Floor price of stocks can be revised for corporate declaration

The Bangladesh Securities and Exchange Commission (BSEC) yesterday decided to allow floor prices of listed stocks to be revised for corporate declarations such as bonus shares or rights share issuance.

On March 19 last year, the stock market regulator stipulated that the floor price of all stocks would be calculated based on their average price for the last five days, aiming to stop the index from falling amid the pandemic-induced fallouts.

However, there was ambiguity over what the adjusted price would be for issuance of bonus or rights shares if the price is lower than that of the floor.

To remove confusion, the BSEC in a commission meeting yesterday decided to allow the revision.

"Considering dilution effect of corporate declaration, a company's adjusted price would be revised floor-price," the BSEC said in a press release.

The issue came to the fore when British American Tobacco Bangladesh announced 200 per cent stock dividend, which took the adjusted price below that of the floor price.

Meanwhile, the regulator also decided to fine the managing director and directors, except the independent director, of Monno Ceramics Tk 1 crore each for breaching securities rules. It also decided to fine Monno Welfare Foundation Tk 10 crore for irregularities.

The BSEC in an investigation found that the company showed higher earnings per share in 2019 by selling scraps, leading to its share price rising manifold.

In the meantime, Monno Welfare Foundation sold off shares and made a huge amount of money, said Rezaul Karim, an executive director of the BSEC.

In this process the company and the foundation breached rules, so the commission decided to fine them, he said.