Regulator's instruction to OTC cos to shift to ATB not heeded

Non-operational, most of them still have shares in paper form

MOHAMMAD MUFAZZAL | Tuesday, 28 February 2023

Nearly one and a half years have passed after the securities regulator asked 18 companies of over-the-counter (OTC) market to shift to the Alternative Trading Board (ATB), but there has hardly been any move to comply with the directive.
Trading on the ATB debuted on January 4 this year with LankaBangla Securities and PRAN Agro guaranteed bonds. No other securities could be added to the list since then. The platform was introduced to facilitate the growth of non-listed companies, any kind of bonds, debenture, sukuk, open-end mutual funds, and alternative investment funds.
"Many of the companies are not in operation," said M Shaifur Rahman Mazumdar, acting managing director of the Dhaka Stock Exchange (DSE), while talking about the transfer of OTC companies.
It is expected that if the companies start functioning again and move to the ATB, investors will show interest in them.
The Bangladesh Securities and Exchange Commission (BSEC) issued the directive in September 2021.
The OTC market is meant for those companies that are not in operation or have failed to hold annual general meetings or have not declared dividends or did not convert their paper shares into digital form.
The securities regulator formally launched the OTC market in September 2009, in an effort to facilitate share trading of the companies delisted from the main board for poor performance.
At present, 56 companies are in the OTC market. Of those, 18 including United Airways were supposed to transfer to the ATB through direct listing.
DSE officials said six of the 18 companies could not even be tracked down. And the remaining companies are not in operation.
Among those, United Airways is bent under mounting liabilities.
In February 2021, the securities regulator restructured the board of United Airways in order to resume its operation.
Efforts are on to revive the other delisted companies as well, which had been instructed to move to the ATB.
The main barrier to the inclusion of the companies on the ATB platform is that their shares are still in paper form. United Airways is an exception, having already digitised its shares.
Kazi Wahidul Alam, chairman of the new board, said United Airways could not restart flight operations even after some measures.
He said the aviation authority was not allowing the company to operate flights for its dues amounting to Tk 4 billion.
"We have appealed to the aviation ministry to waive surcharge and pave the way for payment of dues in installments," Mr. Alam said.
He added the board had planned to run two cargo flights on rents after selling out old aircraft.
The other 17 OTC companies, which were asked to transfer to the ATB, are Bangla Process Industries, Dandy Dyeing, Dynamic Textile Industries, Metalex Complex, Mita Textiles, Modern Cement, Modern Industries, Mona Food Products, Perfume Chemical Industries, Petro Synthetic Industries, Pharmaco International, Quaserm Silk Mills, Quasem Textile Mills, Raspit Inc. Bd., Rose Heaven Ball Pen, Saleh Carpet Mills, and Sreepur Textile Mills.
The objective of the transfer of the companies to the ATB is to facilitate the exit of investors having shares in the companies that had been delisted from the main board, said BSEC spokesperson Mohammad Rezaul Karim.
"It would create liquidity flow and investors of the OTC companies will get scope for exit," he added.
The OTC market had transactions of 13 companies in 2022, with shares worth Tk 405.75 million traded between January 1 and December 31.
Shares of only two companies worth Tk 26.08 million changed hands between January 1 and February 26 this year.
After the launching of the OTC market, some of the companies were transferred back to the main board following improvements in operations and the regulatory compliance.

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