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Dhaka Tribune

BSEC has set sights on cleaning up OTC counter

Currently, 64 companies, with a market capitalisation of Tk 51,845.7 crore, are trading at the OTC counter

Update : 16 Dec 2020, 01:01 AM

Bangladesh Securities and Exchange Commission (BSEC) has taken the initiative to reform the over-the-counter (OTC) market of both stock exchanges.

The OTC market provides an alternative to stock exchange listing for securities of issuers that either chooses not to be listed on Dhaka Stock Exchange or not to meet the relevant listing requirements. 

The term "OTC securities" is a catch-all phrase for any security that is not listed on the stock exchange.

Currently, 64 companies, with a market capitalisation of Tk 51,845.7 crore, are trading at the OTC counter, which started in September 2009 with 51 companies.

The stock market regulator yesterday asked the Dhaka and Chittagong stock exchanges to appoint special auditors to review the business affairs of 21 companies that are listed on the OTC market.

The BSEC also asked the stock exchanges to submit a specific and detailed report on 43 companies that are not in operation as per the records available to the exchange.

The move comes as part of the stock market regulator’s efforts to rid the OTC market from junk companies and to allow the better-performing ones on to the main board of the bourses. Companies such as Alif Industries, Sonali Paper & Board Mills, Wata Chemicals have graduated to the mainboard from the OTC counter.

The companies are not growing appropriately and their shareholders are not getting returns of their investment, said BSEC officials requesting anonymity. 

In many cases, investors lost their entire investment as a whole. 

“This is detrimental to the interest of the investors of the company and undesirable to the commission,” said one of the BSEC officials requesting anonymity. 

The bourses would review all financial and non-financial information about the companies, existence of land, building and property at approximate valuation and operational status.

They must report to the commission immediately.

Besides, the BSEC also said the companies were not allowed to sell, mortgage, transfer or dispose of any company property and assets as well as shares held by sponsor-directors without prior approval from the commission.

Earlier in September, the BSEC delisting/suspended Bangladesh Chemical Industries, Bangladesh Dyeing & Finishing Industries, Bangladesh Luggage Industries and Bangladesh Zipper Industries from the OTC market.

It had previously delisted GMG Industrial Corporation and Padma Cement.

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