BM Desk : The Bangladesh Securities and Exchange Commission (BSEC) has introduced a significant regulatory proposal that would require companies to obtain stock exchange approval before being listed a new step aimed at strengthening due diligence and market transparency.

The draft, titled “Bangladesh Securities and Exchange Commission (Public Offer of Equity Securities) Rules, 2025,” was released on the BSEC website on Thursday (October 30), inviting public feedback within 15 days. The decision to publish the draft followed a commission meeting held in mid-October.

According to the proposed framework, any company intending to offer equity securities to the public must seek BSEC approval and simultaneously submit an application to the respective stock exchange for main-board listing. Firms using the book-building method will also be required to conduct a roadshow before submission.

Once an application is received, the stock exchange will upload it online and notify eligible investors (EIs), who will have seven days to provide comments. These comments will then be shared with the issuer and issue manager, who must respond within seven days.

The exchange may conduct its own verification of the issuer’s financial statements and documents either directly, through a review panel, or via an independent auditor — and must complete the process within 30 days. It may also seek clarifications from issuers, issue managers, auditors, valuers, underwriters, bankers, or credit rating agencies.

Within 45 days, the stock exchange must forward its recommendation — for either listing or rejection to the BSEC, accompanied by a detailed checklist and its observations. In cases of a positive recommendation, the final red-herring prospectus must also be submitted. The Commission may extend its review period by up to 15 days, if necessary.

The draft rules specify that the red-herring prospectus must include valuation methods as outlined in Annexure-C, along with globally recognized valuation approaches, supported by detailed calculations based on both quantitative and qualitative factors. Valuations must be submitted to the issuer or issue manager within three days of the roadshow and included in applications to both the stock exchange and BSEC.

In a bid to enhance pricing transparency, the proposed rules introduce a summary report of IPO valuations, reflecting the 5th, 25th, mean, median, 75th, and 95th percentiles. Eligible investors’ valuations can be collected through an online platform approved by the stock exchange.

To determine the indicative price, input will be required from 45 eligible investors across three categories  portfolio managers, stock dealers, and asset managers (with at least 15 from each group) along with 30 additional EIs from banks and other institutional investors (at least 10 from each).

Market insiders say the new rules aim to tighten IPO scrutiny, ensure greater transparency in price discovery, and enhance investor confidence in the capital market ahead of broader reforms planned for 2025.