FE Report (February 03, 2011)
Listed issues will no more be allowed to change their face value, officials said.
The Securities and Exchange Commission (SEC) Wednesday kept in abeyance its notification regarding changing of face value of shares.
The move comes in response to a recent proposal from the Dhaka Stock Exchange (DSE). A number of companies earlier made their shares overvalued by changing their face value.
SEC Chairman Ziaul Haque Khondker told the FE that the notification has been postponed, and no company would be allowed to complete the formalities of changing their face value.
"The fresh order will remain effective until further order," the chairman said.
The SEC spokesman and executive director Mohammad Saifur Rahman said the regulator Wednesday sent letters to the chief executive officers of both the stock exchanges to make the latest order effective.
Earlier, the SEC issued a notification on May 10, 2010, saying that the commission would take initiatives to approve the face value split of shares of the companies, which would complete the required formalities.
By this time, the SEC gave consent to about 63 companies to split the face value of their shares following a government decision, taken on November 5, 2010.
However, the prices of those companies' shares went up abnormally following the declaration of face value split, taken at their extraordinary general meeting (EGM).
Even, the share prices of the companies, which might split face value in near future, also increased unusually. Presently, some companies are going to arrange EGM to split the face value of their shares.
Experts have been criticising this mechanism from the very beginning of its introduction, as a group of people made huge profits using it, though nothing was added to company fundamentals.
Recently, when the stock market experienced a massive plunge, the retail investors urged the authorities concerned either to stop the splitting mechanism or to take initiatives, so that all of the remaining companies can split the face value of their shares at a time.
Later, the SEC urged the government to give its consent for splitting the face value of the shares of the remaining companies at a time.
The regulator's demand was placed at a meeting held recently at the sate guest house Padma, where all the key stakeholders attended. But Finance Minister A M A Muhith refused the proposal.
Finally the SEC postponed its earlier notification Wednesday in line with the government's decision, and from now on no company will be allowed to split the face value of their shares until further order.
Listed issues will no more be allowed to change their face value, officials said.
The Securities and Exchange Commission (SEC) Wednesday kept in abeyance its notification regarding changing of face value of shares.
The move comes in response to a recent proposal from the Dhaka Stock Exchange (DSE). A number of companies earlier made their shares overvalued by changing their face value.
SEC Chairman Ziaul Haque Khondker told the FE that the notification has been postponed, and no company would be allowed to complete the formalities of changing their face value.
"The fresh order will remain effective until further order," the chairman said.
The SEC spokesman and executive director Mohammad Saifur Rahman said the regulator Wednesday sent letters to the chief executive officers of both the stock exchanges to make the latest order effective.
Earlier, the SEC issued a notification on May 10, 2010, saying that the commission would take initiatives to approve the face value split of shares of the companies, which would complete the required formalities.
By this time, the SEC gave consent to about 63 companies to split the face value of their shares following a government decision, taken on November 5, 2010.
However, the prices of those companies' shares went up abnormally following the declaration of face value split, taken at their extraordinary general meeting (EGM).
Even, the share prices of the companies, which might split face value in near future, also increased unusually. Presently, some companies are going to arrange EGM to split the face value of their shares.
Experts have been criticising this mechanism from the very beginning of its introduction, as a group of people made huge profits using it, though nothing was added to company fundamentals.
Recently, when the stock market experienced a massive plunge, the retail investors urged the authorities concerned either to stop the splitting mechanism or to take initiatives, so that all of the remaining companies can split the face value of their shares at a time.
Later, the SEC urged the government to give its consent for splitting the face value of the shares of the remaining companies at a time.
The regulator's demand was placed at a meeting held recently at the sate guest house Padma, where all the key stakeholders attended. But Finance Minister A M A Muhith refused the proposal.
Finally the SEC postponed its earlier notification Wednesday in line with the government's decision, and from now on no company will be allowed to split the face value of their shares until further order.
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