Written by The Banking Post
The Dhaka Stock Exchange (DSE) has moved to make the delisting of non-performing and non-compliant companies mandatory, aiming to improve market discipline and restore investor confidence.
The DSE board has approved proposed amendments to its listing regulations and submitted them to the Bangladesh Securities and Exchange Commission (BSEC) for approval.
Under the existing rules, companies can be delisted for reasons such as failing to pay dividends for five consecutive years or not holding annual general meetings for three straight years. However, delisting is not mandatory, allowing many troubled companies to remain listed and fuel speculative trading in the secondary market.
The proposed amendments introduce a time-bound compulsory delisting process, including prior notice, hearings and the right to appeal before a final decision is made.
The draft rules identify several grounds for mandatory delisting, including failure to submit audited financial statements, negative net worth, inadequate public shareholding or paid-up capital, fraudulent activities, prolonged non-operational status and persistent regulatory non-compliance.
According to the proposal, companies facing delisting may avoid the action by submitting a rehabilitation plan to be implemented within two years under the supervision of the stock exchange.
To protect minority shareholders, the DSE also plans to introduce a provision requiring sponsor-directors to buy back their shares if a company is compulsorily delisted.
A senior DSE official said many retail investors buy shares of fundamentally weak companies without fully understanding the risks, leaving them exposed if those companies are removed from the market.
The official said the proposed buyback provision is intended to protect minority shareholders from the impact of compulsory delisting.
Once delisted, a company may also be transferred to the Alternative Trading Board (ATB).
