Bangladesh Securities and Exchange Commission (BSEC) has asked 64 companies for plans on how they would comply with the minimum paid-up capital criteria to remain on the main board of the bourses.
The commission issued letters to the companies in this regard last week.
As per the listing regulation of the Dhaka stock exchange, a company needs to have a minimum paid-up capital of Tk30 crore.
Earlier in September this year, the commission formed a committee to scrutinise the overall condition of those firms and look for a mechanism to improve the financial performances of the low-paid-up companies.
The companies were asked to submit their plan reports to the commission within 30 days after receiving the letters.
Of these companies, 13 firms remain with a paid-up capital below Tk5 crore, 17 firms are below Tk10 crore, 20 firms are below Tk20 crore, and the rest of the firms remain below Tk30 crore in the capital market.
20 firms posted a loss in the first quarter of the current fiscal year. And 7 companies remain on the list that have paid-up capital below Tk30 crore.
The companies that have paid-up capital above Tk20 crore now will have to comply with the rule within 30 June 2022.
Besides, companies that have paid-up capital below Tk20 crore will have to comply with this rule within 31 December 2022.
Sources said the low cap scrips are volatile and lack liquidity.
BSEC is asking for plans from them to know how they would comply with the minimum paid-up capital criteria to remain on the main board of the bourses, they added.
Analysing their submitted plans the commission would come up with the next steps it further added.
"We do not want to see any low paid-up company in the capital market as per rule. Because, it tarnishes the image of the stock market" said Dr Sheikh Shamsuddin Ahmed, BSEC commissioner.
He said there are several options to comply with the rules for the companies like capital raising through fresh funds. If the firms fail to raise capital; they have another option.
"We may transfer them to the SME platforms from the main board of the bourses. If the firm is not applicable for the SME platform, then we can process another way" he added.
He said low paid-up scrips are mostly volatile and some investors may use this ill-motive actively.
It is not possible to comply with the rule by issuing stock dividends. Because it will increase the number of shares of the company and it may be possible. The commission wants the company to raise capital through fresh funds, he further added.
The paid-up capital of Sonali Paper and Board Mills is Tk21.96 crore currently.
Rashedul Hossain, Company Secretary of Sonali Paper and Board Mills Ltd said "we got a letter from the regulator in this regard through the mail".
"We applied to the commission to issue right shares to increase its paid-up capital subject to the approval of the regulator".
"We will be able to comply with the rule if we get approval for the application" he added.
JMI Syringes & Medical Devices, remaining at paid-up of Tk22.10 crore, did not get any letter from the regulator yet. Company secretary Muhammad Tarek Hossain Khan said the management will decide after receiving the letter.
Meanwhile, the price of most of the low cap scrip's sharply gained in the last week.