DSE wants cos inspection power without BSEC consent

Mostafizur Rahman | Updated at 10:38pm on August 17, 2018

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A file photo shows the Dhaka Stock Exchange building at Motijheel in Dhaka. --New Age photo

The Dhaka Stock Exchange is going to request the Bangladesh Securities and Exchange Commission to give the bourse authority to inspect offices and factories of the listed companies and investigate their business affairs without prior permission of the regulator.
The bourse thinks that seeking BSEC permission before conducting such drive kills time and thus it allows the companies concerned to cover up their non-compliances, DSE officials said.
They said the DSE board recently agreed in principle to seek the authority after the Eid-ul-Azha holidays.
Eid-ul-Azha, one of the biggest religious festivals of Muslims, will be celebrated across the country on August 22. The bourse will remain closed in August 21-25 due to the Eid holidays and weekly holidays.
According to the DSE listing regulations, the stock exchange, on cause, may inspect at any time, if it is necessary to conduct an inspection for the interest of investors, the affairs of any issuer of listed securities with prior approval of the commission.
The bourse has to request the commission in writing if it desires to inquire into documents, information or explanation relating to the affairs of the issuer of listed securities.
According to a number of senior DSE officials, when the stock exchange requests for permission of inquiry into companies, it takes more than two-three weeks to get the permission from the regulator and the time is enough for companies to do facelift jobs.
There are a good number of listed companies which are running their business with violation of corporate governance guidelines, irregularities and mismanagement and have remained out of accountability and trial, the officials said.
Lack of accountability increases malpractices that ultimately harms the general investors and makes the market a chaotic place, they said.
They also said that the bourse together with the BSEC recently cracked down on a good number of companies for remaining out of production for years and for not holding annual general meetings and declaring dividends.
Meanwhile, the BSEC has given permission to the Chittagong Stock Exchange to inspect offices and factories of three out-of-operation companies — Emrald Oil Industries, Beach Hatchery and C&A Textiles — due to not holding annual general meetings and submitting various financial reports.
The commission recently gave the permission after the port city bourse on July 19 sought consent to conduct inspection of the affairs of the three listed companies.
The bourse will soon visit the three companies’ offices and factory premises.
Emerald Oil earlier informed the CSE that the company had been facing problem since the filing of a law suit by the Anti-Corruption Commission regarding loan scam of BASIC Bank.
CSE officials said that the company did not hold AGM in 2017 and did not submit audited financial accounts for the year ended June 30, 2017 and a number of quarterly financial statements.
Following unusual and astronomical hikes in the prices of shares of low-profile scrips, the BSEC on August 16 suspended trading of the shares of three companies — Monno Jute Stafflers, BD Autocars and Legacy Footwear — for next 30 trading days.
It also sent five other companies — Monno Ceramic Industries, Key&Que, Aziz Pipes, Stylecraft and Dragon Sweater and Spinning — to the spot market for an indefinite period for the unusual price hike of their shares.
Earlier, on July 18, the DSE delisted Rahima Food Limited and Modern Dying and Screen Printing Limited as the companies remained out production for more than five years. The premier bourse also decided to take punitive action against 15 other dud companies.
The BSEC and the country’s two bourses took the punitive measures against non-performing and low-profile companies amid criticisms against the regulator and the stock exchanges for their inaction in this regard.