DSE initiates exit process for 29 listed companies

The exit process for 29 low-performing companies whose shares are traded on the over-the-counter market of the Dhaka Stock Exchange (DSE) has begun.  

According to a directive of the Bangladesh Securities and Exchange Commission (BSEC), 29 companies have been selected for the exit.

The companies include Arbee Textiles, Azadi Printers, Bangladesh Chemical Industries, Bangladesh Dyeing & Finishing, Bangladesh Luggage Industries, Bangladesh Zipper, Chic Tex, Eagle Star Textile Mills, German Bangla JV Food, and Gulf Foods.

Hill Plantation, Jessore Cement, M Hossain Garments Washing & Dying, Maq Enterprise, Maq Paper Industries, Phoenix Leather Complex, The Engineers, Tulip Dairy, Padma Printers, Bangladesh Plantation, and Khaza Mosaic Tiles and Stones are also among the companies.

Other companies that are going to make the exit are National Oxygen, Paragaon Leather, GEM Knitwear, GMG Industrial Corporation, JH Chemical, Meghna Vegetable Oil, Mark Bangladesh Shilpa & Engineering, and Rupon Oil.

The BSEC has instructed the companies to sign agreements with the stock exchanges of the country to begin the procedure for the exit.

Jessore Cement and Arbee Textiles yesterday signed agreements with the DSE yesterday.

"We have just begun the exit procedure," said M Shaifur Rahman Mazumdar, acting managing director of the bourse, at the deal signing ceremony.

He described the BSEC move as a laudable step since these companies are either closed, incurring losses, or have not given dividends for years.

"Investors who own shares of these companies are not getting any dividend and they can't even sell shares in absence of buyers. The BSEC move will benefit investors," he said.

For the exit plan to go ahead, a company must appoint an offeror or a concert party, who makes the offer to buy shares from the shareholders, according to the BSEC directive.

The offeror means the sponsor or promoter of the company while the concert party refers to an existing shareholder, a proposed shareholder, or a non-listed company with a majority owned by the sponsors and directors.

The offer price to buy securities under the exit plan will be the face value, the issue price at the time of the initial public offering (IPO), the last trading price, the net asset value per share as per the last audited financial statement, or the volume weighted average price for one year immediately preceding the date of the suspension of trade or the date of delisting, or whichever is higher.

An official of the BSEC says the regulator wants to ensure good governance in the market. The decision has been taken since some non-performing companies are giving no returns to investors.

"If these companies are delisted, investors will receive nothing and their funds will get stuck. But their exit will fetch a portion of their main investment."