OTC firms to face regulator’s hearing
The regulator has directed the firms to submit their detailed business affairs and action plans
KEY TAKEAWAYS
- OTC firms will inform the regulator about their present status
- They will submit specific proposals and detailed action plans
- DSE launched its OTC in October 2009 with 51 companies
- 60 firms are listed in the OTC market as of 1 October, 2020
- In many cases, investors clocked big losses in those firms
The stock market regulator will hold a hearing separately for the companies listed in the over-the-counter (OTC) market to know why the firms want to stay there.
The Bangladesh Securities and Exchange Commission (BSEC) has already issued letters to the firms in this regard. The BSEC has directed the firms to submit specific and detailed proposals along with appropriate action plans of the companies.
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The regulator in the letter told the firms to craft their future plans to be submitted reflecting on operational and financial improvement so that they come to the main market after being profitable.
The company management will have to be present at the commission with all members of the board of directors, managing director, chief financial officer and company secretary at the hearing.
The documents the firms will have to submit include a copy of audited financial statements, present financial status and all assets of the company, present shareholding position of all sponsors and directors to the commission.
Besides, it will have to submit copies of prospectus Initial Public Offering (IPO), repeat public offering and return on debt of the company.
The firms also will submit the statement IPO fund and its utilisation reports, statements of inventories and statements of present liabilities with all banks and other documents relating to sanction letters of loan facilities.
The OTC market is a facility provided by a stock exchange for buying or selling delisted securities from the exchange.
Earlier, BSEC asked the stock exchanges to appoint a special auditor to review the business affairs of 21 listed OTC firms who are in operation.
Consequently, the regulator also asked to physically visit 43 companies in the OTC market that are not in operation.
The regulator thinks these companies are not growing properly and their shareholders are not getting returns on their investments.
In many cases, investors lost almost all their investments in those companies. This is detrimental to the interest of investors and undesirable to the commission.
Market insiders said it is very important to restructure the OTC market. They need to be more accountable because investors have already lost their enthusiasm about trading in this market.
They also said it is important that an appropriate liquidation process is ensured before delisting the companies. If it is possible to do this, the losses of the investors will decrease a little bit, they opined.
The DSE launched its OTC in October 2009 with 51 companies. In the second phase, 29 more companies were sent to the OTC.
Later, 14 companies managed to come back to the main market by complying with relevant rules and performing better in their business. Besides, six companies were delisted from the stock exchange.
Thus, the total number of securities under the OTC facility stood at 60 as of 1 October, 2020.
