Businesses with small capitals – as low as Tk5 crore – can now get listed with the country’s stock exchanges, according to a new set of rules passed by the Bangladesh Securities and Exchange Commission (BSEC).
The Bangladesh Securities and Exchange Commission (Qualified Investors Offer by Small Capital Companies) Rules, 2018, passed during a BSEC meeting on Tuesday, is aimed at attracting small and medium enterprises (SMEs) to be listed on the bourses.
The meeting was presided over by BSEC Chairman M Khairul Hossain, who approved the rules with some changes, according to a press release.
A gazette notification will soon be published with the new rules, the press release added.
The BSEC had previously sought opinion, advice or objection, if any, on the BSEC Rules, 2018, which was published on its website and in newspapers for public review.
According to the new rules, with the introduction of Small Capital Board, a company can apply for initial public offering (IPO) if it has a minimum existing paid-up capital of Tk5 crore, and intends to raise its paid-up capital by at least Tk5 crore through Qualified Investor Offer (QIO), and if after QIO its paid-up capital stands below Tk30 crore.
At present, to be eligible for applying for an IPO, a company requires Tk30 crore as minimum paid-up capital and profitability for three consecutive years, among other criteria.
“The regulator is going to introduce a small cap platform, where a company with a paid-up capital between Tk5 crore to Tk30 crore will be able to offload shares to the public,” Dhaka Stock Exchange (DSE) Managing Director KAM Majedur Rahman said.
In 2016, following proposals from the two bourses, the commission approved the BSEC (Qualified Investor Offer by Small Capital Companies) Rules, which were published on its website and in newspapers for public review.
On March 27 this year, the DSE submitted a number of proposals with necessary amendments to the BSEC (Qualified Investors Offer by Small Capital Companies’ Rules), which was formulated in 2016, as well as a draft proposal for the DSE small-capital company listing regulation.
Earlier on January 28, the Chittagong Stock Exchange (CSE) had submitted its draft proposal of the listing regulation.
On April 27, the BSEC approved the proposals for the Dhaka Stock Exchange (Listing of Small Capital Companies) Regulations, 2018 and Chittagong Stock Exchange (Listing of Small Capital Companies) Regulations, 2018 with some changes.
At Tuesday's meeting, the BSEC proposed an additional rule making mandatory for all kinds of investors to make a minimum Tk5 lakh transaction at a time, which would allow them in the secondary trading under a separate board.
Furthermore, in case of the paid-up capital of the company crossing Tk30 crore, the company must apply for listing with the main board.
The board of directors of the small companies will also be exempted from holding a mandatory 2% and jointly 30% shares. There will be a lock-in period for shareholders.
At the meeting, the BSEC also agreed to warn AM Securities and Financial Services Ltd for not complying with the securities law. The company has failed to submit its financial report with the stock market regulator.
In addition, the commission has decided to extend the facilities regarding provision protection in case of losses after investment, which are currently enjoyed by mutual funds and financial institutions, to merchant banks as well. A directive regarding this decision will be published soon as well, according to the press statement.
