BSEC exit plan: 4 more firms to be delisted from OTC

The Bangladesh Securities and Exchange Commission (BSEC) has ordered the stock exchanges to delist four more companies from the over-the-counter (OTC) market in response to the companies’ applications as per the regulator’s exit scheme.

The companies are Jessore Cement Company, Hill Plantation, Arbee Textiles and, Azadi Printers Limited.

The stock market regulator on Wednesday wrote to the Dhaka Stock Exchange and the Chittagong Stock Exchange to start the process of delisting the companies.

Due to their weak financial performances, the companies failed to give dividend payouts for long to their shareholders regularly, bringing much dismay to the investors.

Currently, as many as 70 companies are being traded on the OTC market.

On September 16, the BSEC decided that of the 70 companies, forty-one will be shifted to the Alternative Trading Board (ATB) and SME board of the bourses in line with their financial performances, and twenty-nine companies will be delisted.

Following the decision, eighteen companies have so far been transferred to the ATB and twenty-three to the SME board.

The OTC market was introduced in 2009. Usually, non-compliant companies or junk companies are traded on the OTC market.

According to the BSEC directive, a company can be qualified for the delisting, if it remains out of production for two years, incurs losses for three consecutive years, its losses or loan exceed its paid-up capital, fails to pay cash dividends for three consecutive years, and hold AGMs for two consecutive years.

When a company plans to get delisted, it needs to apply to the commission through its issue manager.

Upon receiving approval from the regulator, the sponsor directors must buy back the public shares or agree with a third party as an assurance for the purchase of the shares.

The BSEC sets a cut-off date and informs the company formally.

Later, the applicant needs to agree with the stock exchanges, determines the purchase price of the public shares.

Speaking to The Business Post, DSE Director Shakil Rizvi welcomed the regulator’s decision and said this is a globally recognised practice.

“There is no point in keeping the companies in trading floors that have been in poor financial conditions for years. When there is life, there is a death,” he said.

He further added that the authorities concerned should ensure that the investors get their money back from the delisted companies timely.

BSEC Spokesperson Mohammad Rezaul Karim said the companies in question have failed to contribute to the stock indices. “That is why the delisting of those companies would not put any adverse impact on the market. Rather investors will get their money back and have an opportunity to reinvest in other securities.”

According to the BSEC directive issued in December last, the sponsors of the companies that planned to delist will have to buy back the shares from the investors and pay them at the prevailing market prices.