In a bid to enhance cleanliness in the stock market, regulatory body Bangladesh Securities and Exchange Commission (BSEC) has issued stringent directives to companies, urging them to shift or reclassify into the ‘Z’ category if they fail to declare dividends for consecutive two years. The new guidelines, signed by BSEC Chairman Prof. Shibli Rubayat-Ul-Islam on Thursday, February 15, extend the criteria for reclassification to companies unable to hold annual general meetings or pay annual fees for two consecutive years. The move also covers companies inactive for six months or those keeping their operations suspended.
Furthermore, the BSEC has extended its directives to non-listed companies, stating that any entity remaining inactive in its operations for six months or ceasing production will also be reclassified into the ‘Z’ category. The new regulations also apply to companies with a negative cash flow for two consecutive years or having higher debt than paid-up capital.
According to the issued statement, if any company fails to comply with security laws, regulations, notices, orders, or directives, it may be reclassified into the ‘Z’ category after approval from the commission.
According to regulations, companies listed on the stock exchange, excluding banks, insurance, and non-banking financial institutions, can now provide investors with interim dividends (other than stock/bonus shares). Under the new rules, the categorization of companies will be determined by considering the interim dividends.
Additionally, if any company, apart from banks, insurance, and non-banking financial institutions, has already been reclassified into the ‘Z’ category, it will not be able to engage in share transactions or undergo reclassification without prior approval from the commission.
This latest directive will render ineffective the provisions of the Dhaka Stock Exchange (Listing Regulations) 2013 and Chittagong Stock Exchange (Listing Regulations) 2013, Article 5(2). The new guidelines will take effect today, superseding the aforementioned regulations.
