BSEC restructures Z-category companies’ boards

Top brasses of BBS Cables to face music for manipulating share price

FE Report | Friday, 14 August 2020

The securities regulator has taken a number of decisions including restructuring the boards of 'Z' category companies for bringing positive changes in their operations.

The decisions were taken on Thursday at a meeting held at the office of Bangladesh Securities and Exchange Commission (BSEC).

At the meeting, the securities regulator has also imposed penalty worth Tk 80 million on top brasses of BBS Cables for manipulating the company's share price along with conducting insider trading.

As per the BSEC's decision, the companies which are being traded in 'Z' category for two years or above will have to restructure their incumbent boards within 45 working days after the announcement of the order in written form.

Otherwise, the directors and sponsors of those companies will not be allowed to be the directors of other listed companies and market intermediaries.

And the sales, transfer, replacement and pledges of the shares held by all sponsors and incumbent directors at 'Z' category companies will remain closed.

The securities regulator said it would ensure good governance in 'Z' category companies appointing special auditor.

The BSEC also asked all 'Z' category companies to hold annual general meeting within months along with conducting all shareholders' meeting through digital platform or hybrid systems.

As per the BSEC's decision, a 'Z' category company will be delisted along with facing other legal actions if the restructured board fails to ensure development within four years.

The securities regulator has also changed definition of 'Z' category to ensure further accountability of companies listed under other categories.

As per the BSEC's decision, the shares of a company will be traded under 'Z' category if it fails to distribute cash dividend or hold AGM in two years at a row.

A company will be transferred to 'Z' category if its productions remain closed for six months or above.

The securities regulator said a company having net operating loss or negative cash flow from operations for two consecutive years will also be transferred into 'Z' category.

A listed company will also be transferred into 'Z' category if its negative retained earning crosses its paid-up capital.

Besides, any listed company can be transferred to 'Z' category for breaching the securities rules subject to the BSEC's permission.

The trading cycle of the 'Z' category companies will be turned into T+3 from existing T+4.

At Thursday's meeting, the BSEC has fined Mrs. Khadija Taher Syria, spouse of the chairman of the BBS Cables, Tk 30 million for her involvement in manipulating the company's share price in 2017.

According to BSEC information, Mrs. Syria and other top brasses of BBS Cables breached the securities rules as they conducted insider trading without publishing price sensitive information in right time.

The securities regulator also imposed an aggregate amount of penalty worth Tk 50 million on the BBS Cables, the company's managing director of Engr. Abu Noman Howlader and his relatives, one nominated director, and five individuals and their respective associates.

At Thursday's meeting, the securities regulator also approved a work-plan to be implemented for bringing further accountability and transparency in trading of the secondary market.

The BSEC has decided to change the name of its surveillance department with a view to collect hidden information on different activities of the capital market.

As per the BSEC's decision, the name of the surveillance department will be 'Market Surveillance and Intelligence'.

At Thursday's meeting, the securities regulator also allowed Mir Akther Hossain to determine its cut-off price to float shares under the book building method.

The company will raise a capital worth Tk 1.25 billion to purchase machineries, repay bank loans and bear IPO expense.

The BSEC has also approved the rights of Pragati Life Insurance which will issue one right share against one existing share at an offer price of Tk 15, including a premium of Tk 5.0 per share.