Discussants have laid importance on proper IPO (Initial Public Offering) pricing, good governance in taxation and reduced timeframe for approval of public offerings to attract good companies to go public.
They made the suggestions Sunday at a seminar titled "Obstacles of listing into capital market and ways to solve" held at a hotel in the capital.
Incumbent and former chairmen of the Bangladesh Securities and Exchange Commission (BSEC) Prof Shibli Rubayat Ul Islam and Faruq Ahmad Siddiqi attended the programme as chief guest and special guest respectively.
The participants at the seminar said the reduction of corporate tax gap between the listed and non-listed companies is one of the factors discouraging companies having good fundamentals to go public.
"Due to insufficient application, laws do not play a significant role in our country. Good companies will be interested for listing to avail tax benefit if the revenue board could ensure proper application of laws on corporate tax laws," the former chairman of BSEC Mr Siddiqi told the seminar arranged by the online news portal businesshour24.com.
He said good governance will have to be ensured in the taxation department.
"Otherwise, no laws will be able to facilitate the listing of good companies amid tax benefits," Mr Siddiqi said.
Presently, there is 7.50 per cent gap between the corporate tax paid by listed and non-listed companies. Previously, the gap was 10 per cent.
While speaking on the jobs of auditors, Mr Siddiqi said the subsequent procedures of a company's listing will be hampered if quality auditing is not ensured.
"So, the quality auditing is very important, despite it is a tough job as many auditors do their auditing jobs taking into account their fees paid by the companies," Mr Siddiqi said.
He said proper IPO pricing will have to be ensured to attract good companies to go public.
"A good company will not be interested to go public if there is no significant difference between the prices of a good and bad company. So, the policy of fixing fair IPO pricing is very important to attract good companies."
Mr Siddiqi said the companies depend on bank financing without going public as such financings are easy compared to the funds raised through the IPO.
"The banks run after the good companies. Such companies will remain reluctant in going public until the banks will have access financing capacity," Siddiqi said.
He said the government will have to come forward to remove the obstacles hindering the listing of good companies.
In his speech, Prof. Shibli Rubayat Ul Islam said presently it does not take enough time to clear an IPO proposal if the company submits papers properly.
"We are trying to convince good companies to go public. Three good companies of leading business groups now are already on the way to go public," Mr Islam said.
He said the companies are unwilling to increase their valuation through the listing due to their so-called mindset.
"We have established SME (small and medium-sized enterprises) platform to help those take preparations for listing with the exchanges' main boards," said Mr Islam, adding that the SME sector should have been prioritised 50 years ago.
The BSEC chairman said the classification of bank loans is not business friendly.
"All the businesses do not have bad intentions. There are profits and losses in business. But the companies having good reputation also become sufferer due to a section of bad borrowers," said Prof. Islam.
He said the auditors now will dare to prepare window-dressed balance sheets as monitoring has been intensified here.
"We have also stopped the business of placement shares," Islam said.
Referring to the incentives offered for the RMG sector, the president of Bangladesh Merchant Bankers Association (BMBA) Md. Sayadur Rahman said no sector was able to see developments without availing benefits offered by the government.
"Why will a company having strong base be listed if there is no benefit for it?"
The BMBA president Mr. Rahman said the corporate tax gap will have to be increased along with framing mandatory rules for the listing of good companies.
The president of the Institute of Cost and Management Accountants of Bangladesh (ICMAB) Md. Mamunur Rashid presented his keynote speech at the seminar moderated by the businesshour24.com editor Amirul Islam Nayon.
mufazzal.fe@gmail.com