Z category listing criteria revised

The Bangladesh Securities and Exchange Commission (BSEC) issued an order yesterday revising the criteria for companies to be considered and listed as junk.

A listed company will be shifted to the Z category if it fails to declare any dividend for two consecutive years, said the order.

If the issuer fails to hold its annual general meeting (AGM) within a stipulated timeframe as per relevant laws, it will be sent to the lowest category, it said.

According to the law, if an AGM cannot be held for any writ petition or legal process pending before a court, a maximum of two years may be allowed before placement or adjustment of securities under Z category.

A company will be treated as junk if it is not in operation or exploration for a minimum of six months at a stretch, excluding periods such as for renovations or in the event of unforeseeable circumstances.

If net operating loss or negative cash flow from operations is reported for two consecutive years or if negative balance of retained earnings exceeds its paid-up capital, the company will be placed under Z category, the BSEC said.

Any listed company shall be placed in the Z category for any non-compliance with any provision of securities laws, rules, regulations, notifications, orders and directives.

The same will be applicable in case a company fails to comply with listing requirements as per regulations of the stock exchanges.

In this case, the stock exchange shall review such-non compliances by the listed companies regularly and shall place deserving companies in the category, subject to prior approval of the commission.

On the other hand, if any company is able to provide interim dividend on the basis of audited financial reports, it can be upgraded from the Z category.

The BSEC said sponsors and directors of Z category companies, excluding banks, insurance and non-bank financial institutions, shall not be allowed to transact any share without prior approval of the commission.