The Z category stock settlement cycle will be T plus three instead of T plus nine from Wednesday.
This means, after buying a Z category stock on Sunday one can sell it on Wednesday.
The Bangladesh Securities and Exchange Commission (BSEC) issued two directives in this regard on Tuesday.
Earlier, the BSEC took major steps to bring the underperforming listed companies back to the track.
Alongside helping to restructure the companies' leadership, the securities regulator also changed the definition of Z category stocks and the way they will be treated in future.
If a listed company fails to pay dividends, arrange shareholders' annual general meeting (AGM) on time, remains out of operations for six months in a row, stock exchanges now put them in the Z category – a penalty for a company in many ways.
If a company fails to pay cash dividends for two consecutive years, it will belong to the Z category, too, according to a new directive.
The same measure will be applicable to the companies which fail to conduct an AGM for two consecutive years or remain out of operations for six months.
Also, the new definition says listed companies with net operating loss or negative cash flow for two consecutive years will fall into the Z category.
The companies with negative retained earnings, surpassing their paid-up capital, will also be placed in the same category.
And stock exchanges can send any company to the Z category with the commission's approval if it violates securities law.
To improve the companies' overall condition, the regulator will restructure the board of directors of listed companies which have been in the Z category for two or more consecutive years.
These companies will get 45 days to restructure their boards. And each Z category company must hold its shareholders' AGM within the next six months.
If they fail to do so, their directors and sponsors will be disqualified to be on the board of any other listed company or market intermediary firm.
And the commission will appoint a special auditor and observer to ensure good governance within junk shares.
If a restructured board fails to improve a Z category company's overall situation within four years, the stock exchanges will take steps to delist the company alongside taking other legal actions.
And general meetings of all the Z category companies must ensure e-voting voting facility so that shareholders can easily participate in the transformation.
The e-voting facility will be an agenda-wise option and remain open for not less than one day and more than three days prior to the meeting.
E-voting will remain open until the end of the general meeting. The issuer company will arrange live streaming of the shareholders' meeting.
Now 53 listed companies are trading in the Z category. Several of them are trading for years, cheating the investors by not recommending dividends.