The Bangladesh Securities and Exchange Commission will follow new public issue rules in dealing with the pending applications for initial public offerings of different companies.
The new rules would be issued through a gazette notification soon, BSEC officials said.
They said that the new public issue rules would repeal the existing rules, so the repealed rules would be ineffective for the pending IPOs.
The officials, however, said that the commission might consider the IPO size of the companies under the rules they had submitted the applications.
There are around 26 companies who had applied for IPOs under the existing public issue rules and have been waiting for IPO approval from the commission.
The commission on April 29 had said in a press release that the IPO applications submitted before April 29 would be considered under the existing rules.
Market experts said continuation of repealed rules was against the spirit of laws.
On July 16, the BSEC finalised the new public issue rules after analysing opinions from stakeholders and general public.
According to the finalised new public issue rules, the size of the public issue under the fixed price method must be minimum Tk 30 crore or 10 per cent of the company’s paid-up capital, whichever is higher. Previously, it was Tk 15 crore.
The size of the public issue under the book building method must be at least Tk 75 crore. Previously, it was Tk 50 crore.
The other changes including bidding process, IPO quota facility and share lock-in system would also be applied to the pending issues.
The IPO quota facility for the general investors has been raised to 50 per cent from 40 per cent under the fixed price method of IPO and it has been increased to 40 per cent from 30 per cent under the book building method.
The quota facility for the eligible investors has been cut to 50 per cent from 60 per cent under the book building method while it has been reduced to 30 per cent from 40 per cent under the fixed price method.
But the shares held by placement shareholders and alternative investment funds would face a two-year lock-in period. The period would be counted from the first trading day of the issue on the stock exchanges.
According to the new rules, the eligible investors including financial institutions must have to invest a certain amount of fund at the secondary market to get the IPO quota facility reserved for them.
The commission would set the amount in the consent letter of every IPO.
If an EI does not invest the BSEC-set amount at the secondary market, the EI would lose the IPO quota facility.
The commission came up with the changes after facing a spat of criticisms from different quarters that the IPO approval process had loopholes and the drawbacks allowed weak companies to get IPO approval.
Of the pending applications, Lub-rref (Bangladesh) has applied to raise Tk 150 crore, Delta Hospital Tk 50 crore, Baraka Patenga Power Tk 225 crore, Aman Tex Tk 200 crore, Walton High-Tech Industries Tk 100 crore, Mir Akhter Hossain Tk 125 crore and Energypac Power Generation Tk 149.86 crore under the book building method of IPO.
Dhaka Regency Hotel & Resort also applied for raising Tk 60 crore, Shamsual Alamin Real Estate Tk 80 crore, and Index Agro Tk 40 crore under the book building method.
Under the fixed price method, Electro Battery applied to raise Tk 22 crore, Crystal Insurance Tk 16 crore, Desh General Insurance Tk 16 crore, Al-Faruque Bags Tk 30 crore, BD Paints Tk 20 crore, SF Textile Tk 18 crore, Bonito Accessories Industries Tk 30 crore, PEB Steel Alliance Tk 15 crore, Asya Sea Food Tk 20 crore, Sonali Life Insurance Tk 19 crore, Associated Oxygen Tk 15 crore and Gardenia Wears Tk 20 crore, Mohammed Elias Brothers Poy Tk 25 crore, BD Thai Food and Beverage Tk 15 croe, AFC Health Tk 17 crore and Oryza Agro Industries Tk 25 crore.
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