The Dhaka Stock Exchange (DSE) will conduct on-site inspections of five non-performing listed companies over their failure to issue dividends and reports to shareholders.
The errant firms facing possible regulatory action are Key & Que, Meghna Pet Industries, Meghna Condensed Milk Industries, Imam Button, and Savar Refractories limited.
"The Bangladesh Securities and Exchange Commission (BSEC) on Tuesday gave the go-ahead to the DSE to inspect the production, operations and corporate offices of the companies,” a top official at BSEC said.
The five companies are among 15 firms under review by the DSE, following widespread criticism about the role of the bourse and the regulator in dealing with companies whose share prices soar without any price sensitive information (PSI) having been disclosed.
The other 10 companies are ICB Islamic Bank, Dulamia Cotton Spinning Mills, Samata Leather Complex, Shyampur Sugar Mills, Zeal Bangla Sugar Mills, Beximco Synthetics, Jute Spinners, Shinepukur Ceramics, Sonargaon Textiles, and Information Services Network.
BSEC officials said the DSE’s chief regulatory officer requested permission from the regulator to inspect the companies in a letter sent on August 13.
The companies had failed to submit various reports, and some did not hold an Annual General Meeting (AGM) last year.
If any of the companies fail to satisfy the conditions of DSE’s inspection, they may be delisted from the stock exchange.
The DSE has been reviewing the current financial conditions, commercial operations and business plans of the 15 companies, as the firms in question operate under the “Z” category.
The firms were relegated to the Z category due to their failure to earn and declare dividends for a period of five years.
The operations of most of the 15 companies have been shut down, though some of the companies conduct partial business activities.
Despite their poor financial condition, the share prices of all 15 companies remained abnormally high, prompting the DSE to investigate.
Earlier on July 18, the DSE delisted Rahima Food Limited and Modern Dying and Screen Printing Limited, as the share prices of the companies had continued to surge abnormally despite the companies having long been out of operation.
Furthermore, on August 16, BSEC ordered the stock exchanges of the country to suspend the trading of three companies: Monno Jute Stafflers Ltd, BD Auto Cars and Legacy Footwear.
The commission decided on the punitive measures after the watchdog detected anomalies in the trading of the companies’ shares. BSEC also decided that five other companies will be traded on the spot market for an unlimited period, due to irrational price hikes.
The five companies which were sent to the spot market are Monno Ceramics, Key & Que, Aziz Pipes, Style Craft, and Dragon Sweater.
In addition, the stock market regulator decided to form an inquiry committee to investigate the abnormal price hikes of BD Autocars, and Legacy Footwear shares.
BSEC pledged to investigate the reasons behind the unusual increase in the price of shares of these companies, considering possible insider trading, price manipulation, and securities violations.
