BSEC relaxes rule allowing Sonali Paper to issue rights shares

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According to the guidelines, a company cannot issue the right shares within three years of listing on the main stock exchange board

02 April 2022, 22:00

Last modification: April 02, 2022, 10:04 p.m.

Sonali Paper and Board Mills factory. Photo: Collected

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Sonali Paper and Board Mills factory. Photo: Collected

The stock market regulator has approved the relaxation of a rule relating to the issuance of rights shares of Sonali Paper and Board Mills, a concern of Younus Group of Industries to comply with the regulatory obligation to maintain capital released minimum of Tk30 crore.

Bangladesh Securities and Exchange Commission (BSEC) commissioner Dr Shaikh Shamsuddin Ahmed said the commission decided to exempt the company from a rule on issuing the right shares so that it can fulfill the paid-up capital of more than Tk 30 crore.

Company secretary Rashedul Hossain Imon said: “We have not yet received a letter from the commission.”

According to the guidelines, a company cannot issue the right shares within three years of listing on the main stock exchange board and Sonali Paper only re-listed a year ago.

Currently, the paid up capital of the company is Tk 21.96 crore.

The company wants to increase its paid-in capital by issuing rights shares at a ratio of 1R:2 (1 rights share to 2 existing shares held) at Tk 10 per value.

Earlier, the regulator appointed a special auditor for the company to review its assets which were reassessed in 2016 by SH Khan & Co Chartered Accountants.

The Dhaka Stock Exchange (DSE) transferred the company to the over-the-counter (OTC) market in October 2009 due to continued poor performance.

In July 2020, the company was re-listed on the main stock exchanges with an exemption from the listing rules.

Its main activities are the manufacture and marketing of supports, liners, simplex and duplex cardboard and quality papers such as newsprint.

The company’s stock price has surged an unusual 337% in the past nine months. The company focused on the capital market rather than the manufacturing sector.

Over the period July-December 2021, its operating profit increased by 47% compared to the same period of the previous year.

The company has invested Tk 45.37 crore in the capital market, but its stocks are only worth Tk 31.76 crore.

A large part of the income was generated by investments in the capital markets.

Sonali Paper & Board Mills was incorporated in 1977 and listed on Dhaka Stock Exchange in 1985 and Chittagong Stock Exchange in 1996.

Younus Group took over the company after buying all the shares in 2006.

After 17 years of acquisition, new management has demanded the company return to the motherboard in 2020.

As of February 28, 2022, sponsors and directors jointly own 67.51%, institutions 7.69% and the general public 24.80% of the shares of the company.

The company’s latest trading price on the Dhaka Stock Exchange was Tk 876.40 per share on Thursday.

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