Companies don’t just sit quietly after you buy their shares. They hold meetings, publish reports, split stocks, restructure, and make decisions that directly affect your investment. Understanding corporate actions and annual reports is how you stay informed — and avoid being caught off guard.
Annual Reports: The Complete Picture
An annual report is the most comprehensive document a company publishes. While quarterly earnings give you a snapshot, the annual report provides the full story — audited financials, management’s perspective, risk factors, and future plans.
Where to Find Them
- DSE website — Under each company’s listing page, look for “Annual Report” in the documents section
- Company website — Most listed companies have an “Investor Relations” page
- BSEC website — The Bangladesh Securities and Exchange Commission maintains filings
Annual reports are typically published within 3-6 months of the fiscal year-end. Most DSE companies follow the July-June fiscal year, though some (especially multinationals) use January-December.
How to Read an Annual Report (Without Reading All of It)
Annual reports can be 100+ pages long. You don’t need to read every word. Here’s a focused approach:
1. Chairman’s Statement and Managing Director’s Review (5 minutes)
This is where management tells you what happened during the year and what they expect ahead. Read between the lines. Optimistic language about “challenging conditions” usually means things weren’t great. Specific targets and numbers indicate confidence.
2. Financial Highlights Page (2 minutes)
Most reports include a summary page with 5-year comparisons of revenue, profit, EPS, NAV, dividends, and key ratios. This single page tells you the trajectory of the business.
3. Auditor’s Report (3 minutes)
Look for the auditor’s opinion — you want to see “unqualified” or “clean” opinion. A “qualified” opinion means the auditor found issues. An “adverse” opinion is a serious red flag. Also check if the auditor is a reputable firm.
4. Financial Statements (10 minutes)
We covered these in our previous post. Focus on the income statement trend, balance sheet health, and cash flow quality.
5. Notes to Financial Statements (as needed)
This is where details hide. If you see an unusual number in the financials — say, a sudden jump in “other income” or “provisions” — the notes explain what happened. You don’t need to read all notes, just the ones that explain anything unusual.
6. Related Party Transactions
This section lists dealings between the company and its directors, sponsors, or affiliated entities. Excessive related-party transactions can be a governance concern — especially if the company is buying from or lending to entities controlled by its own directors at non-market terms.
7. Shareholding Structure
Check sponsor/director holdings, institutional holdings, and foreign holdings. Generally, higher sponsor holdings (above 40-50%) indicate management has skin in the game. If sponsors have been selling shares over time, ask why.
Annual General Meetings (AGMs)
The AGM is a mandatory yearly meeting where shareholders approve the company’s financial statements, dividend declarations, appointment of auditors, and other routine business.
What Happens at an AGM
- Adoption of financial statements — Shareholders vote to accept the audited accounts
- Dividend approval — The board recommends a dividend; shareholders vote to approve it. Shareholders can approve or reduce the proposed dividend, but cannot increase it beyond what the board recommends
- Election of directors — Board members up for rotation stand for re-election
- Appointment of auditors — Shareholders approve the auditor and their fees
- Special business — Anything beyond routine matters (capital raising, changes to articles of association, etc.)
Do You Need to Attend?
Practically speaking, most retail investors don’t attend AGMs. But you should:
- Read the AGM notice (published in newspapers and on the DSE) to know what’s being proposed
- Pay attention to any “special business” items — these can include rights issues, changes in company structure, or related-party transactions that require shareholder approval
- Monitor the outcomes — AGM resolutions are published on the DSE after the meeting
Record Date for AGM
To participate (and to receive dividends), you must hold shares before the record date. This is announced in advance. Mark your calendar.
Extraordinary General Meetings (EGMs)
An EGM is called when a company needs shareholder approval for something that can’t wait until the next AGM. Common reasons include:
- Urgent capital raising through rights issues
- Mergers or acquisitions
- Changes to the company’s memorandum or articles of association
- Removal or appointment of directors outside the normal cycle
EGMs are less common, but they often involve significant decisions. Pay close attention when one is announced.
Stock Splits
A stock split increases the number of shares while reducing the price per share proportionally. On the DSE, the most common form is changing the face value from ৳10 to a smaller denomination.
How It Works
If a company with a ৳10 face value announces a split to ৳1 face value:
- Before: You hold 100 shares at ৳500 each (total: ৳50,000)
- After: You hold 1,000 shares at ৳50 each (total: ৳50,000)
Like bonus shares, your total value stays the same. The purpose is to make shares more affordable and increase trading liquidity.
Impact on Metrics
After a split, all per-share metrics adjust accordingly:
- EPS drops proportionally (if EPS was ৳25 with ৳10 face value, it becomes ৳2.50 with ৳1 face value)
- NAV per share drops proportionally
- P/E ratio remains the same (both price and EPS adjusted by the same factor)
When comparing historical data, make sure you’re looking at adjusted figures. A stock that went from ৳800 to ৳80 isn’t a disaster if there was a 10:1 split in between.
Mergers and Acquisitions
Mergers among DSE-listed companies are less frequent than in developed markets, but they do happen — particularly in the banking and financial sector where regulators sometimes push for consolidation.
When a merger is announced:
- The terms specify a share swap ratio (e.g., 3 shares of Company A for every 2 shares of Company B)
- Both sets of shareholders vote at EGMs
- BSEC must approve the transaction
- The process typically takes 6-12 months
For investors, the key question is whether the merger creates or destroys value. Do the combined companies have synergies? Or is a weaker company being merged into a stronger one, dragging down the quality?
Delistings and Suspensions
Sometimes companies get suspended from trading or delisted entirely:
- Trading suspension — BSEC or DSE can suspend trading if a company fails to submit financials, violates regulations, or faces serious governance issues. Your shares exist but you cannot trade them.
- Delisting — In extreme cases, companies are removed from the exchange. This can trap investors. To protect yourself, avoid companies that consistently fail to file financials or that receive repeated regulatory warnings.
Tracking Corporate Actions
Missing a corporate action can cost you money — failing to subscribe to a rights issue means dilution; missing a record date means missing a dividend.
FinTrail tracks corporate events, announcements, and key dates for all DSE-listed companies. Set up alerts for your portfolio holdings so you’re always aware of upcoming AGMs, record dates, and dividend declarations.
The companies you invest in will keep making decisions. Your job as a shareholder is to stay informed and evaluate whether those decisions serve your interests. Annual reports and corporate actions are how you do that.
Think About This
- You read an annual report where the chairman’s statement is vague and avoids specifics, while the auditor’s report contains a qualified opinion. How would this affect your confidence in the company?
- A company announces a 10:1 stock split. The stock price jumps 8% on the news. What does this tell you about how the market sometimes reacts to events that don’t change fundamental value?
- If sponsor/director shareholding has dropped from 55% to 35% over three years, what questions would you want answered before continuing to hold the stock?
