BSEC made the decision at a commission meeting held at its office in Dhaka
The Bangladesh Securities and Exchange Commission (BSEC) on Thursday formed a committee to amend the rules for ‘Z’ category companies.
BSEC made the decision at a commission meeting held at its office in Dhaka. BSEC chairman M Khairul Hossain presided over the meeting, said a press release.
BSEC director Md Mansur Rahman will lead the three-member committee. Others members are deputy director of BSEC Md Nazrul Islam and Sheikh Md Lutful Kabir.
The committee will make necessary recommendations discussing the notification issued in 2002 for the 'Z' category companies.
According to the 2002 notification, there is a requirement to reform the company's board of directors in the 'Z' category for a period of one year through extra general meeting but in reality it is not followed.
‘Z’ category companies are which have failed to hold the annual general meeting when due or have failed to declare any dividend based on annual performance or which are not in operation continuously for more than six months or whose accumulated loss after adjustment of revenue reserve, if any, exceeds its paid up capital. The total number of listed companies is 41 at Dhaka Stock Exchange (DSE).
Recently, share prices in junk companies or ‘Z’ category companies have been rising abnormally despite the absence of price sensitive information and growth in earnings, posing a threat to the stability in the capital market.
Manipulators usually target small cap stocks as their prices can be easily manipulated and the demand for their shares can be artificially inflated.
Such misconduct in the capital market frequently leads to general investors losing money as they gamble in junk shares, despite warnings from regulators and financial experts to not pour funds into the capital market without proper knowledge and information.
Previously, on July 18 last year, the DSE also 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.