Six more poor-performing companies were downgraded to 'Z' category, which comes into effect today (Monday), as they failed to hold annual general meeting (AGM) in time.
The companies are Active Fine Chemicals, AFC Agro Biotech, Fareast Life Insurance, New Line Clothing, Prime Finance & Investment, and Prime Textile Spinning Mills.
The Bangladesh Securities and Exchange Commission (BSEC) on February 15 issued a directive, saying any listed company shall be labelled as 'Z' stock for failure to hold the annual general meeting in time, and for failure to provide any kind of dividend for two consecutive years.
The companies, which have been out of operation for more than six months, or have accumulated losses or negative retained earnings exceeding the paid-up capital, will also be punished in the similar fashion.
Investors cannot take margin loans to buy shares of these junk companies, and their trading requires three days (T+3) to be settled, instead of the usual two days for regular stocks.
Earlier on February 18, the Dhaka Stock Exchange (DSE) downgraded 22 companies to 'Z' category.
Out of the 22 companies, 15 companies' accumulated losses exceeded their paid-up capitals, production of four firms remained suspended for more than six months, and the rest failed to hold the annual general meeting on time.
With the latest six companies, the total number of 'Z' category companies reached 55.
"The stock brokers and merchant bankers are requested to abstain from providing loan facilities to purchase stocks of these companies from Monday," reads a DSE statement.
Despite the news of stock transfer, most of the six companies saw stock price rise; four stocks rose between 0.23 per cent and 9.18 per cent on Sunday.
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