Aftab Auto stock jumps as directors move to meet shareholding requirements

Stocks of Aftab Automobiles rose following the announcement that its directors would meet the minimum shareholding requirement set by the Bangladesh Securities and Exchange Commission (BSEC).

The automobile company's share price soared 6.61 per cent to Tk 25.80 yesterday, according to Dhaka Stock Exchange (DSE) data.

Three directors of Aftab Automobiles previously declared that they would buy 15.12 lakh shares in the company at the prevailing market price within 30 working days.

Considering the current market price, these shares are worth around Tk 4 crore in total.

The directors -- Sajedul Islam, Saiful Islam and Khaleda Islam -- aim to purchase 4.78 lakh, 5.55 lakh and 4.78 lakh shares respectively.

"They are buying the stocks as they committed to the BSEC to fulfill its condition of holding minimum 30 per cent shares," said a top official of the company preferring anonymity.

In 2011, the market regulator ordered all sponsors and directors to individually hold a minimum 2 per cent stake in their companies and 30 per cent jointly.

However, none of the directors or sponsors followed the order despite repeated notifications from the commission.

The present commission had fixed October 27 as the deadline to fulfil the collective minimum shareholding requirement but later extended it by a month.

On November 25, the BSEC decided to restructure the boards of the companies that failed to hold a collective 30 per cent stake in their firms.

The directors of 43 companies had to meet the minimum shareholding condition by the deadline but some companies sought for more time while promising to buy the shares.

"We are one of them who informed the BSEC that we would fulfil the condition," the official said.

At present, the directors of Aftab Automobiles hold 2.72 crore shares, or 28.42 per cent of the listed automobile company's total shares.

Among the 28 companies who are yet to fulfil the condition, the directors of Olympic Accessories, Tallu Spinning have already increased their holdings while some others are taking preparations, according to the BSEC.

Aftab Automobiles incurred losses of Tk 0.20 per share in the July-September quarter of the current financial year while it booked a profit of Tk 0.30 per share in the same period the previous year.

The company's sales revenue also dropped during that period due to the ongoing coronavirus pandemic, it said in a disclosure published on the DSE website yesterday.