Summary of “Power Grid to Issue Shares for Accounting Adjustment of Long-Held Govt Investment,” Babul Barman, The Financial Express, 15 June 2023
July 4, 2023To partially comply with a three-year-old directive from the Financial Reporting Council (“FRC”), the state-run electricity transmission and distribution service provider, Power Grid Company, has chosen to issue shares using government funds. In 2020, the FRC directed state-run companies to convert share money deposits into paid-up capital as such funds were piling up in huge amounts. It also made it mandatory that share money deposits be incorporated into paid-up capital within six months after the money is deposited in a company’s bank account in order to prevent fund anomalies.
The decision was made to issue 201.08 million ordinary shares at a premium of BDT10 to BDT20 each, along with 7.64 billion non-redeemable and non-cumulative preferred shares with a face value of BDT10. The total value of the ordinary shares will be BDT4.02 billion, which is considerably less than the BDT76.41 billion value of the preferred shares.
According to an anonymous company official, a larger quantity of preferred shares vs. ordinary shares are being issued to protect existing shareholders, since only ordinary shares contribute to the paid-up capital. Preferred shares entitle shareholders to receive dividends before common stock dividends are distributed.
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