Union Bank, Sea Pearl, Sonali Life downgraded to Z category
None of the three firms sought an extension from the BSEC to hold their AGMs within the required timeframe
The Dhaka Stock Exchange (DSE) has downgraded Union Bank, Sea Pearl Beach Resort, and Sonali Life Insurance to the Z category due to their failure to hold annual general meetings (AGMs).
In an announcement today (15 January), the DSE stated that the reclassification complies with a securities regulator directive issued on 20 May last year.
The directive mandates that any issuer failing to conduct its AGM within the stipulated time frame must be moved to the Z category, commonly referred to as the junk stock category.
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According to DSE listing regulations, companies are required to hold their AGMs within 45 working days after the record date which is set during the year-end board meeting.
But none of the three firms sought an extension from the Bangladesh Securities and Exchange Commission (BSEC) to hold their AGMs after failing the deadline. Consequently, the DSE decided to downgrade their categories.
Following the downgrade, Union Bank's share price remained unchanged at Tk4.60, while Sonali Life shares dropped by 9.65% to Tk41.20, and Sea Pearl Beach Resort shares plunged 7.76% to close at Tk29.70 at the DSE yesterday.
Union Bank's ongoing struggles
Union Bank, owned by the S Alam Group, had initially scheduled its AGM for 12 August last year. However, on 7 August, the bank's board of directors in a meeting decided to postpone the AGM, citing unavoidable circumstances.
The AGM was postponed reportedly due to inactivity among the bank's directors after the fall of the Awami League government. As of now, the AGM for the year of 2023 has not been rescheduled.
The bank's board recommended a 5% cash dividend for 2023, but it has been unable to disburse the dividend without AGM approval.
On 27 August, Bangladesh Bank dissolved Union Bank's board and appointed five independent directors to oversee its operations.
In the July-September quarter of 2024, Union Bank reported a loss per share of Tk0.77 and a net operating cash deficit of Tk19.50 per share.
Sea Pearl's delayed AGM and losses
Sea Pearl Beach Resort had planned its AGM for 28 December 2024 but postponed it on 19 December. The company declared a 7% cash dividend for the last fiscal year, but shareholders have yet to approve the dividend due to the delayed AGM.
Sea Pearl also reported a loss per share of Tk1.05 in the July-September quarter of 2024.
Sonali Life Insurance under regulatory scrutiny
Sonali Life Insurance has yet to declare a dividend, publish its audited report, or schedule its AGM for 2023.
The insurance regulator dissolved the company's board following allegations of fund embezzlement by its owners and appointed an administrator to safeguard the life fund collected from clients.
