The Bangladesh Securities and Exchange Commission (BSEC) has planned on letting 21 companies exit from Over the Counter (OTC) market of the country's stock exchanges.
The stock market regulator has already directed the bourses to take necessary measures within one month.
The companies are Arbee Textiles Ltd, Azadi Printers Ltd, Bangladesh Chemical Industries Ltd, Bangladesh Dyeing & Finishing Ind. Ltd, Bangladesh Luggage Industries Ltd, Bangladesh Zipper Industries Ltd, Chic Textiles Ltd, Eagle Star Textile Mills Ltd, and German Bangla JV Food Ltd.
Gulf Foods Ltd, Hill Plantation Limited. Jessore Cement Company Limited, M Hossain Garments Washing & Dyeing Limited, Maq Enterprises Ltd, Phoenix Leather Complex Ltd, The Engineers Limited, Tulip Dairy and Food Products Ltd, Padma Printers and Colors Ltd, Bangladesh Plantation Ltd, Khaza Mosaic Tiles & Stone Industries Ltd, and Jago Corporation Ltd are also included in the list.
Sources said the regulator has finalised approval of the exit plan of these 21 companies after discussions with their management.
However, the sponsor-directors of each of these companies will have to take care of the interest of their stock investors as per the BSEC guideline, they added.
Sources also said the Dhaka and Chattogram bourses are working as per the regulator's directive in this respect. The exits would take place one after another.
As a part of its stock market overhauling plan, the BSEC issued a directive on company delisting last year, which dictated sponsor-directors to buy out public investors' shares before they leave the bourses.
If a company is involved in money laundering, terrorism financing, illegal business, or subversive activities, the commission may direct it to apply for delisting.
Also, underperforming companies that do not foresee any potential to come back in business can apply for delisting.
Delisting criteria also include not being in operations for more than two years, incurring net losses or failing to pay cash dividends for more than three years, accumulated losses exceeding paid-up capital, or failing to hold shareholders' general meetings for two consecutive years.
The BSEC, assisted by the bourses, decided to bring some OTC companies – that showed the potential of a comeback in business – back to the newly constructed trading platforms – SME Platform and Alternative Trading Board.
Of those, eight companies that are still in operation and 13 which are not in operation have been directed to shift to the SME Platform of the bourses, where new small-cap companies also are applying to get into.
Of the more than six dozen OTC companies, 19 have been directed to shift to the Alternative Trading Board (ATB) of the bourses.
The ATB will have fewer buyers and sellers compared to that in the main trading boards of the bourses, but there would be better opportunities to buy and sell securities compared to what the almost dormant OTC market is offering.
General investors will be able to buy and sell shares on the ATB platform. But, they will be able to only sell on the small-cap platform.
Earlier, the stock exchanges conducted special audits of the financial statements of 21 companies in the OTC market.
Also, the exchange officials physically visited 43 companies in the OTC market that are not in operation.
The exchanges investigated all financial and non-financial information of those companies. They checked the existence of land, buildings, and property to assess their value, and prepared their recommendation report for the BSEC.
The DSE launched its OTC in October 2009 with 51 companies that were ousted from the main trading board due to their non-performance in business or non-compliances in the market.
In the second phase, 29 more companies were sent to the OTC.
Meanwhile, around a dozen companies came back to the main market as they demonstrated improvement in business alongside complying with securities regulations.