24 companies set to miss deadline

FE Report (September 20, 2010)

Twenty-four companies are set to be removed from the main board to the over-the-counter (OTC) market as they are going to miss the deadline of the securities regulator for converting paper shares to electronic forms.

The securities regulator has given four months' time, which will expire on September 30, to dematerialise their shares in a bid to bring transparency in the trading system.

The Central Depository Bangladesh Limited (CDBL), which covers settlement of trades on the stock exchanges, needs 20 working days to transform paper shares into electronic ones.

"The companies that have failed to comply with the directive will be placed in the OTC market," Yasin Ali, a member of the Securities and Exchange Commission (SEC) told the FE.

Asked if the regulator will extend the time for dematerialisation, he said, "There is no scope for time extension as enough time has already been given."

The 24 companies include Alpha Tobacco, Yousuf Flour, Bangladesh Plantation, Hill Plantation, Gulf Foods, Modern Industries, Northern Jute, Quasem Silk, Modern Dyeing, Alltex Industries Ltd, Anlima Yarn, Bangla Process, Therapeutics, Orion Infusion, Azadi Printers, Bangladesh Hotels, Bangladesh Services, Niloy Cement, Samata Leather, The Engineers, Himadri.

"It takes around 20 working days to convert paper shares into electronic forms," said Shuvra Kanti Choudhury, CDBL's chief financial officer.

"Very few companies, however, rushed to us at the eleventh hour but most of them are yet to communicate," he said adding that share dematerialisation would not be possible within the remaining days of the deadline.

Paper shares make up less than one per cent of the total market capitalisation and less than 10 per cent of the total issues traded on Dhaka Stock Exchange.

On June 1, 2010, the SEC, in a directive, said no paper securities shall be transacted in the stock exchanges from October 01, 2010.

Since then, 26 companies have dematerialised their paper shares and joined the electronic trading system, which was introduced in January 2004.

Presently, shares of 51 companies de-listed from DSE are being traded in the OTC market.

In September 2009, the DSE introduced the OTC market - a separate floor to facilitate trading of the non-listed and de-listed companies.