64 firms ordered to raise paid-up capital to Tk30cr

Bangladesh Securities and Exchange Commission (BSEC) has instructed 64 companies to raise their paid-up capital to Tk 30 crore within June next year—a move seen by analysts as a boon for junk companies and bane for good companies.

The companies have also been ordered to come up with detailed proposals in the next 30 days for complying with the new directive.

On Thursday, the securities regulator wrote to the low-cap companies to follow the directive.

Currently, sixty-four out of 345 companies listed with the Dhaka Stock Exchange have paid-up capital below Tk 30 crore, according to an analysis of The Business Post.

Any company listed with the main board of the stock exchange must maintain at least Tk 30 crore as the paid-up capital as per the Dhaka and Chittagong (Listing) Regulations, 2015.

Paid-up capital is the amount of money a company has received from shareholders in exchange for shares of stock.

Explaining the move, BSEC spokesperson Mohammad Rezaul Karim said manipulators usually target small-cap stocks, which can be easily manipulated and the demand for their shares can be artificially inflated.

Apart from this, he said, the measure will help bring depth to the capital market and was taken to protect the interest of the investors.

“On the other hand, some companies have a low capital base but their reserves are much higher. But they are not raising capital. We are trying to increase their capital,” said the BSEC spokesperson.

“The move is good for companies with weak fundamentals but bad for the companies with strong fundamentals,” said stock market expert Abu Ahmed.

The weak companies or poorly performing companies will gain the most from the move, he said adding that once the weak companies fail to do so, they can be sent to the SME board.

The move will also send the wrong message to the multi-national firms as they are always reluctant to raise the paid-up capital.

The highest number of companies with paid-up capital below Tk 30 crore falls in the food and allied sector. The number is 12 as of October this year, according to the Dhaka Stock Exchange. The rest comes from the engineering, textile, pharmaceutical, energy, paper and tannery sectors.

The companies with paid-up capital below Tk 5 crore are Eastern Lubricants, Savar Refractories, Libra Infusions, Jute Spinners, Renwick Jajneswar and Co (Bd), Northern Jute Manufacturing, Ambee Pharmaceuticals, Monno Agro and General Machinery, Sonali Aansh Industries, Pharma Aids, BD Autocars, Gemini Sea Food, Reckitt Benckiser, KAY and QUE, and Shyampur Sugar.

The companies with paid-up capital above Tk 5 but below Tk 10 crore are Shyampur Sugar, Aziz Pipes, Apex Foods, Zeal Bangla, Aramit Limited, Standard Ceramic, National Tea, Desh Garments, Bangas, Dulamia Cotton, Imam Button, PRAN, Apex Spinning, GQ Ballpen, BD Lamps, Bangladesh Monospool Paper Manufacturing, Rahim Textile, and Rangpur Foundry Limited.

The companies with paid-up capital above Tk 10 but below Tk 15 crore are Samata Leather, Paper Processing, Information Services Network, Apex Footwear, Meghna Pet, Unilever Consumer, Legacy Footwear, Bata Shoe, Stylecraft, Fine Foods, and Wata chemicals paid-up capital is.

The companies with paid-up capital above Tk 15 but below Tk 20 crore are Anwar Galvanizing, Linde BD, Apex Tannery, Meghna Condensed Milk, Progressive Life Insurance, Usmania Glass, Anlima Yarn, Sonali Paper, Samorita Hospital, Hakkani Pulp, Rahima Food, and Sinobangla Industries.

The companies with paid-up capital above Tk 20 but below Tk 30 crore are Orion Infusion, JMI Syringes, Kohinoor Chemical, Al-Haj Tex, CVO Petrochemical, H.R Textile, Eastern Cables, Sonargaon Textile and Meghna Cement.

As per the securities rules, a listed company is allowed to increase the paid-up capital by offering rights shares, stock dividends and repeat public offers.