27 firms face KSE’s ire over dividends

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As many as 27 more listed firms, including some prominent banks, are going to face punitive action from the management of Karachi Stock Exchange (KSE) for their failure to bring in dividends for their shareholders at the volume-starved Karachi bourse.
List of the 27 unprofitable companies also carries the names of some bigwigs from the ever-profitable banking industry such as Silk Bank Limited, NIB Bank Limited, Samba Bank Limited and Network Microfinance Bank Limited.
Other firms which are under fire, include Dewan Sugar Mills, Dewan Salman Fibre Limited, Ali Asghar Textile Mills, Khalid Siraj Textile Mills, Olympia Spinning And Waving Mills, Olympia Textile Mills, Taha Spinnig Mills, ICC Textiles Mills, Mohammad Farooq Textile Mills, Baba Farid Sugar Mills, Dewan Sugar Mills, Altern Energy Limited, Balochistan Glass Limited, Frontier Ceramics, Al-Abbas Cement Industries, Maple Leaf Cement Factory, MACPAC Films Limited, Haji Muhammad Ismail Mills, Leather Up Limited, Ruby Textiles Mills, Southern Netwrokls, S.G Power Limited, Southern Electric Power Company and AMZ Ventures Limited.
These companies are defaulting on the Listing Regulation No 30(2) that entails placement of a listed company on KSE’s Non-Complaint Segment list after its failure to “declare dividend or a bonus for five years since the last declaration”.
KSE’s daily quotations reveal that at least 37 listed firms, having an accumulative paid-up capital of Rs943,732,853 million, have already been declared Non-Compliant for not declaring any dividend for their ordinary shareholders at the bourses.
The KSE management has served show-cause notices to the 27 firms, managements of which have come up with various explanations and reasons. KSE, however, has set a deadline for tomorrow after which firms would be placed on the Non-Compliant list.
“Companies subsequent to issuance of show-cause notices and in consideration of a response were allowed an extension in time for placement in the Non-Compliant Segment, the last date is June 30, 2011,” said the KSE through a notice, KSE/N-3529, on Tuesday.
It said in view of the companies’ repeated requests, the KSE had decided to allow all companies a further extension in time.
KSE’s daily quotations reveal that over 50 per cent, at least 320, of the total 638 listed firms at the Karachi bourse bore little or no attraction for the risk-averse recession-hit investors.
The quotations show that of the said 320 firms, some 151 were on the default counter, 113 were facing suspension of trading in their shares, 38 were declared as non-complaint and 18 had been de-listed from the equity market. This factor along with several others, the brokers and investors agreed, carried enough weight to negate the widely-held perception that the ill-defined and, therefore, unpopular levies like Capital Gains Tax (CGT) were keeping investors aloof from the once vibrant and actively-traded equity market.
“Investors are reluctant to invest in those firms which are on the default counter or facing any other punitive measure,” views Rafi Securities Chief Executive Officer Naeem Rafi. Market observers are concerned that prevailing low volumes at the country’s largest capital market, where the average daily share trading once used to stand at Rs40 billion, would take the highly volatile bourse to the brink of a market crash, similar to that of 2005 and 2008.