B Mirror Desk: It has been proposed to make listing in the cap-ital market mandatory for companies that will borrow Tk 1,000 crore or more from banks. Bangladesh Bank has been recommended to issue instructions to all banks in this regard.
In addition, the task force formed by the capi-tal market regulator BSEC to reform the stock market has recommended entrusting the pri-mary power to approve initial public offerings (IPOs) for new companies entering the capital market to the stock exchange.
The task force submitted its recommendations regarding IPO to Bangladesh Securities and Exchange Commission (BSEC) Chairman Khandaker Rashed Maqsood at Agargaon in the capital on Monday (March 24). These rec-ommendations were presented there.
The task force’s recommendations state that no company with a capital of less than Tk 30 crore should be listed on the main market under the fixed price method and no company with a capital of less than Tk 50 crore should be list-ed on the main market under the book building method. In addition, the task force has pro-posed to reserve 50 percent of the shares in the IPO for general investors and the remaining 50 percent for institutional investors. Out of the 50 percent reserved for general investors, 5 percent should be allocated for expatriate Bangladeshis and the remaining 45 percent for investors residing in the country.
High yield bond recommendations
The task force has recommended that the stock exchanges will take the initial decision on
which companies will come to the market through IPO and which companies will not get approval. If the stock exchange rejects the IPO proposal of a company, the regulatory body BSEC will not be able to approve the IPO of that company. The task force has recommend-ed amending the IPO law to include this provi-sion.
The report containing the recommendations of the task force was handed over to the BSEC chairman by Majedur Rahman, a member of the task force and CEO of Bangladesh International Arbitration Center, and Mohammad Helal Uddin, Executive Vice Chairman of Microcredit Regulatory Authority. Along with other members of the task force, three BSEC commissioners and members of the task force focus group were also present at the time.
A five-member task force was formed on October 7 to recommend capital market reforms to develop the stock market, increase investor confidence and ensure international standards of good governance. The members of the task force are Mohammad Helal Uddin, professor of the Department of Economics of Dhaka University, KAM Majedur Rahman, former managing director of Dhaka Stock Exchange (DSE), AFM Neseruddin, senior partner of audit firm Huda Vasi Chowdhury & Co., Md. Mustafa Akbar, professor of the Department of CSE of Bangladesh University of Engineering and Technology (BUET), and
Al Amin, associate professor of the Department of Accounting Information Systems of Dhaka University.
The scope of work of the Capital Market Reform Task Force formed by BSEC was 17. These included identifying the main reasons for the low size of the capital market, i.e. the ratio of GDP to market capitalization, and pro-posing policies for improvement; recommend-ing the government to formulate policies for financing from the capital market instead of bank loans for long-term financing and ensur-ing BSEC’s representation in taking policy decisions related to this; analyzing the current situation and major challenges to improve mar-ket governance and formulating recommenda-tions for solutions; recommending increasing the institutional capacity of BSEC; formulating recommendations to ensure transparency, accountability and good governance of the institutions, including upgrading the supervi-sory activities of DSE, CSE, CDBL, CCBL to world standards; recommending to update the securities policies related to private placement; formulating recommendations to increase investor protection and market depth, includ-ing transparency, accountability, institutional good governance, corporate announcements of listed companies; Recommending to update existing laws and regulations for market inter-mediaries; Providing necessary advice to pro-tect the interests of investors and increase con-fidence; Formulating specific penal codes and punishment rules to bring equality in the trial and punishment of market manipulation, irreg-ularities, Formulating a standard procedure or guidelines for coordination among regulatory agencies; Making recommendations regarding obtaining .
BSEC’s no-objection before the High Court’s approval for mergers of unlisted companies with listed companies, acquisitions, etc. The task force has submitted a report with recommendations to the BSEC on three issues. These include recommendations related to mutual funds, recommendations for changing the rules on margin rules or loan facilities provided against shares. The latest recommendation was submitted yesterday regarding IPOs. In its recommendation on IPO, the task force said that the stock exchange will form a separate specialized panel to review IPO applications. That panel will examine the details of the IPO applicant company. If necessary, it will conduct on-site visits to the company’s offices and factories or businesses. Then, if the stock exchange, based on the opinion of that panel, gives its opinion that the company is eligible for listing, then the commission will consider it for approval, otherwise not. However, even after the stock exchange gives a positive opinion on the IPO of a company, the commission will have the authority to not accept the IPO if the company is not eligible for approval in the opinion of the commission. Again, if the stock exchange gives a negative opinion, the company concerned will have the opportunity to review or review it.
