The Bangladesh Securities and Exchange Commission has eased rules related to enterprises’ eligibility to raise fund from the capital market under the fixed price method of initial public offering.
Under the relaxed rules, an entity would be eligible to raise fund from the capital market under the fixed price method with net profit after tax and positive net operating cash flow in the immediate preceding one year.
The relaxation has been incorporated in the amended Bangladesh Securities and Exchange Commission (public issue) Rules, 2015, a BSEC press release said.
The amendments to the public issue rules were finalised at a commission meeting held on Tuesday. BSEC chairman M Khairul Hossain presided over the meeting.
A BSEC official said that the move was taken with a view to making it easier for companies to enter into the capital market for finance.
Under the book building method, the profitability requirement for the companies, however, will remain unchanged — net profit after tax and positive net operating cash flow in the immediate preceding two years.
For the IPO-seeking companies under the book building method, entities will have to float shares worth at least Tk 50 crore along with pre-IPO paid-up capital of Tk 30 crore.
Earlier, pre-IPO paid-up capital requirement for the IPO-seeking companies under book-building method was Tk 15 crore.
On the other hand, in case of the fixed price method, pre-IPO paid-up capital of a company must have to be Tk 15 crore, while an entity’s IPO size would be worth Tk 15 crore or at least equivalent to 10 per cent of its paid-up capital.
Besides, the market regulator tightened a provision in the public issue rules with a view to containing syndication in determining cut-off price under the book building method.
Under the latest amendment, eligible investors would be allowed to offer highest 2 per cent of a company’s issue size instead of the existing 10 per cent.
The previous amendment allowed syndication of IPO cut-off price under the book-building method as only 10 bids of eligible institutional investors could exhaust full offer size of an entity.
The latest amendment also asked eligible institutional investors to submit IPO application through the stock exchange directly.
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