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BSEC to amend private placement, book building method guidelines

  • Published at 12:20 am March 20th, 2019
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File photo of Bangladesh Securities and Exchange Commission Office in Dhaka Syed Zakir Hossain/Dhaka Tribune

BSEC made the decision at a commission meeting held at its office in Dhaka

The Bangladesh Securities and Exchange Commission (BSEC) on Tuesday formed two separate committees to amend the private placement (pre-IPO placement) regulation and the book-building method.

BSEC made the decision at a commission meeting held at its office in Dhaka. BSEC Chairman M Khairul Hossain presided over the meeting, said a press release.

BSEC Executive Director Mahbub Alam will lead the four-member committee on amending the private placements regulation.

In the past few days, private placements at the stock market have been an important topic of discussion among stakeholders as shares are being traded through extensive irregularities through the process. 

Additionally, there has been criticism at the meeting of the Board of Directors of the Dhaka Stock Exchange (DSE) regarding the situation. Prompted by this, BSEC decided to form a committee for the amendment of the private placements notification.

The commission made the move after repeated reports from the media that almost every company issues huge placement shares within three years of applying for public offering to dump the shares on the general public.

Placement shareholders were found selling their shares at the stock market after the existing one year lock-in period, pushing down the company’s share prices at the market—leaving general shareholders to bear the brunt of the price fall.

DSE raised their voice against the random placement shares’ issuance just before their listing with the stock exchanges, and proposed placement shares to be kept under the lock-in period for three years instead of the existing one year.

The bourse also urged not to approve allotment of placement shares at least three years before listing with the exchanges.

BSEC Executive Director Ruksana Chowdhury will lead the five-member committee formed for amending the book-building method. The committee will recommend changes to the method after reviewing it.