Three more cos relegated to junk status

Stock exchanges have downgraded three more companies to the status of junk stock over their failure to complete the distribution of approved dividends within the stipulated time.

Both the Dhaka and Chittagong stock exchanges on Monday informed investors through their websites that ACME Pesticides, SK Trims, Alif Manufacturing Company, and Advent Pharma had been relegated to Z category from B category but hours later ACME Pesticides was transferred back to B category as it submitted a compliance report on dividend distribution.

Company secretary of ACME Pesticides Sabuj Kumar Ghosh said Sunday was their last day for submitting a report on the distribution of dividends. The company was a bit late to submit the report.

As per a directive issued in May 2024, a listed company is required to disburse at least 80 per cent of the dividends recommended within a month after approval at the AGM (annual general meeting).

Besides, a company is transferred to 'Z' category for its failure to declare any dividend for two consecutive years, inability to hold AGM timely, non-operational status for more than six months, and excess negative balance of retained earnings, compared to paid-up capital.

Meanwhile, both the bourses have requested the stockbrokers and merchant banks not to provide margin loan facilities for purchasing the stocks of the three companies as the rules do not permit credit facility against investments in junk stocks.

Of the companies, Advent Pharma and Alif Manufacturing Company had recommended 1 per cent cash dividend each only for general shareholders for the year ended in June 2024. SK Trims recommended a 1.75 per cent cash dividend for all shareholders for FY24.

Like these companies, many others have a tendency of recommending nominal dividends in a bid to avoid junk status so they can avail of facilities, including margin loans and reduced trading cycle.

Presently, the number of junk stocks is 98, including the latest 3.

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