Securities and insurance regulators have stood against each other regarding the IPO approval of Bangladesh National Insurance Company Ltd (BNICL).
The conflict surfaced as Insurance Development and Regulatory Authority (IDRA) alleged that the stock regulator had approved initial public offering proposal of the BNICL without much scrutiny.
IDRA said the insurance company had violated IPO rules by not taking permission from the insurance regulator before having its IPO okayed by the stock regualtor.
According to the insurance rules, no company can raise its authorised or paid up capital without consent of IDRA.
IPO without IDRA’s consent will result in the loss of the company’s licence, the rules say.
“Approving IPO of the BNICL which had no permission from the insurance regulator breached the IDRA rules,” said an IDRA official.
Bangladesh Securities and Exchange Commission (BSEC), however, denied the insurance regulator’s allegation and said the company had followed all the rules required.
On May 17, the BSEC approved the IPO proposal of BNICL to raise fund worth Tk17.70 crore.
The IPO subscription is scheduled to begin from June 30.
In a letter to IDRA, the stocks regulator argued that the BNICL had complied with the rules required for going public.
It said the insurance regulator could take action against the company if found guilty of any IPO rule violation.
BSEC spokesperson Saifur Rahman is unaware of the friction that has developed between the two regulatory bodies over an IPO issue.
When contacted, Saifur Rahman said he knew nothing about it.
Market analysts also blamed the BSEC saying it had not followed rules properly in okaying IPO offer of the BNICL.
They said such approval could destabilise the market.
According to an analyst who preferred not be named, fundamentals of many companies, which have recently hit the market, are also questionable.
According to the Registry of Joint Stock of Companies (RJSC), BNICL recently raised its authorised and paid up capitals of Tk100 crore each from Tk20 crore and Tk15 crore respectively.
But in IPO prospectus submitted to the BSEC, the company showed its authorised capital is Tk100 crore and paid up capital Tk26.55 crore.
After raising capital, its paid up capital will be Tk44.25 crore.
According to the insurance rules, an insurance company must have to pay 60% of its total amount of raised paid up capital to its sponsors.
But the rule was also allegedly violated by the BNICL.