26 firms defaulting on fee, face KSE ire

As many as 26 firms listed at Karachi Stock Exchange are faced with the risk to be placed in defaulters’ segment owing to their failure to comply with concerned Listing Regulations of the Exchange, it emerged on Monday. Management of KSE warned that if they failed to rectify their default within stipulated time, these companies would be placed on defaulter’s segment by 12th of next month.
Those defaulting companies include Dost Steels, Fawad Textile Mills, Azam Textile Mills, Bortehrs Textile Mills, (Colony) Thal Textile Mills, Hajra Textile Mills, J.A Textile Mills, Kohinoor Industries Limited, Sarltow Spinning Mills, Tri-Star Polyster Limited, Kohinoor Power Company, First IBL Modaraba, Tri-Star Mutual Fund, Ansari Sugar Mills, Tri-Star Power Limited. And Usman Textile Mills, Dadabhoy Sack Limited, Nazir Cotton Mills, First Islamic Modaraba, Investeo Securities, Al-Mal Securities and Services, English Leasing Limited, Platinum Insurance Company Limited, Natover Lease and Refinance Limited and Prudential Discount and Guarantee House Limited.
Majority of these companies have not paid the Exchange’s annual listing fee since 2009 that make them accountable under Listing Regulation Number 30(1(a)) that might eventuate into their delisting from the Exchange. Then there are companies which are facing KSE’s ire for their failure to start commercial production within three years of the date of their formal listing at equity market. Some of them have not held Annual General Meetings (AGMs) for various periods ranging from months to years while others failed to join CDS of the Central Depositary Company of Pakistan.
“In case, any company rectifies default(s) prior to its placement in the defaulters’ segment, the name of such company will be removed from the list,” said the KSE notices, KSE/N-6330 and KSE/N-6331, issued on Monday. And if they failed to do so, KSE warned that the Exchange “reserves the right to initiate further action against the companies… subsequently.” That action, it said, included “suspension of trading in their shares/delisting from the exchange.” However, regulators have already suspended trading in shares of the last 10 firms.
Also on Monday, KSE and Securities and Exchange Commission of Pakistan suspended trading in the shares of nine companies for their failure to “remove the cause of suspension”. These firms include Beema Pakistan Company, Kausar Paints Limited, Dadabhoy Leasing Company, Crescent Spinning Mills, Colony Woolen Mills Limited, Schon Textiles Limited, Turbo Tec Limited, Cass Pakistan Industries and Pan Islamic Steamship Company Limited. Regulators have decided to hold their suspension for further 60-day period initiating form 4th, 6th and 8th of next month, December.
These punishments, analysts however believe, usually prove ineffective and have rarely made defaulting firms ensure compliance. Market observers say that a company, violating Listing Regulations, takes years to face hard, and therefore unacceptable, action like delisting from regulators.