The share price of Keya Cosmetics has soared following news that the company has received approval from the High Court to hold its annual general meeting (AGM) after a two-year hiatus.
The share price rose by 9.38% on Wednesday on the Dhaka Stock Exchange (DSE) and the closing price of each share was Tk7.
Although its share price has soared by 141% in the last two months, investors have attributed the rise to the news of the company's getting approval to hold its AGM and a rumour that the company is soon going to release its financial statements.
Replying to a query by the DSE about the reason behind the price hike, the company, on September 21, said that there was no price sensitive information in recent times.
Due to the national election in 2018, the company could not hold its AGM for the financial year 2017-18.
As per the law, if a company fails to hold its AGM within the stipulated time, it will require approval from the High Court to hold the meeting next time.
In this context, the company applied to the High Court last year to get its approval to hold the AGM.
According to the DSE, although the audited financial report for the financial year 2017-18 was released, Keya Cosmetics did not hold the AGM that year.
The unaudited financial report for the first three quarters of the financial year 2018-19 and the audited financial report for the last financial year were also not released.
As a result, the company's investors are completely in the dark about its financial and business updates.
In 2019, the Bangladesh Securities and Exchange Commission fined Keya Cosmetics for its failure to submit its unaudited financial reports on time.
Noor Hossain, company secretary of Keya Cosmetics, told The Business Standard it had declared a 10% stock dividend for its shareholders for the financial year 2017-18.
"However, we could not distribute the dividend because we failed to hold the AGM. Now, there will be no problem in holding the AGM and financial statements will also be published after the AGM," he said.
He added that the date for the AGM has not been set yet.
Asked about the current business status of the company, he said, "Business declined because of the shutdown put in place to curb the spread of the novel coronavirus, but business is on the rise now."
At present, the cosmetics sector is in full production, he said. However, orders in the garments sector are low.
According to company sources, at one time Keya was in a good position in the cosmetics business.
However, Abdul Khalek Pathan, chairman of the company, took out a lot of loans to focus on the garments business and failed to repay them on time. Then he lost his business ability.
Additionally, the Anti-Corruption Commission in 2017 filed a case against him on charges of laundering money abroad. He was also arrested in the case and later released on bail.
To repay the loans, Abdul Khalek Pathan made several attempts to sell the shares but was unsuccessful.
In such a situation, the company's share price fell to Tk2 and many investors incurred losses from having purchased the company's shares, said top officials of several brokerage houses.
The company posted a profit of Tk121 crore in its 2017-18 financial statement.
However, the Financial Reporting Council accused the company of releasing false information in its financial statement.
Sponsors and directors hold 46.27%, institutional investors 9% and general investors 44.73% shares of the company.