The Bangladesh Securities and Exchange Commission (BSEC) has extended the deadline until 2030 for stockbrokers and merchant banks to adjust their existing negative equity and unrealised losses in the capital market.

Under the new arrangement, the concerned institutions must maintain provisions against at least 25 percent of their existing negative equity every year from 2027. They will also be prohibited from providing fresh margin loans or charging interest and portfolio management fees against beneficiary owners’ (BO) accounts carrying negative equity. Investors cannot be held responsible for liabilities arising from these accounts.

The decisions were taken at the 1,038th commission meeting of the BSEC held on Tuesday, chaired by Commission Chairman Masud Khan.

According to a press release signed by BSEC spokesperson and Executive Director Md Abul Kalam, the meeting also approved several other measures, including transferring bonds listed on the Alternative Trading Board (ATB) to the main board, introducing a single-window review system for initial public offering (IPO) applications and relaxing restrictions on dividend account management.

Under the BSEC decision, stockbrokers and merchant banks must maintain provisions at a minimum annual rate of 25 percent against their existing negative equity as of September 30, 2026, starting in 2027. The entire amount must be adjusted by 2030.

However, institutions that have already received extensions for adjusting their negative equity will remain subject to their previously approved arrangements.

Any new negative equity created during 2026 must be covered by the required provisions in the same year. Such newly created negative equity will not be eligible for the extended provisioning facility.

The commission has also imposed restrictions on transactions involving negative-equity BO accounts. Investors will be allowed to purchase ‘A’ category shares using proceeds from the sale of existing shares in those accounts. However, no fresh margin loans will be permitted for such purchases, and transactions through the block market will remain prohibited.

Furthermore, stockbrokers and merchant banks will not be allowed to charge margin loan interest or portfolio management fees against these accounts during the provisioning and adjustment period. Investors cannot be held liable for any claims or financial obligations arising from the accounts.

During the extended adjustment period, concerned stockbrokers, stock dealers and merchant banks will also be prohibited from declaring or distributing cash dividends.

The BSEC has directed issuers of bonds whose approval letters specify listing on the Alternative Trading Board but which have not yet been listed to apply for listing on the main board of the relevant stock exchanges by November 30.

The stock exchanges have also been instructed to take necessary steps by the same deadline to transfer or list existing ATB-listed bonds on their main boards, subject to applicable listing regulations and requirements.

The commission has also decided to introduce a single-window review system to make the IPO application process more efficient, coordinated and time-saving.

Under the new system, stock exchanges will be able to incorporate the commission’s observations while reviewing IPO applications. They will then consider both their own findings and the BSEC’s observations before submitting recommendations to the commission.

The entire IPO review process will be coordinated through the stock exchanges, which the regulator expects will simplify the process for companies and accelerate application reviews.

In another decision, the BSEC has decided to relax existing restrictions on managing dividend accounts of issuer companies at banks where one of the companies’ directors is also a member of the bank’s board of directors.

The commission will amend its directive issued on January 14, 2021, along with subsequent amendments, and issue a revised directive. The decision will take effect from the date the new directive is issued.