Global Islami Bank downgraded to Z after failure to hold AGM

Highlights

• Its AGM for 2023 scheduled for 8 Aug
• But the bank postponed it on 7 Aug
• Bangladesh Bank later reconstitutes its board
• Cenbank move comes to free it from S Alam Group
• Now DSE downgraded its stocks to junk category

Global Islami Bank, a private sector lender, has been downgraded to the Z or junk category by the Dhaka Stock Exchange (DSE) due to its failure to hold its 2023 annual general meeting (AGM).  

The downgrade came into effect today (13 February), in compliance with a directive from the Bangladesh Securities and Exchange Commission (BSEC) issued on 20 May 2024, according to a disclosure.

The BSEC directive mandates that if a listed firm fails to hold its AGM within the stipulated time, it will be downgraded to the Z category. DSE listing regulations stipulate that companies have 120 days to publish annual financials and set a record date, followed by a further 45 days to hold the AGM.

The bourse categorised a listed company to the Z category, if it fails to hold an AGM regularly, fails to declare any dividends based on annual performance, has not been in operation continuously for more than six months, or accumulates losses that exceed its paid-up capital after adjusting revenue reserves.

The DSE asked stock brokers and merchant bankers not to provide loan facilities to purchase securities of Global Islami Bank, which has been facing difficulties following a change in political regime and its release from the control of the controversial S Alam Group.

Md Manjur Hossain, company secretary of Global Islami Bank, told TBS, "Due to the delay, the bank now needs to secure court permission to hold the AGM. We are in the process of obtaining permission from the court. Once we secure it, a new date or schedule will be announced in due time."

The delay in AGM

The then board of Global Islami Bank approved the annual financials for 2023 on 28 April 2024 and recommended a 5% cash and 5% stock dividend for its shareholders. The AGM was scheduled for 8 August.

The declared dividends were supposed to receive shareholder approval at the AGM, while the stock dividend was subject to approval by the commission.

Later, the commission approved the stock dividend, but a day before the AGM, on 7 August, the bank postponed the meeting, citing unavoidable circumstances.

Subsequently, Global Islami Bank was freed from S Alam Group's control after the Bangladesh Bank dissolved its board of directors and appointed five independent directors.

Jul-Sep 2024 financials

Global Islami Bank incurred a loss of Tk57 crore in the July-September quarter of this year due to higher provisions against classified loans.

According to the bank's statement, its loss per share stood at Tk0.55 during the quarter.

In the first nine months of this year, its earnings per share were Tk0.43, marking a significant decline from Tk1.15 in the same period of the previous year.

Its shares closed at Tk4.20 on the DSE today. 

Golden Son reinstated to B category

After disbursing its declared dividend, the DSE reinstated Golden Son Limited to the B category.

The company had been downgraded to the Z category due to its failure to disburse dividends to shareholders for the year ending June 2024.

It had declared a 1.50% cash dividend for FY24, which was later approved at its AGM, but the company failed to disburse the dividend on time.