The capital market in Bangladesh has not become stable yet. And currently it is behaving irrationally. The Bangladesh Securities and Exchange Commission has for long been emphasising institutional investment in the market. But the institutions do not feel confident about investing. On the other hand, millions of small money savers are looking for a profitable scope of investment. Although most of the listed companies are earning well, they do not seem to spend much in dividends. Many shareholders have already suffered losses against their investment since listed companies paid them very low dividends. The stock market regulator has not yet formed any policy on reserve and dividends.
The BSEC authorities can have a look at the following measures to bring about positive changes in the market.
1) Listed companies' board of directors should hold more than 50 per cent shares.
2) They must not be allowed to keep reserve (retain earnings) more than their paid up capital.
3) They cannot be allowed to transfer more than 25 per cent of yearly net earnings in reserve in a year.
4) They must pay minimum 75 per cent of yearly net earnings as dividends to shareholders.
If these restrictions are applied in the capital market, both individuals and institutions will feel interested in investing in shares. The market will not face any scarcity of liquidity . And shares will not stay undervalued.
Md Ashraf Hossain,
120, Middle Bashabo, Dhaka,
mah120cb@yahoo.com
Bringing about positive changes in capital market
FE Team | Published: April 16, 2022 19:24:50
Bringing about positive changes in capital market
Share if you like