BSEC’s exit plan for junk companies

Dhaka (December 29, 2020): The securities regulator BSEC has made an exit plan for the poor-performing companies in the stock exchanges.

Analysts welcomed the move saying it will help recoup losses and protect the interest of investors.

Under the exit plan, the delisted companies will have to buy back the securities at the offer value or last trading price, whichever higher, said the Bangladesh Securities and Exchange Commission in a directive on Monday.

“The offer price for buying securities under the exit plan must be the issue price at the time of IPO in case of such securities traded below the face value subject to the approval of the securities regulator,” said the directive.

Any issue manager of securities delisted from the main board of the stock exchanges, trading at the over-the-counter platform, alternative trading board, or any other securities as directed by the regulator will be allowed to apply in line with the exit plan.

Any company that has not been in commercial operation for the period of more than two years, made a net loss for a period of consecutive three years, failed to declare any dividend in cash for a period of consecutive three years, or fail to hold an annual general meeting for a period of two years will fall in the exit plan, according to the BSEC.

“This is a good move,” said Md Moniruzzaman, the managing director of IDLC Investments. “Delisted companies offer nothing. The investors who bet on the stocks years back will get the scope to offset their losses,” he said.

Another analyst, however, said there should have been capital punishment for the directors found guilty for pushing the financial situation of the companies down.