Around 38 listed companies have disappeared since 1994, some without even a trace of their registered addresses, leaving shareholders to lose almost all their money invested in the companies.
Stakeholders blamed Bangladesh Securities and Exchange Commission (BSEC), the regulator, for the setback as it has not been rational in allowing the companies to go public.
Dhaka Stock Exchange has received no correspondence from the companies for a long time. According to the prime bourse, the total value of the “vanishing companies” could be in excess of Tk150 crore.
The companies are listed entities that have raised money from investors through initial public offerings and then disappeared.
After suffering losses years after years, some of them announced liquidation in accordance with the rules, meaning that after payment of its loan and liabilities, remaining assets was distributed among the shareholders.
The latest example is Padma Cement, which disappeared in March this year, leaving investors at risk. Just a year into its making debut in the DSE, its operation had been suspended, raising doubt over its getting IPO approval from the Bangladesh Securities and Exchange Commission.
“My hope to get money back from the company diminished,” said aggrieved Mohammad Kashem, who put Tk15 lakh on the cement maker.
He failed to contact with the executives of the company in line with its announcement for shareholders of contacting with official liquidator of Padma Cement with proper documents to get money back.
An executive said the company failed to give money back as it had nothing remaining to give to its shareholders after payment of loans and liabilities.
The DSE had sent Padma Cement to the OTC (over the counter market) in 2010 after its production suspension.
The year of 2004 witnessed disappearances of 15 companies, which is the highest, followed by the year of 1996 when 14 companies vanished.
The number of such companies is likely to go up in years to come as most companies currently traded in the OTC market appeared to be dubious and most (if not all) of these would turn out to be vanishing companies, according to people involved with the matter.
“But the number could, in fact, be higher than that. Most companies under OTC market are not compliant with the listing agreement,” said an official.
Non-compliance means the firms did not adhere to requirements like filing financial statements with the exchanges concerned. How many of these would be classified as vanishing would depend on whether or not these companies are traceable at their registered offices.
Another official said these non-compliant companies are likely to fall in the vanishing category. “Around 50% of the companies are likely to be vanishing,” he said, suggesting the number of vanishing companies could be over 50.
Some investors earlier wrote to the regulator on the issue how their closure would affect investors. When tried to contact on the issue with the regulator, it did not elicit any response.
“This trend is very unfortunate,” said former BSEC Chairman Mirza Azizul Islam. Before giving IPO approval to any company, the regulator should be very careful about its track record and prospect of future, he said.
It also should look into the background of the board members of the company, he said, adding that physical inspection to the factories concerned should also be conducted before giving IPO nod as it is the interest of the investors and the market as well.
