Sonali Paper is back on DSE mainboard. But its return is not without controversy.
Small capital-based Sonali Paper & Board Mill's re-listing on the mainboard of the Dhaka Stock Exchange has raised questions as the regulator granted an exemption to it to pave the way for the resumption of its trading.
Sonali Paper will start trading on the mainboard from Thursday, said the premier bourse yesterday.
The stock market regulator amended the listing regulations in July last year so that companies, whose paid-up capital is less than Tk 30 crore, can't be listed with the mainboard as gamblers target the companies to make a quick buck.
However, the previous commission of the Bangladesh Securities and Exchange Commission (BSEC), whose tenure ended recently, approved the re-listing of Sonali Paper by exempting it from fulfilling the condition on the paid-up capital.
Sonali Paper's paid-up capital stood at Tk 16.63 crore in 2019, according to DSE data.
In response to the company's request, the commission also gave another exemption. As a result, it did not have to comply with the rule on net positive cash flow in the immediate three financial years.
The company did not declare a dividend in 2017 and 2018. It announced a 10 per cent stock dividend last year.
The company's annual report has not been published on the website of the DSE and its website. But DSE data showed it made a profit of Tk 6.34 crore in 2019.
Sonali Paper would be traded as a "Z" category company and the status would continue until it holds its annual general meeting, the DSE said.
The floor price of the company will be the last closing price on the over-the-counter (OTC) market on January 30, when it was Tk 273. The price is almost seven times that of Bashundhara Paper Mills, the leading peer company. Yesterday, Bashundhara Paper's shares traded at Tk 39.
"This is clear that Sonali Paper would be another item for gamblers because of its lower number of shares," said a merchant banker requesting anonymity to speak candidly on the matter.
It should have been listed with the small-cap board. Then the main market would not have seen another gambling item.
"At a time when we need to transfer small-cap companies from the mainboard to the small-cap board to cut the scope for gambling, the re-listing of this type of companies will only give room to gamblers," the merchant banker added.
The company was sent to the OTC market 10 years ago after it failed to comply with rules.
The previous commission decided to re-list it as per its consideration and the current commission can't say anything now, said a top official of the BSEC, preferring anonymity.
Maybe, the previous commission allowed the company as it returned to profits in recent years, he added.