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NTL Transfers 42% Undistributed Shares to CMSF

Industry: Building Material, Steel, Stock Market
Company: National Tubes Limited
Company Intelligence Tag: Business Insights

National Tubes Limited (NTL) has transferred 42% of its outstanding shares to the Capital Market Stabilisation Fund (CMSF). These shares were issued as stock dividends in 2007 but had remained undistributed. Over the years, the company reported profits only in 2020 and 2021, with accumulated losses far exceeding these profits. The issuance of annual stock dividends between 2014 and 2019 increased the company’s paid-up capital.

Chairman of EDGE Asset Management, noted that giving stock dividends has the same accounting impact as retaining cash on the balance sheet, suggesting that the company had reinvested capital in its business. However, the continuous losses in the past five years indicate that this reinvestment did not create value. The undistributed bonus shares, totaling 14.56 million, were meant to be received by the government (14 million shares) and general investors (0.56 million shares). The delay in distribution was due to investors holding their shares in paper form. The CMSF received the shares but still awaits the investor list to determine the rightful claimants. National Tubes has also transferred around Tk 5 million in cash dividends to the CMSF.

 

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