The regulatory body Bangladesh Securities and Exchange Commission (SEC) has taken a number of decisions to bring back Z-listed companies to normal production and profit. One of these is to reduce the transaction settlement deadline of Z category companies to four days. At present it takes T + 9 i.e. 10 days to settle the transaction of such company.
The BSEC has also taken steps to ensure institutional good governance in the ‘Z’ category of companies by restructuring the company’s board, banning the sale and transfer of shares to entrepreneur-managers, online voting of shareholders as well as hiring observers.
Such a decision has been taken at the recent meeting of BSEC. The commission said a notification would be issued soon, canceling all previous notifications and orders on the ‘Z’ category. These decisions have been taken in view of the overall situation of the ‘Z’ category companies listed on the stock exchange and the restructuring of the board of directors.
Meanwhile, the capital market stakeholders said that the transaction time of the ‘Z’ category company has been reduced. If the transaction settlement deadline is then reduced, it will not be good for the market. This will increase the risk of manipulation. However, if the conditions of other reforms mentioned by BSEC are met earlier, it will not have a negative impact on the market.
In this context, capital market analyst Professor Abu Ahmed said, first of all, the management of such companies must be changed. There are other reforms that need to be done as well. Then the transaction deadline should be reduced. Otherwise, there is a risk of manipulation of these shares in the market.
Companies that have stopped production, failed to pay dividends to shareholders, and failed to hold annual general meetings (AGMs) fall into the ‘Z’ category. Trading in shares of a company in this category takes a long time. Other categories of stock exchange transactions take three days to be settled but in Z category it takes 10 days. In addition, margin loan facility is not available in Z category shares.
Transfers of shares held by all Z Category Entrepreneurs and current Managers will remain suspended. Companies in this category will have to hold an Annual General Meeting (AGM) within the next six months. In addition, AGMs and EGMs (special general meetings) have been made mandatory to have the facility of e-voting or online voting through digital platform or hybrid system.
The SEC also said that if companies that have been in the Z category for two years or more fail to reconstitute the board within 45 working days, the current directors and entrepreneurs will not be able to remain as directors of any of the other listed companies and capital market intermediaries.