BSEC seeks roadmap from 60 firms on Tk30cr capital compliance
The Bangladesh Securities and Exchange Commission (BSEC) has again requested that 60 listed companies submit a clear roadmap outlining how they plan to comply with the minimum paid-up capital requirement to remain listed on the main board of the stock exchanges.
The commission issued letters to the companies in this regard before Eid al-Adha vacation.
According to the listing regulations of the Dhaka Stock Exchange and Chittagong Stock Exchange, a company must have a minimum paid-up capital of Tk30 crore to remain listed on the main board. The regulator considers failure to comply with this requirement a clear violation of securities laws.
A BSEC official, speaking on condition of anonymity, said, "The commission had previously instructed these companies to raise their paid-up capital, but most failed to comply. This time, we are taking a stricter stance."
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He added, "Companies that fail to meet the requirement within the specified timeframe may be transferred from the main board to the SME or Alternative Trading Board (ATB) platforms."
However, these decisions will be made on a case-by-case basis. Each company will be given a specific deadline based on the roadmap it submits, and the commission will review its progress before taking further action.
The official also mentioned that some multinational companies are on the list, but due to their adequate reserves, they are expected to comply with the rules more easily.
"As per the rules, we do not want to see any company with low paid-up capital in the capital market, as it damages the market's reputation," the official said.
He explained that companies have several ways to meet the minimum capital requirement, including raising fresh funds. If a company fails to raise new capital, alternative measures will be considered.
"We may transfer such companies to the SME platform. If a company is not eligible for the SME platform, we will explore other options," he added.
He further noted that low-paid-up capital stocks tend to be highly volatile and can be manipulated by some investors with ill intentions.
The official clarified that issuing stock dividends is not a valid way to meet the capital requirement, since it only increases the number of shares without increasing actual capital. The commission wants companies to raise real funds to strengthen their financial base.
Earlier, in December 2021, the regulator asked 64 companies for plans on how they would comply with the minimum paid-up capital criteria to remain on the main board of the bourses.
In that year, the commission formed a committee to scrutinise the overall condition of those firms and look for a mechanism to improve the financial performance of the low-paid companies.
The companies were asked to submit their plan reports to the commission within 30 days after receiving the letters.
Of these companies, 11 firms remain with a paid-up capital below Tk5 crore, 15 firms are below Tk10 crore, 21 firms are below Tk20 crore, and the rest of the firms remain below Tk30 crore in the capital market.
Among these companies, some are performing well. However, several have reported losses, and a few have even shut down their factories. Despite these challenges, the share prices of some of these companies have risen, without any valid information or justifiable reason, raising concerns among investors and market analysts.
Market insiders say that due to low paid-up capital, the shares of these companies tend to be highly volatile. While some investors may profit by investing in such companies, most often, investors suffer losses.
Additionally, many company promoters and directors see this situation as an opportunity and show little interest in increasing the paid-up capital.
