The Bangladesh Securities and Exchange Commission (BSEC) has moved to make it mandatory for companies willing to go for an initial public offering (IPO) to float at least 10 per cent of its paid-up capital from the stock market.
The regulator drafted the rule to amend the Public Issue Rules, 2015.
According to the draft rules, companies willing to go public must ensure the size of public offer on the basis of post-IPO paid-up capital.
The size of the public offer must be at least 30 per cent of the paid-up capital, including the intended offer, if the size of post-IPO paid-up capital is up to Tk 75 crore.
If the post-IPO paid-up capital is between Tk 75 crore and Tk 150 crore, the IPO size must be at least 20 per cent of the paid-up capital.
And if the post-IPO paid-up capital crosses Tk 150 crore, the company must float 10 per cent of the paid-up capital, including the intended offer.
The move was made after facing a spate of criticisms when Walton Hi-Tech Industries floated only 0.93 per cent of shares of its total paid-up capital to raise Tk 100 crore through their IPO, said BSEC officials.
The rules also allowed the IPO-aspiring companies to issue placement shares up to 15 per cent of the size of its IPO under the fixed price method, or at the cut-off price under the book-building method to anyone, which must be treated as a part of the said IPO.
Market experts said the facility may be misused as the company may issue placement shares to anyone at higher prices due to the guarantee of the IPO approval.
The company must also obtain post-facto consent from the commission for its existing paid-up capital under the Securities and Exchange Commission (Issue of Capital) Rules, 2001 before submitting the IPO application.
It will also not be eligible to apply for IPO if it has raised paid-up capital except the issuance of bonus shares within the preceding two years from the date of application.
However, the issuance of shares in exchange for collaborative investments are allowed subject to prior approval of the commission.
The IPO applicant, upon the instruction of the commission, must collect and submit certified copies of VAT returns from the National Board of Revenue (NBR) and a certified copy of bank statements from concerned banks of the company.
The commission may verify the authentication of the documents from the NBR or the concerned bank.
The BSEC also reshuffled quota facilities for the investors.
According to the draft rules, general investors would enjoy 65 per cent, non-resident Bangladeshis 5 per cent, eligible investors 20 per cent and mutual funds 10 per cent of the IPO shares under the fixed price method.
Under the book-building method, general investors will enjoy 65 per cent, NRBs 5 per cent and eligible investors 30 per cent.