SEC takes action against 28 defaulter companies
Share trading of 28 laggard companies has been suspended from today for an indefinite period by the stock market regulator.
The Securities and Exchange Commission (SEC) through a letter yesterday ordered Dhaka and Chittagong stock exchanges to suspend share trading of 28 Z category companies until further order, officials said.
Companies that do not offer dividends, or hold annual general meetings (AGM) regularly, or are out of operations, fall under the Z category.
"Twenty eight companies are not holding AGMs, and have not been declaring dividends for a long time, many of them are not even in operation, but their share prices are increasing irrationally," Anwarul Kabir Bhuiyan, executive director of SEC, told journalists.
He said, "The commission has decided to suspend share trading of those companies to protect investors' interest."
Out of more than 90 companies now listed under the Z category, traces of many are not found, while some have gone out of operations. But trading of shares of those companies is taking place nonetheless, as many retail investors are unaware of the companies' present status.
The companies, share trading of which shall remain halted from today, are Al Amin Chemical, Ashraf Textile, Bangladesh Chemical, Bangladesh Dyeing & Finishing, Bangladesh Zipper, Beach Hatchery, Chittagong Vegetable Oil, Excelsior Shoes, Gachihata Aquaculture, GMG Industrial Corporation, Maq Enterprises, Maq Paper, Metalex Corporation, Meghna Condensed Milk, Meghna Pet Industries, Mita Textile, Modern Cement, Padma Printers, Quasem Textile, Rahman Chemicals, Rangamati Food, Rose Heaven Ball Pen, Sajib Knitwear & Garments, Sonali Paper, Sreepur Textile, Tamijuddin Textile, Wonderland Toys, and Wata Chemicals.
People close to the issue said the move is only the initial stage of placing share trading of non-performing and under-performing companies on 'over the counter' (OTC) market, which will be a separate trading window.
Under the OTC system, Dhaka Stock Exchange (DSE) will open a separate counter where interested buyers and sellers of shares of non-performing and under-performing companies will announce prices and numbers of shares to be traded.
Transaction will take place if the announced prices of buyers and sellers match.
In February this year, DSE decided that it will open the separate window in a bid to discourage investors from betting on non-performing and low quality companies.
DSE said trading of such companies will take place on the OTC market, meaning price movement of those shares will not be seen on the electronic board.
The DSE initiative to open an OTC market came following a surge in the share prices of a number of Z category companies. There were also allegations that the laggard companies had even declared dividends to boost their share prices.
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