The Bangladesh Securities and Exchange Commission has halted the share trading of Sonali Paper and Board Mills, which was scheduled to begin on the main board of Dhaka bourse on Thursday, as the regulator decided to scrutinise the company’s profile again to avoid criticism.
BSEC on Wednesday asked Dhaka Stock Exchange not to start the trading of Sonali Paper shares until further directives, DSE officials said.
A senior official of BSEC said that the commission felt that the share prices of Sonali Paper, which had been on the over counter market since 2009 before relisting with the DSE main board on Thursday, was much higher compared to that of many better companies.
Share prices of Sonali Paper settled at Tk 273 each on the OTC market on the last trading day on Tuesday and its trading was supposed to start on the bourse at the price on Thursday (July 2).
The commission decided to reassess the company’s profile before allowing trading on the main market to avoid criticism over the approval of low-profiled companies on the market, he said.
After evaluating the company, the commission may impose conditions on it so that its shares can be traded on the main board without affecting the investors and the market, he said.
The commission headed by the new chairman Shibli Rubayat-Ul-Islam is firm in its decision not to allow any fundamentally weak company to trade on the market, the official said.
BSEC officials said that the company had a very small number of floating shares that allowed some investors to raise prices of the shares on the OTC market after the decision of the company’s relisting had been revealed.
It is easy for a scrupulous quarter to manipulate share prices of low-profile companies, a practice which harmed general investors in the past, they said.
In November last year, the then commission headed by M Khairul Hossain allowed the low-profile Sonali Paper to be relisted on the main board and exempted it from complying with more than 15 provisions of the rules, including the requirement to have a minimum paid-up capital of Tk 30 crore and a net positive cash flow for three immediate financial years to be eligible for the DSE main board.
Although the DSE had declined the company’s relisting on grounds of non-compliance with rules, the then commission provided further waivers to enable relisting of the fundamentally weak company.
The DSE in a post on July 2 said, ‘Due to unavoidable circumstances, Sonali Paper & Board Mills Limited will not be traded from July 02.’
Sonali Paper has gradually raised its paid-up capital by declaring bonus dividends since 2011 and its paid-up capital stood at Tk 16.63 crore in 2019.
The company declared no dividends in 2017 and 2018.
Of the 1.66 crore shares of Sonali Paper, 72 per cent is held by its sponsor-directors and around 45 lakh shares are free-float.
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