The draft guidelines for initial public offering (IPO) may be finalized next week. This week, the reform committee will meet with the stock exchange, merchant bank association and other related parties and take their opinions. Based on these views, the final draft will be prepared and sent to Khandaker Rashed Maqsood, chairman of the stock market regulator Bangladesh Securities and Exchange Commission (BSEC).
A member of the committee said, “I hope that the discussions with stakeholders will be concluded this week and the IPO draft will be finalized next week.”
Meanwhile, several changes are being made to the IPO process in the draft guidelines. In particular, new proposals have been made to hold auditors and issue managers accountable. In the past, each institution tried to avoid responsibility by blaming each other, but now everyone will have to be responsible for their work. If any irregularities are found in the financial statements of a company, not only the auditor but also the company’s board will be responsible for it. In addition, the draft regulations are also including the share price determination, lock-in method, power of the stock exchange, etc.
The new regulations state that the stock exchange will evaluate the company’s listing application. After reviewing the financial statements and other factors, the stock exchange will send their evaluation to the BSEC. BSEC will approve the listing of the company based on that evaluation. BSEC will not be able to issue any order or directive on the listing of a company itself, but will only approve based on the stock exchange’s evaluation.
In addition, the IPO draft contains some new recommendations for determining the share price. Some new conditions have been added before the sale of shares in the bookbuilding method, which will be helpful in determining the correct price of the shares. In addition, it has been recommended to reintroduce the lock-in system for institutional investors during the sale of shares.
In this regard, a member said, “There is a tendency to increase share prices through manipulation due to the lack of lock-in. The lock-in system is being restored to prevent this trend.”
In addition, it is known that there have been many irregularities in the listing of companies on the stock market. Weak companies have been listed through loopholes in the law and there are also allegations of giving benefits to certain groups. The reform committee is preparing the IPO draft keeping these issues in mind.
After finalizing the draft policy next week, BSEC will review it and take a final decision.
