The securities regulator has initiated a move to make the ailing listed companies, including state-owned ones, operationally sound and financially viable for the greater interest of the shareholders and stock market.
The Bangladesh Securities and Exchange Commission (BSEC) has already started restructuring the boards and suggested the state-owned companies to reassess their assets and liabilities to reflect fair valuation of the companies.
It would also conduct special audit in some errant companies.
According to the BSEC officials, initially they were working with 35 non-performing companies while the other ones would come under their supervision gradually.
BSEC chairman Prof. Shibli Rubayat Ul Islam said that the regulator preferred not to issue any directive for the state-owned listed companies.
"Now, we are trying to pursue the companies to consider our suggestions made based on findings for the sake of their viable operations," he said.
As part of the move, the BSEC has been holding separate meetings with the companies, most of which presently were out of operations amid huge accumulated losses.
It has also asked a non-compliant company to handover their ownership to another party having sound operational background if they are unable to run the entity.
In separate meetings, the regulator suggested the officials of Bangladesh Services, Usmania Glass Sheet Factory, Shyampur Sugar Mills and Zeal Bangla Sugar Mills to revalue their assets and liabilities for the sake of 'fair' valuation ofthe companies.
The BSEC officials have suggested the companies to take initiatives for raising funds through issuing government-guaranteed corporate bonds with the features of convertible options.
"If the funds are raised, the portion of high interest bearing bank loans can be settled and the bond would be redeemed gradually in line with the companies' performances, earnings and cash flow," said a BSEC official.
Of the companies, Bangladesh Services, which provides hospitality services and pioneered five-star hotel through Inter Continental Dhaka, incurred an accumulated loss of Tk1.64 billion as on June 30, 2020.
The company's current liabilities also exceeded its current assets by Tk 1.44 billion as on 30 June 2020, according to the auditor's report.
Of the other state-owned companies, Usmania Glass Sheet Factory, Shyampur Sugar Mills and Zeal Bangla Sugar Mills have accumulated a loss of Tk 320 million, Tk 4.99 billion and Tk 4.26 billion respectively as on June 30, 2020.
The productions of these companies also remained suspended.
Shaikh Shamsuddin Ahmed, a BSEC commissioner, said they would move forward very prudentially as some of the state-owned companies such as Bangladesh Services have historical background.
"We have talked about some dimensions for making the companies' operations viable. We will hold more discussions and it will take time to do something for the companies," he said.
By dissolving the previous boards, the securities regulator has restructured the boards of Fareast Finance & Investment, Ring Shine Textiles, C&A Textiles, Emerald Oil Industries, Familytex (BD), United Airways and Alhaj Textile Mills due to their sorry state of operations and non-compliances with the securities rules.
Of these companies, operations at Ring Shine Textile Mills, Emerald Oil Industries and Alhaj Textile Mills have already restored after restructuring their boards.
In this regard, BSEC chairman Mr. Islam said the outcome of restructuring the boards of some non-performing companies have already become visible.
"Operations at the three companies resumed following the execution of our decision regarding restructuring the boards," he said.
He said the revival move taken for the non-performing companies will be reflected gradually in the stock market.
As per another decision, the securities regulator will discuss with the Bangladesh Bank and ICB Islamic Bank about the ways of making visible the operations of Bangladesh Industrial Finance Company and ICB Islamic Bank.
Apart from taking a decision to conduct special audit at Aramit Cement, the regulator has sought an explanation from the company about the huge amount of inter-company loans.
The BSEC will also conduct a special audit at another errant company namely Generation Next Fashions and settle enforcement decisions.
Legal actions may be initiated against the company for non-compliances so far identified by the regulator.
In a meeting, the securities regulator has told the Tung Hai Knitting and Dyeing to transfer their ownership to another party having good operational record if the present owners are unable to make the company viable.
As part of the regulatory decision, the BSEC will send letter to Dulamia Cotton Spinning Mills, seeking explanation regarding bonus dividend and loan status of the company.
According to auditor's report, Dulamia Cotton incurred an accumulated loss of Tk 349.66 million as of June 30, 2020 and the company's liabilities exceeded its total assets by Tk 273.91 million.
The company's production and other operations are also remained suspended since June 2019.
Besides, another seven listed companies were under the BSEC's special supervision due to their dire straight in operations.
The companies are: Alltex Industries, The Dacca Dyeing and Manufacturing Company, Jute Spinners, Meghna Condensed Milk Industries, Megha Pet Industries, Mithun Knitting and Dyeing and R. N. Spinning Mills.