Six listed state-owned companies are yet to issue shares against Tk 6,652 crore share money deposits of the government, depriving the government from the ownership and dividend income, observed the Financial Reporting Council. The FRC in a letter to the finance ministry on June 16 described the matter and also narrated about the necessity of implementation of the rules issued by the regulator on February 11. The share money deposit (money paid in exchange for shares) of the government in Powergrid Co Bangladesh was Tk 5,071 crore, in Bangladesh Submarine Cables Company Tk 166 crore, in Titas Gas Transmission Co Tk 151.21 crore, in Meghna Petroleum Tk 4.95 crore, in Rupali Bank Tk 680 crore and in Dhaka Electric Supply Co Tk 579.41 crore as per financial year June 30, 2019. On February 11, the FRC issued a directive saying that share money deposits must be converted into the company’s capital within six months of receiving the money to prevent misuse with the money. The FRC in the letter to the ministry said that the government was deprived of dividends worth Tk 1,115.51 crore in FY19 and Tk 948.92 crore in FY18 as the six companies did not issue shares to the government. The government did not own shares against its investments in the companies, it said. When the FRC queried the companies about the compliance with the share money deposit rules, the companies replied the regulator that they did not receive any direction from the government, which was not acceptable answer from the listed companies, it said. It would be prudent to give necessary directions to the companies regarding issuing shares to the government against investment of the government, the letter reads. It is against the corporate governance and international financial reporting practices to show share money deposit as share capital or liability in financial statement, it said. After assessing the matter, proper measures can be taken to realise the government’s investment incomes, it said. FRC executive director Md Sayeed Ahmed told New Age that the companies told the FRC that the issuance of huge amount of shares would adversely affect share prices and earnings per shares of the companies that might hurt the general shareholders. To avoid the adverse impact on the capital market, the companies may issue irredeemable preference shares on paying rational dividends or issue preference shares convertible into ordinary shares, he said. Sayeed said that the FRC suggested the government to consider the remedial options in issuing the shares by the companies in favour of the government. Share money deposits in BSCCL and Meghna Petrolium remained the same. But, the amount of money in the other four companies doubled in three financial years to reach Tk 6,481.62 crore in FY19 from Tk 3,644.79 crore in FY17. Earlier, Power Grid Company raised its paid-up capital by Tk 251.81 crore through issuing shares against share money deposit to its parent organisation, Bangladesh Power Development Board (BPDB). Powergrid company secretary Jahangir Azad told New Age that the government provided funds as 60 per cent loans and 40 per cent equity to invest in various projects. So, the funds provided as equity remained as share money deposit for a long time, as the company is also owned by the government, he said. He said, ‘We have sought rule waivers from the FRC. If not given, we will follow the government instruction in this regard.’ BSCCL chief financial officer Shukanta Kumar Debnath said that the company did not make any decision about the issuance of shares as it was a long process and it required approvals from ministries and shareholders. However, the company appointed ICB Capital Management to evaluate the matter and report the company. A couple of companies sought rule waivers, but the FRC does not want to give exemptions as everyone would seek waiver then, FRC officials said.
