The Bangladesh Securities and Exchange Commission (BSEC) has asked 64 companies to make plans on how they would meet the minimum paid-up capital criteria to stay on the main stock exchange board.
The commission sent letters to businesses in this regard last week.
According to the listing regulations of the Dhaka Stock Exchange, a company must have a minimum paid-up capital of Tk 30 crore.
Earlier in September this year, the commission formed a committee to review the general condition of these companies and seek a mechanism to improve the financial performance of low-wage companies.
Companies were asked to submit their plan reports to the commission within 30 days of receiving the letters.
Of these companies, 13 companies keep paid-up capital below Tk 5 crore, 17 companies are below Tk 10 crore, 20 companies are below Tk 20 crore and the rest of the companies remain below Tk 30 crore in the capital market.
20 companies recorded a loss in the first quarter of the current fiscal year. And 7 companies remain on the list with paid-in capital of less than Tk 30 crore.
Companies with paid-up capital greater than Tk 20 crore will now have to comply with the rule by June 30, 2022.
In addition, companies with paid-up capital of less than Tk20 crore will have to comply with this rule by December 31, 2022.
Sources have said that small cap scripts are volatile and lack liquidity.
BSEC is asking them for plans on how they would meet the minimum paid-up capital criteria to stay on the main stock exchange board, they added.
By analyzing their submitted plans, the commission would propose the next steps that it further added.
“We don’t want to see any low-wage companies in the capital market as per the rule. Because it tarnishes the image of the stock market,” said Dr Sheikh Shamsuddin Ahmed, BSEC commissioner.
He said there are several options for complying with the rules for businesses, such as raising capital through fresh funds. If companies fail to raise capital; they have another option.
“We can transfer them to the SME platforms from the main stock exchange board. If the business does not apply to the SME platform, we can deal with them in another way,” he said. added.
He said low-paid scripts are mostly volatile and some investors may actively use this malicious motive.
It is not possible to comply with the rule by distributing stock dividends. Because it will increase the number of shares of the company and it may be possible. The commission wants the company to raise capital with new funds, he added.
The paid-up capital of Sonali Paper and Board Mills is currently Tk 21.96 crore.
Rashedul Hossain, general secretary of Sonali Paper and Board Mills Ltd, said that “we have received a letter from the regulator in this regard by post”.
“We have asked the commission to issue shares to increase its paid-up capital subject to regulatory approval.”
“We will be able to comply with the rule if we get the approval of the request,” he added.
JMI Syringes & Medical Devices, remaining at Tk 22.10 crore, has yet to receive a letter from the regulator. Company secretary Muhammad Tarek Hossain Khan said management would decide after receiving the letter.
Meanwhile, the price of most small cap stocks rose sharply over the past week.