The securities regulator has taken an initiative to strictly enforce a provision that requires the sponsor-directors of the listed companies to hold a certain amount of shares.
The Bangladesh Securities and Exchange Commission (BSEC) will also incorporate some new conditions into its notification regarding the minimum amount of shares to be held by the sponsor-directors.
The BSEC will also amend the public issue rules soon to incorporate new provisions on capital raising issues.
The securities regulator held a meeting with major stakeholders of the capital market on Thursday to discuss the proposed amendments.
Representatives of the Dhaka Stock Exchange (DSE), the DSE Brokers Association (DBA), the Bangladesh Merchant Bankers Association (BMBA) and the asset management companies attended the meeting, with BSEC Chairman Professor M Khairul Hossain in the chair.
"The securities regulator has given a briefing on the proposed amendments to the public issue rules. The amendments will be finalised soon," DBA President Md Shakil Rizvi told the FE.
As per the proposed amendments, a listed company would be shifted to a new category if its sponsor-directors fail to hold the minimum amount of shares mentioned in the notification.
The listed companies would also not be allowed to raise capital through bonus shares, rights shares, and RPO (repeat public offer) or go for merger if their sponsor-directors fail to hold the stipulated amount of shares.
The meeting also discussed another condition that margin loans would not be provided against the shares of the companies of such sponsor-directors not complying with the notification.
However, this condition is yet to be finalised, DBA president Shakil Rizvi said.
As per the notification issued in 2011, the sponsor-directors of the listed companies must hold a minimum of 2.0 per cent of shares individually. And the sponsor-directors jointly will hold a minimum of 30 per cent of shares. Otherwise, the companies would not be allowed to issue rights shares.
Contacted, BSEC executive director Mohammad Saifur Rahman said the stakeholders were informed of the draft amendments to the securities rules in the meeting.
"The draft amendments will be placed in the next meeting of the commission. After taking public opinion, the BSEC will give final approval to the amendments," Mr. Rahman said.
Two BSEC committees are now working to amend the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015.
As per the decision taken on April 29, the non-listed companies will not require the regulatory approval to raise capital through private placement.
And the minimum size of IPO will be Tk 500 million under the fixed-price method, while the IPO size will be Tk 1.0 billion under the book-building system.
The listed companies would have to explain the reasons for raising capital through bonus shares after listing.
The companies will also have to publish the necessity of issuing bonus shares as price sensitive information (PSI).
The IPO quota for eligible investors (EIs) will be scrapped if they fail to conduct the regular functions, according to BSEC decision.
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