Dhaka Stock Exchange stockbrokers are unhappy with the Bangladesh Merchant Bankers Association’s proposal to keep the provision of placement shares.
The association has recently sent the proposal to the stock market regulator Bangladesh Securities and Exchange Commission after BSEC in the BMBA’s presence decided to end placement share issuance by companies.
DSE director Minhaj Mannan Emon said that BSEC at a meeting on April 29 made a number of decisions including the one on discontinuing placement shares.
‘We are not taking the BMBA’s new proposal seriously,’ he said.
BMBA also proposed BSEC reinstate one-year lock-in for placement shares.
Following a meeting with all the stakeholders including merchant bankers on April 29, BSEC issued a press release mentioning its decision that it would not accept any new application from the unlisted companies for the purpose of capital raising.
It said that the decision would effectively bring an end to the existence of any ‘placement shareholders’.
The regulator also decided that from now on it would not accept any application from the unlisted companies for the purpose of capital raising.
The commission made the decision as it faced complaints that companies sold share certificates to public showing the regulator’s capital raising approval.
Investors welcomed the BSEC decision and reacted positively to it.
But, at a recent meeting with the stakeholders, BSEC chairman M Khairul Hossain backtracked on its earlier position and said that the commission would seek public opinions on the decisions made on April 29.
DSE sources said the BMBA’s proposal and the BSEC’s backtracking on its position made investors puzzled.
Investors raised questions about the BSEC’s decision making ability and capability of standing on its choice, they said.
BMBA in its letter to BSEC proposed the share lock-in period for placement shares minimum six to maximum 12 months as the association found that the lock-in for placement shares was lower than one year in the neighbouring countries.
It also proposed making guidelines on the placement shares issuance to avoid any complexity.
BMBA also requested the commission to let company raise Tk 30 crore through initial public offerings instead of the recent BSEC decision of allowing Tk 50 crore under the fixed price method and proposed making it mandatory for a company to have post-IPO paid up capital of Tk 50 crore.
BMBA secretary Khairul Basar Abu Taher said that they proposed one-year lock-in line with the other countries.
He said that the approval of BSEC regarding capital raising would bring transparency as the commission would look into irregularities in the process.
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