The Bangladesh Securities and Exchange Commission (BSEC), the regulatory authority for the stock market, has issued new guidelines for transferring listed companies to the Z category for non-compliance. From July 2, any listed company that violates specific conditions can be moved to the ‘Z’ category by the stock exchange.

On Monday (May 20), BSEC released these directives, outlining several conditions under which a company may be reclassified.

According to the guidelines, if a company fails to declare dividends for two consecutive years from the date of the last dividend declaration or from the date of listing on the stock exchange, it will be moved to the Z category. Additionally, failure to hold the annual general meeting (AGM) within the stipulated time as per law will result in the same action.

However, if an AGM is not held due to a court order or legal proceedings, this rule will not apply for up to two years, considering the extraordinary circumstances.

The guidelines also state that a company will be moved to the Z category if it ceases production for a continuous period of at least six months, except for periods allocated for restructuring or BMRE (Balancing, Modernization, Rehabilitation, and Expansion).

Furthermore, if the accumulated losses of a listed company exceed its paid-up capital, it will be transferred to the Z category.

Another condition includes failure to distribute at least 80% of the declared or approved dividends within the specified timeframe, leading to reclassification to the Z category by the stock exchange.

Trading of Z category shares will be settled on a T+3 basis.

These measures aim to ensure stricter compliance and maintain the integrity of the stock market.

The Bangladesh Securities and Exchange Commission (BSEC), the regulatory authority for the stock market, has issued new directives for the trading of shares of companies listed on the Alternative Trading Board (ATB).

On Monday (May 20), BSEC released the guidelines, stating that for the first trading day, the circuit breaker will be set at 5% above the fair value, as determined by Schedule A, Appendix 2 of the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) regulations. If no trades occur within the first six months, the selling broker will initiate an offer based on a price set by the seller.

In cases where there are no trades, the seller can set any offer price, provided it does not exceed the fair value calculated under Schedule A, Appendix 2.

From the second transaction onward, the regular circuit breaker will be 5% above the previous day’s closing price or the open adjusted price.

Additionally, the value of shares traded on the ATB cannot exceed 30% above the fair value at any time.

All equity securities traded on the ATB platform will be settled on a T+4 basis.

A listed security issuer will not be eligible for listing on the ATB if the company has increased its paid-up capital by issuing bonus shares from retained earnings within the two years prior to the application date to the stock exchange.

Before and after listing on the ATB, the issuer’s most recent financial statements must be audited by a panel of auditors as declared by the stock exchange for ATB listing.

These directives override provisions of the Dhaka Stock Exchange (Alternative Trading Board) Regulation, 2022, and clauses (e), (f), and (g) of sub-regulation 9 of the Chittagong Stock Exchange (Alternative Trading Board) Regulations.

The new guidelines are effective immediately.

The Bangladesh Securities and Exchange Commission (BSEC) has fined four investors a total of Tk85 lakh for violating rule in Janata Insurance Company’s share transactions.

Of the investors, Md Saif Ullah has been fined Tk40 lakh, AG Mahmud Tk20 lakh, SM Motaharul Janan Tk20 lakh, and Hasina Akther Tk5 lakh. The penalties were imposed in the last week of April.

According to the law, any investor who wants to hold or acquire more than 10% of the shares in a listed company must announce their intention through the stock exchange before the transaction.

However, these investors did not follow this rule and failed to make the necessary announcement.

With this, they transacted shares “unfairly” to make benefits, according to the BSEC officials who spoke on condition of anonymity.

This is the third time Md Saif Ullah and AG Mahmud have been fined within a span of one and a half years.

In July 2020, Janata Insurance’s share price was around Tk14.7, which rose 337% to Tk63.2 within nine months without any price-sensitive information, according to the Dhaka Stock Exchange website.

After that, in July 2023, its share price stood at the Tk27 level but rose 83% to Tk49.6 without any valid reason.

Earlier, in March this year, the BSEC also fined Md Saif Ullah and AG Mahmud Tk55 lakh in total for manipulating the share prices of Index Agro Industries, a publicly traded feed maker.

An investigation by the commission found that AG Mahmud and Md Saif Ullah were engaged in manipulating the share prices of Index Agro.

Consequently, the commission fined AG Mahmud Tk25 lakh and Md Saif Ullah Tk30 lakh for violating securities laws by trading shares.

According to the DSE, Index Agro Industries’ share price was around Tk60 in May 2021, which rose 145% to Tk147 in a few months without any available price-sensitive information.

In April 2022, its share price stood at Tk90 but rose 72% to Tk155 without any valid reason.

In October 2022, the commission had fined AG Mahmud and Md Saif Ullah for manipulating share prices as well.

At that time, AG Mahmud was fined Tk3 crore for manipulating the share prices of National Feed Mills, while Md Saif Ullah was fined Tk85 lakh. Saif Ullah was also penalised Tk25 lakh for manipulating Safko Spinning’s shares.

Earlier, the commission had penalised four individuals, including AG Mahmud, Saif Ullah, Kazi Sadia Hasan, and DIT Co-Operative Limited, a total of Tk2.40 crore for manipulating Bangladesh National Insurance Company Limited shares, even though the four investors made a profit of around Tk5 crore from the scheme.

The commission also fined Md Abdul Quader Tk1 lakh for violating rules in share transactions of Regent Textile Mills Limited.