Eight cos to be downgraded to Z category for failing to pay dividends for FY22
5 SMEs face punitive actions for same violation of rules
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Eight companies of the DSE's main board are going to be downgraded from A and B category to Z category for failing to pay the dividends that the boards declared and got approved by the securities regulator for FY22.
The A category companies are Fortune Shoes, Taufika Food and Lovello Ice-cream, Lub-rref (Bangladesh), Associated Oxygen and S. S. Steel. And 'B' category companies are Advent Pharma, Safko Spinning Mills and Pacific Denims.
These firms will also face other regulatory actions, including penalty and fines.
They recommended dividends between 1 per cent and 15 per cent for the year ended in June last year.
The issuers of listed securities are bound to pay off dividends in 30 days after declaration or approval, as the case may be, according to a regulatory provision. Cash dividends are to be transferred to the bank accounts of securities' holders while stock dividends into BO (beneficiary owner's) accounts.
In a letter sent to the non-compliant companies on Sunday, the Bangladesh Securities and Exchange Commission (BSEC) said non-payment of the dividends to shareholders within the stipulated timeframe was tantamount to "market manipulation".
A company gets the tag as A category if it has distributed at least 10 per cent dividend or above per share for a particular year. Companies come under B category for paying dividends less than 10 per cent per share in a year.
Stocks get to be in Z category if they have failed to hold annual general meetings for three years in a row and issue no cash dividend for two consecutive years.
Meanwhile, another five companies of the SME board of the Dhaka Stock Exchange (DSE) face similar punitive actions for failing to pay dividends to shareholders for FY22.
They are Oryza Agro Industries, BD paints, Mamun Agro Products, Krishibid Seed and Krishibid Feed.
Krishibid Seed and Krishibid Feed are at risk of stricter actions as, according to the DSE, sponsors of these firms made announcements for selling their shares after the dividend declarations.
One sponsor of Krishibid Feed made a sale declaration the day after the dividend declaration while six others did it within four months after the dividend declaration. Five of them completed selling shares by April this year.
One sponsor of Krishibid Seed posted a sale declaration four months after the dividend announcement.
"Any kind of measures, including legal actions and penalties, will be taken based on the merit of the offences," said a BSEC official preferring anonymity.
It is suspected that the sponsors had sold out shares being fully aware of the companies' position regarding the disbursement of dividends, he added.
Earlier, the securities regulator made a list of 15 companies that had not disbursed dividends for FY22. Later on two among those -- Beach Hatchery and Premier Cement - cleared the dues in an extended period of time. Hence, the names have been dropped from the list.
Meanwhile, the BSEC asked the companies to submit documents proving they had distributed cash and stock dividends to shareholders.
It also sought copies of buy-sell declaration of insiders to see if they had traded shares to capitalize on dividend declarations.
Since there is no category of the companies listed on the exchange's SME board, the ones accused of wrongdoing will be punished with fines and penalties in line with the relevant rules.