Defending the selection of Chinese consortium, Dhaka Stock Exchange on Sunday sent replies to the queries made by the Bangladesh Securities and Exchange Commission about the rules ‘violations’ by the group.
The DSE board had finalised its answers on Saturday, a DSE official said.
He said that they replied to all the queries that the commission had asked about. ‘If the commission wants further explanations, we would provide defending our choice,’ he added.
If the regulator has any suggestion to modify or amend, they would negotiate with the group, said the DSE official, adding that the consortium had already showed flexibility to accept any conditions that international laws and customs favoured.
Earlier on February 26, the BSEC asked the DSE to clarify a number of rule ‘violations’ by the Chinese consortium of Shenzen Stock Exchange and Shanghai Stock Exchange in its bid to be a strategic partner of the DSE and asked the bourse to submit reply by March 4.
A BSEC committee, after evaluating the consortium’s proposal sent by the bourse on February 19, in a letter to the DSE wrote that a number of clauses of the proposal were in direct deviations of the country’s relevant laws.
According to the BSEC evaluation, the Chinese consortium’s proposal to execute the agreement under the UK law and settlement of any dispute under international arbitration law was in violation with the relevant laws in Bangladesh.
DSE officials on the issue said that any international agreement required settling under international arbitration law.
The regulator also figured out that the price offered (Tk 22 a share) was not a fixed price as the group share purchasing agreement says that if the DSE pays any dividend to shareholders or its net asset value falls, the purchase price must be subject to a negative adjustment.
DSE officials said before signing the agreement that may take more than one year, if the net asset value and the overall valuation of DSE falls, the price quote could be reduced in accordance with the valuation deficiency.
Regarding the group asking for waiver from settlement guaranteed fund, the DSE said that the SGF was for the brokerage house on their trading and the strategic partner would not provide brokerage services.
The BSEC also raised question whether the DSE had made any independent assessment on the value of the consortium’s technical support worth $37 million as claimed by the consortium.
The BSEC committee observed that despite holding 25 per cent shares, the Chinese consortium, if it became a strategic partner, would hold ‘certain prerogative over the rest 75 per cent share holders’.
Besides, the committee asked the DSE to explain whether the consortium’s proposal to include certain clause in the agreement, allowing it to form technical committee and appoint the co-chief technical officer, was in violation of the DSE demutualisation scheme.
The DSE officials said that the agreement with the Chinese consortium was negotiable if commission asked to change the clause that violates the relevant laws of the country.
‘The committee will submit its report to the commission soon,’ BSEC officials said.
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