3 cos elevated from junk status
Union Insurance, Shepherded Industries, Advent Pharmaceuticals paid off dividends announced
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The Dhaka Stock Exchange (DSE) on Monday decided to elevate three companies to 'A' and 'B' categories from 'Z' category after they had reported disbursement of cash dividends.
The companies are Union Insurance, Shepherded Industries, and Advent Pharmaceuticals. The decision will be brought into effect today.
The prime bourse upgraded the status of the companies a day after the Bangladesh Securities and Exchange Commission (BSEC) had instructed the exchanges to transfer junk stocks to relevant categories if they disbursed at least 80 per cent of the dividends declared.
Consequently, Union Insurance has been placed in the 'A' category for completion of 10 per cent cash dividends for 2022.
Shepherded Industries and Advent Pharma have been labeled as 'B' category stocks for paying off 5 per cent cash dividends and 2 per cent cash dividends respectively to their shareholders for FY23.
Following the news, stock prices of Advent Pharma, Union Insurance, and Shepherded Industries rose 4 per cent, 2.25 per cent and 1.46 per cent respectively.
The stockbrokers and merchant bankers are requested to refrain from providing margin loan facilities for purchasing these securities in the next seven trading days from Tuesday following the change of categorisation.
Earlier on September 26, the prime bourse downgraded 28 companies to junk status. Of those, 14 paid less than 80 per cent of the dividends that they had announced for their shareholders while the remaining 13 failed to make any payments for more than two years.
As per the latest BSEC directive issued in May this year, any company will be shifted to Z category if it fails to pay dividends to shareholders for more than two years.
The same will be applicable for failure to pay 80 per cent of the declared cash dividends within the stipulated time frame and failure to hold annual general meetings timely, if production remains suspended for more than six months in a row and if negative retained earnings surpass paid-up capital.
After the latest decision, the total number of 'Z' category stocks reached 83. Investors are not allowed to take margin loans to buy shares of these companies, and their trading requires three days to be settled, instead of the usual two days for regular stocks.