Bangladesh Securities and Exchange Commission (BSEC) has moved to bring some changes to public issue and mutual fund rules.
The changes were proposed at the commission meeting yesterday. The regulator will post the changes on its website, seeking public opinion before giving it a final shape.
Under the proposed amendment to public issue rules, the regulator has proposed to include foreign investors who have portfolio investments in the capital market of Bangladesh, alternative investment fund managers and alternative investment funds to participate in bidding under the book-building process as eligible investors (EIs).
Quota for each eligible investor will be kept in IPO and lock-in for alternative investment funds will be reduced to one year.
Red herring prospectus must be finalised on the basis of comments and observations of the EIs participated in the road show.
Red herring prospectus is a prospectus, which does not have details of either price or number of shares being offered, or the amount of issue.
The prospectus must contain all the information pertaining to the issuer and the issue including the total amount to be raised through the public issue, but not include the issue price and the number of securities to be offered.
The cut-off price will be determined at nearest integer of the lowest bid price at which the total securities will be offered to eligible investors. Eligible investors shall be allotted security on pro-rata basis within their category-wise quota at the cut-off price.
Securities shall be offered to general public for subscription at an issue price to be fixed at 10% discount (at nearest integer) from the cut-off price.
Under some of the proposed changes to mutual fund rules, the fund will be allowed to invest highest 20% of its fund size in fixed deposit.
Every fund has to publish monthly reports of their investment in and out of the capital market on their websites.
The fund will be allowed to re-invest dividends as per the regulator’s prescription and to provide interim dividend for its unit holders unless there is no provision shortfall.
Net asset value will have to be published daily instead of existing weekly basis.
Every after two years, mutual fund must organise general meeting to discuss funds performance. The fund managing company’s paid-up capital will be Tk10 crore for registration eligibility.