Dhaka, Ctg bourses ordered to explain failure in reporting on Z cos

Both the stock exchanges have not reported to the securities regulator on operations of Z category companies, ignoring a 2020 order that was aimed at turning the firms into profitable entities.
The Bangladesh Securities and Exchange Commission (BSEC) has demanded that both the Dhaka and Chittagong stock exchanges explain their inaction by Sunday.
According to a directive issued in September 2020, the stock exchanges should have kept watch on "every phase of activities" of the companies and reported to the commission.
"The commission did not receive any report," reads a letter sent to the bourses on July 4, since the issuance of the directive.

Active managing director of the Dhaka Stock Exchange (DSE) M. Shaifur Rahman Mazumdar, however, said the prime bourse had communicated different matters to the commission time to time.
Now the DSE will see if there is anything left unreported to the commission, he added.
Referring to the chief regulatory officer of the Chittagong Stock Exchange (CSE), its acting managing director Md. Ghulam Faruque said the bourse had submitted reports on a regular basis on Z companies.
"We will give a reply [to the latest later] the next working day," added Mr. Faruque.
The 2020 order was meant to contain fraudulent activities by Z category companies.
The BSEC imposed restrictions on buy or sell or transfer of shares by sponsors and existing directors of such companies without prior approval of the commission.
In the order, it said the board of a company shall be reconstituted in 45 working days after its placement under Z category. The stock exchanges are supposed to monitor matters, such as corporate governance, moves taken by the new boards and their implementation.
The main objective of board restructuring is to make the companies profitable.
Within six months after a new board is formed, it has to identify reasons for the company's failure in operating and performing profitably, and identify the person(s), if any, who were responsible for it.
The new board is also obliged to take appropriate measures, including legal actions, if applicable, against the persons identified for the company's failure.
The board is to prepare a specific and/or detailed proposal for an appropriate action plan or business plan to improve the operational and financial performance of the company.
If the new business plan requires any sale or replacement or transfer of assets of the company, it has to be included in the plan. All matters, including the action plan should be approved by shareholders in a general meeting.
Moreover, copies of the minutes of all meetings of the board of directors and the directors' reports have to be submitted to the stock exchanges.
The bourses were supposed to see if the newly-restructured boards were doing their job in compliance with the 2020 order and keep the commission informed.
But the latest letter from the BSEC to the bourses reveals that there has not been any monitoring of the Z category companies and reporting on them.
When attention drawn to the responses of the exchanges, BSEC spokesperson Mohammad Rezaul Karim said the regulator sought explanation as it did not find any report on the relevant matters.
"The bourses can give their [written] explanations, attaching copies of the reports that they submitted to the commission. But if they did not submit reports, measures will be taken in line with the rules."
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