The Bangladesh Securities and Exchange Commission on Wednesday threatened the Dhaka Stock Exchange with legal action if it provided observations about a company’s initial public offering based on suspicion.
DSE officials said that the BSEC letter in this connection would make the bourse’s IPO team reluctant to do their job properly as they had already become nervous.
The BSEC on Wednesday issued the letter, signed by its executive director Ruksana Chowdhury, asking the bourse to strictly follow the direction given in the public issue rules while making observations on an IPO.
According to the public issue rules, the DSE must mention in its observations whether a company violates any securities rules, accounting standard and any other law of the land.
DSE officials said that the IPO team sometimes noticed inconsistencies in financial statements of the IPO seeking companies and it mentioned those inconsistencies in the IPO observation reports as it thought that the things required further investigation.
As per rules, the DSE is not allowed to conduct any investigation to verify the information, they said.
They said that the BSEC did not require issuing such a letter as the commission could easily ignore observations that might not require further scrutiny.
The BSEC letter said that the BSEC and the DSE held a meeting on July 6 at the BSEC office in the capital and reached a consensus that the bourse would not provide observations going beyond the public issue rules.
If the DSE gives any observation that does not involve with the IPO seeking companies’ violation of rules in line with public issue rules, the commission would take specific, proper and necessary legal action against the bourse, the letter said.
BSEC chairman Shibli Rubayat Ul Islam told New Age that he did not know anything about the issuance of such a letter to the bourse.
He also said that he would look into the matter today.
Investors expected that the new commission headed by chairman Shibli would not allow poor companies to come to the market.
The previous commission under the immediate past BSEC chairman M Khairul Hossain approved 60 companies’ IPOs despite reservations shared by the DSE about the IPOs.
Despite allegations of various anomalies including formation of an artificial paid-up capital against Coppertech Industries, the commission had allowed the company to come to the capital market without any further investigation.
The same practice was also seen regarding the approval of Ring Shine Textiles that had exposed a tussle between the DSE and the BSEC over the IPO approval.
Approval of mostly poor companies ignited criticisms from different quarters that forced the BSEC to allow the DSE to form an IPO review panel on October, 2019.
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