SEC won't allow trading of paper shares after Sept
Saturday, 26 June 2010
FE Report
The Securities and Exchange Commission (SEC) said Thursday it is determined to send the shares to over-the-counter (OTC) market for trading if the concerned companies fail to dematerialise or transform them into electronic shares by September 30.
"We have warned the companies several times and gave them enough time to dematerialise their shares. But they did not pay heed to us," a senior SEC official said.
On May 25 last, the SEC issued a directive saying that from July 1, 2010, no paper share would be traded in 'B' category.
And from October 1 no paper share will be traded in the bourses.
As per the directive, the 'B' category companies of paper shares will be shifted to 'Z' category from July 1.
Currently, the paper shares of 48 listed companies with a capital of Tk.707.33 million are being traded in 'B' and 'Z' categories in the bourses.
Central Depository Bangladesh Limited (CDBL) said by 30 June of 2010, the demating of Prime Textile and Rahima Food will be completed and by June and the demating of another five companies will be completed.
The CDBL also said the companies are reluctant to communicate with us for demating purpose of their shares.
"If the remaining 41 companies do not communicate with us by July, we will not be able to demat their paper shares by September of the year," Shuvra Kanti Choudhury, chief financial officer of the CDBL, told the FE.
However, if a reasonable number of companies of paper shares are sent to the OTC for not demating their paper shares, the general shareholders of these companies will be affected.
Salman F Rahman, the president of the Bangladesh Association of Publicly Listed Companies, said the general shareholders will not be affected as the free float portion of these companies is very small.
"There is no data on free float portion of shares available at the moment. But I think it's not a major problem as these companies are not big," Mr. Rahman said.
But, according to the profiles of these companies, there are 23 to 59 per cent shares of these companies are in the hand of general shareholders.
Mr. Rahman, however, said the BAPLC could initiate discussion with the companies that are reluctant to demat their paper shares.
The Securities and Exchange Commission (SEC) said Thursday it is determined to send the shares to over-the-counter (OTC) market for trading if the concerned companies fail to dematerialise or transform them into electronic shares by September 30.
"We have warned the companies several times and gave them enough time to dematerialise their shares. But they did not pay heed to us," a senior SEC official said.
On May 25 last, the SEC issued a directive saying that from July 1, 2010, no paper share would be traded in 'B' category.
And from October 1 no paper share will be traded in the bourses.
As per the directive, the 'B' category companies of paper shares will be shifted to 'Z' category from July 1.
Currently, the paper shares of 48 listed companies with a capital of Tk.707.33 million are being traded in 'B' and 'Z' categories in the bourses.
Central Depository Bangladesh Limited (CDBL) said by 30 June of 2010, the demating of Prime Textile and Rahima Food will be completed and by June and the demating of another five companies will be completed.
The CDBL also said the companies are reluctant to communicate with us for demating purpose of their shares.
"If the remaining 41 companies do not communicate with us by July, we will not be able to demat their paper shares by September of the year," Shuvra Kanti Choudhury, chief financial officer of the CDBL, told the FE.
However, if a reasonable number of companies of paper shares are sent to the OTC for not demating their paper shares, the general shareholders of these companies will be affected.
Salman F Rahman, the president of the Bangladesh Association of Publicly Listed Companies, said the general shareholders will not be affected as the free float portion of these companies is very small.
"There is no data on free float portion of shares available at the moment. But I think it's not a major problem as these companies are not big," Mr. Rahman said.
But, according to the profiles of these companies, there are 23 to 59 per cent shares of these companies are in the hand of general shareholders.
Mr. Rahman, however, said the BAPLC could initiate discussion with the companies that are reluctant to demat their paper shares.