BSEC relaxes rule allowing Sonali Paper to issue rights share
As per the guidelines, a company cannot issue the right shares within three years of listing on the main board of the stock exchanges
The stock market regulator has approved the relaxation of a rule relating to issuing right shares of the Sonali Paper and Board Mills, a concern of Younus Group of Industries to comply with the regulatory obligation to maintain a minimum paid-up capital of Tk30 crore.
Dr Shaikh Shamsuddin Ahmed, Bangladesh Securities and Exchange Commission (BSEC) commissioner said the commission has decided to exempt the firm from a rule relating to issuing the right shares so that it can fulfil the over Tk30 crore paid-up capital.
Company Secretary Rashedul Hossain Imon said, "We did not get any letter yet from the commission".
As per the guidelines, a company cannot issue the right shares within three years of listing on the main board of the stock exchanges and Sonali Paper got relisted on the bourses only one year ago.
Currently, the paid-up capital of the company is Tk21.96 crore.
The company wants to increase its paid-up capital by issuing rights shares at a ratio of 1R:2 (1 right share against 2 existing shares held) at Tk10 per value.
Earlier, the regulator appointed a special auditor for the company to look into its assets that were revalued in 2016 through SH Khan & Co Chartered Accountants.
The Dhaka Stock Exchange (DSE) transferred the company to the over-the-counter (OTC) market in October 2009 due to continued poor performance.
In July 2020, the company relisted on the main board of the stock exchanges taking exemption from the listing regulations.
Its principal activities are manufacturing and marketing of media, liner, simplex, duplex paperboard, and quality papers such as newsprint.
The share price of the company witnessed an unusual hike of around 337% over the last nine months. The company has focused on the capital market instead of the manufacturing business.
In the July-December period of 2021, its operating income increased by 47% compared to the same period of the previous year.
The company has invested Tk45.37 crore in the capital market but its inventories are worth only Tk31.76 crore.
A big portion of the revenue has been generated through capital market investment.
Sonali Paper & Board Mills was incorporated in 1977 and got listed on the Dhaka Stock Exchange in 1985 and on the Chittagong Stock Exchange in 1996.
Younus Group took over the company after buying all shares in 2006.
After 17 years of acquisition, the new management has applied for bringing the company back to the mainboard in 2020.
As of 28 February 2022, sponsors and directors jointly held 67.51%, institutions 7.69%, and the general public 24.80% shares in the company.
The last trading share price of the company on the Dhaka Stock Exchange was Tk876.40 per share on Thursday.
