared of the delisting process as the company declared dividend for the financial year of 2017-2018.

Earlier, in July 2018, the DSE delisted Rahima Food Limited and Modern Dying and Screen Printing Limited.
Source: http://www.newagebd.net

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