The Dhaka Stock Exchange (DSE), premier bourse in the country, has downgraded Runner Automobiles to the Z category as it failed to disburse at least 80% of declared dividend to its shareholders for the 2021-22 fiscal year.
Runner’s shares were traded under the A category as the company approved a 10% cash dividend for the shareholders. But, the DSE found that the company did not meet the required dividend disbursement threshold, prompting the downgrade, according to a disclosure of the company published on the DSE’s website today.
As a result, Runner’s stock price dropped by 7.55% in the last two days, closing at Tk20.80 per share today.
The DSE executed the downgrading following a directive of the Bangladesh Securities and Exchange Commission (BSEC) issued in May 2024, which mandates that any company failing to disburse 80% of its declared dividend within the stipulated time frame will be moved to the Z category.
The DSE also advised stockbrokers and merchant bankers to refrain from offering loan facilities for purchasing Runner shares.
On 25 September, the DSE had decided to downgrade 28 companies from the A and B categories to the Z category. Among the downgraded companies was Energypac Power Generation which was returned to its previous B category after it disbursed the declared dividend for the general shareholders for 2022-23 fiscal.
Runner Automobiles, the country’s leading motorcycle manufacturer and exporter, had declared a 10% cash dividend for the 2021-22 fiscal year, which was approved at their annual general meeting on 27 December 2022.
According to the listing regulation of the stock exchanges, listed companies must pay off dividends within 30 working days after approval and shall submit a dividend compliance report within seven working days after payment to stock exchanges.
According to DSE officials, the shareholders of Runner Automobiles approved the dividend for FY22 around two years ago, but it failed to disburse at least 80% of the declared dividends.
An official of Runner Automobiles seeking anonymity told The Business Standard, “The dividend, which was entitled for the general shareholders, had been disbursed on time, but with the consent of sponsor-directors, the company has been using the dividend entitled for sponsor-directors as working capital.”
“The company informed the matter to the commission,” he added.
The company did not pay any dividend to its shareholders for 2022-23 fiscal, citing losses.
Runner Automobiles, listed in 2019, incurred a loss of Tk87 crore in FY23 due to the economic slowdown and high inflation.
Losses have continued into the first nine months of the 2023-24 fiscal year, with Runner incurring a consolidated loss of Tk42 crore from July to March.
According to DSE, as of September, out of the total shares, sponsor-directors held 49.93%, and the rest held 26.55% by institutional and 23.52% by general investors.
