Downgrading to Z category will be on 28 Feb

There is no possibility to defer the effect of the securities regulator's November 30 directive for downgrading the eligible companies to the Z category on 28 February, according to Professor Shaikh Shamsuddin Ahmed, commissioner of the Bangladesh Securities and Exchange Commission (BSEC).

"For the category denomination of listed companies, the stock exchanges will follow the rules, and there is no plan to deviate from the latest directive issued by the BSEC on November 30," he said, busting a market rumour that the regulator might further extend its hand to the weaker company stocks.

On 30 November, the regulator gave the market the roadmap for coming out of its 1 September 2020 ad hoc measure for market support amid the pandemic challenges.

It let firms stay in regular categories like A and B for two years without paying any dividends, while the bourses used to downgrade companies to the Z category if they failed to pay any dividends for the past year, remained out of operations for six months, or failed to hold annual general meetings within the stipulated time.

The September 2020 relaxation was a crisis time measure so that investors and the market do not suffer too much, and it is not relevant in the present market situation, Professor Ahmed told TBS on Sunday.

The relaxed criteria for category downgrading did come with a stricter consequence for the directors of the company concern as it led to board reconstruction then, and the 30 November, 2023 directive that repealed the 1 September 2020 order also repealed the toughest consequences of downgrading to the Z category, said M Shaifur Rahman Mazumder, managing director of the Chittagong Stock Exchange (CSE).

After the 30 November 2023, directive, the Dhaka Stock Exchange found more than 60 listed companies eligible to be downgraded to Z category.

Its MD ATM Tariquzzaman said, "We are updating the list based on the present information of the companies."