The Bangladesh Securities and Exchange Commission has given Sonali Paper and Board Mills Limited further exemption from rules as the previous waivers could not ensure relisting of the low-profile company on the Dhaka Stock Exchange’s main board. The BSEC, in addition to the previously given immunity from rules, has recently exempted the company from complying with the rules related with three years of positive net current asset as the DSE, mentioning the non-compliance, had rejected Sonali Paper’s appeal for relisting it on the main board. The DSE had found that despite having waivers from many provisions of the rules, the company still remained non-compliant with a provision of its listing regulations which said that a company must have positive net current asset in the last three years to be eligible for the main board. In November last year, the commission had provided the company with exemption from around 15 provisions of the DSE listing regulations to allow the shares of Sonali Paper, which has been trading on the bourse’s over-the-counter market for the last 10 years for non-compliance with rules, to be traded on the main board of the stock exchange. The previous waivers included requirement of having minimum paid-up capital of Tk 30 crore and the net positive cash flow for immediate three financial years. Sonali Paper, after declined by the DSE, appealed to the BSEC for waiver from complying with the rule regarding three years of net positive current asset, and the commission gave the waiver to the company that apparently has removed every hurdle to relisting the company on the main board. Sonali Paper has raised gradually its paid-up capital by declaring bonus dividend since 2011 and its paid-up capital stood at Tk 16.63 crore in 2019. The company did not declare dividend in 2017 and 2018. Market operators said that it was not understandable why the BSEC bustled about relisting a low-profile company despite knowing the fact that market manipulation mainly occurred involving the shares of small-capitalised companies. The BSEC itself has recently raised the minimum paid-up capital to Tk 50 crore for a company to be eligible to be listed on the stock exchanges to curb manipulation on the market, they said. The premier bourse on October 1, 2009 delisted 51 ‘Z’ category issues including Sonali Paper and placed them on the OTC trading floor. The companies were ousted from the main board due to their non-performance in business and failure in holding annual general meetings and providing dividend to their shareholders over the years. Sonali Paper’s net profit after tax shot up by 105 per cent to Tk 6.3 crore in 2019 against Tk 3.07 crore in 2018, and the company never before witnessed such a jump in profit. Market analysts said that companies usually inflated profits in their financial statements for different purposes, and the regulator should assess the reason for any significant deviation in the figures. Of the 1.66 crore shares of Sonali Paper, 72 per cent is held by sponsor-directors and around 45 lakh shares are free-float. The price earnings ratio of the company was 65 in 2019, indicating that the shares were risky and the purchase of the shares with margin loans was forbidden as per the BSEC rules. Share prices of Sonali Paper soared to Tk 273 each on the OTC market on January 30 this year. Sonali Paper started its operations in 1977 and the company got listed on the DSE in 1985. After years of poor performance, the company was taken over by Younus Group in 2006.
