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BSEC not to take new IPO application till change in rules

Staff Correspondent | Published: 00:00, May 01,2019

 
 

Bangladesh Securities and Exchange Commission on Tuesday postponed receiving any new IPO application until the public issue rules are amended.
The commission also decided not to accept any new application from the unlisted companies for the purpose of capital raising, which would diminish the existence of any ‘placement shareholders’.
The decisions were made at a regular commission meeting presided over by its chairman M Khairul Hossain, a BSEC press release said.
It said that from April 30 the commission would not accept any new application until it made amendments to the BSEC public issue rules, 2015.
But, it will consider the applications already summited under the existing rules.
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 criticism that companies sell share certificates to public showing the regulator’s capital raising approval.
The capital market has been going through a severe losing phase due to the rampant IPO approval with lack of verification of companies’ business position.
These fundamentally poor companies issued huge amount of placement shares just before coming to the secondary market to dump the shares on public.
Investors took to the streets protesting against the random IPO approval as the companies could not perform well soon after they got listed with the exchanges.
Therefore, the commission moved to rectify the IPO approval system to ease the ongoing situation in the market.
There would be no placement holders from now on. The placement holders would automatically become shareholders and would incur 3-year shares lock-in.
The commission at the meeting also approved Mutual Trust Bank to sell 6.37 crore shares to NORFUND.
The commission at the meeting allowed Delta Brac Housing Finance Corporation Limited to float bond worth Tk 300 crore.
As per the BSEC approval, DBH will float non-convertible zero coupon bond worth Tk 300 crore.
The face value of each unit of the bond will be Tk 10 lakh and the bond will be fully redeemable in five years.
Only corporate bodies, financial institutions, corporate institutions and other eligible investors will be allowed to subscribe the bonds through private placement.
The purpose of the issue is to strengthen its capital base.
Sena Kalyan Insurance Company acts as the trustee for the bond while Standard Chartered Bank is the mandated lead arranger for the bond.

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