Two more firms moved to Z category

The Dhaka Stock Exchange (DSE) downgraded two more companies – Acme Pesticide and Federal Insurance – on Tuesday for failing to disburse dividends within the stipulated time. 

Investors will no longer be able to obtain margin loan facilities to purchase these shares, the DSE announced on its website.

Following the downgrade, Acme Pesticide shares dropped by 9.22% to close at Tk12.80, while Federal Insurance stocks fell by 5.34% to settle at Tk19.50.

Earlier, Acme Pesticide had declared a 0.10% cash dividend to its shareholders for FY23 but has yet to disburse the declared dividend. Federal Insurance announced a 10% cash dividend for 2023, which was approved at the annual general meeting in August. However, this dividend has also not been disbursed, according to the DSE.

After the company's shares were downgraded to the Z category, Federal Insurance submitted its dividend disbursement report to the DSE, which has been uploaded on the stock exchange's website. Despite this, the DSE has yet to update the company's category.

Currently, a total of 85 stocks are traded in the Z category, accounting for over 21% of all listed companies.

Earlier, on 30 September, Energypac Power Generation was reinstated to its previous category B after disbursing the declared dividend to its general shareholders for the fiscal 2022-23. The company had been sent to the Z category on 25 September.

Meanwhile, Desh Garments announced that it disbursed its declared dividend on Tuesday, following its downgrade to a lower category.

On 25 September, the DSE downgraded 27 stocks to the Z category for failing to pay at least 80% of the declared dividend.

Stocks in the Z category face delays in share settlements compared to stocks in other categories, and no margin loans are provided for purchasing these stocks. The settlement cycle for Z stocks is set at T+3, while for others it is T+2, according to the DSE.