Dhaka Stock Exchange on Thursday placed before market regulator Bangladesh Securities and Exchange Commission a set of proposals that included ceiling on issuance of placement shares at 25 per cent of a company’s paid up capital and limiting placement-share holders to 50 investors.
DSE on Thursday submitted the proposals to BSEC after getting approval of its board at a meeting held on Wednesday.
The bourse made the recommendations as it found unhealthy practices involving pre-IPO placement shares in recent times.
Apart from the proposal of limiting number of placement-share holders, DSE requested for a lock-in for a period of one year from the date of debut trading to thwart any abuse.
To shield the market from unusual volatility, shares of sponsors/directors/placement holders should be held under a separate category under Central Depository Bangladesh Limited with separate flagging system for identification.
The bourse also suggested that the shares of sponsor-directors should be under lock-in for the period of three years from the date of debut trading, not from the date of approval of prospectus.
Besides, if the company declares any stock dividend after debut, the stock dividend portion of the sponsor-directors would be under lock-in for one year.
The share sales declaration of sponsors/directors would be executed after 15 days from the date of declaration, to provide an opportunity to the general investors to decide as to whether they would hold their shares or not, DSE proposed.
If the shareholding of any director of a listed company falls under 2 per cent of outstanding paid-up capital of the company, his/her directorship would be ceased automatically.
DSE proposed that a new category should be launched for companies where sponsors/directors/promoters do not hold 2 per cent individually and 30 per cent jointly of the company’s shares.
Circuit breaker on highly volatile small-cap companies may be withdrawn so that tendency to reap unusual benefit is prevented, DSE proposed.
Supply of fundamentally sound securities is a major requirement for the country’s capital market and the market needs to attract companies which are large in size and are fundamentally strong.
Therefore, the government as well as BSEC can take required initiatives to offload shares of state-owned enterprises on the stock exchanges.
The government grants permission for private bodies to establish companies in the special sectors including power generation, LNG terminal and large infrastructure projects, DSE said adding, ‘We recommend encouraging these companies to offload at least 30 per cent of their shares through the stock exchanges at the time of granting permission.’
Currently a large number of foreign companies are running their business in Bangladesh, but only a few are listed with the country’s stock exchanges.
Many of these companies are also operating in neighbouring countries and are listed with the respective countries’ stock exchanges.
BSEC may consider initiatives to bring such companies to the capital market of Bangladesh, it said.
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