Bangladesh Securities and Exchange Commission on Thursday formed a committee and asked it prepare necessary proposals on a notification regarding reconstitution of boards of companies remaining in the ‘Z’ category in the stock exchanges for more than a year.
The decision was made at a commission meeting presided over by its chairman M Khairul Hossain, said a press release.
It said that the commission formed the three-member committee headed by its director Mansur Rahman to assess the BSEC notification issued in 2002 on ‘Z’ category companies which remained in the category for more than a year.
According to the notification issued in 2002, the existing board of directors of the issuer company of a listed security which remains in the ‘Z’ category for one year or more must reconstituted by holding extra-ordinary general meeting within six months.
The committee was asked to submit necessary recommendations on the notification, the release said.
The commission made the move after continuous criticisms about the companies which have remained in the ‘Z’ category, which groups low-profile companies, for years without any business operations.
Most of the ‘Z’ category companies do not maintain basic regulatory requirements and do not provide dividends to their shareholders.
Despite having no business operations, the share prices of most of the ‘Z’ category companies often rose abnormally amid manipulation.
Considering the overall market situation, Dhaka Stock Exchange has recently requested BSEC to delist four companies and send them to the over-the-counter market.
The commission has preferred board re-constitution of the companies to delisting as per the existing rules, BSEC officials said.
They said that the committee would work to bring changes in the directive and resolve some issues.
As per the current rules, the existing board would appoint new board members.
BSEC officials said it would never happen because of their unwillingness of leaving the board.
A new directive might force these dud companies to restructure their boards for failing to improve their business, they said.
The existing notification also said, ‘In case the issuer fails to show improved operational and financial performance of the company within twenty four months from the date of reconstitution of the board, it shall take appropriate measures for dissolution of the company, including merger or winding up, as per law, after taking the shareholders’ approval by holding extra-ordinary general meeting within three months of expiry of the said twenty four months.’
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