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Dhaka Tribune

DSE to form expert panel to scrutinize IPO prospectus

The meeting was presided over by Bangladesh Securities and Exchange Commission (BSEC)  Chairman M Khairul Hossain at Commission’s headquarters in the capital

Update : 24 Oct 2019, 10:37 PM

The securities regulator and stakeholders at an emergency meeting on Thursday decided to form an expert panel to ensure the entries of quality initial public offerings (IPOs) in the stock market.

The meeting was presided over by Bangladesh Securities and Exchange Commission (BSEC)  Chairman M Khairul Hossain at Commission’s headquarters in the capital.

Stakeholders of share market including representatives from Dhaka Stock Exchange (DSE) and Dhaka Stock Exchange Brokers' Association (DBA) were present at the meeting.

Four auditors and a number of DSE directors will be included in the proposed panel. The experts will examine the prospectus of IPOs, including their financial statements and present business and commercial activities.

The meeting also decided to empower the DSE with authority to inquire into the companies in line for the IPO approvals.

DSE Director Minhaz Mannan Emon said, “The meeting with the regulator was fruitful and we hope the implementation of the meeting outcome will help the market.”

He said the continuous fall of share prices in the market shook the confidence of the investors. 

“We proposed to put 50 % circuit breaker provision in place on the debut trading day and second trading day of any listed company so that the prices cannot rise or fall abnormally,” he added.

Dhaka Stock Exchange Brokers' Association (DBA) President Shakil Rizvi told Dhaka Tribune that the recent drop in the stock market was due to confidence crisis and lack of good IPOs.

He demanded that IPOs of only good performing companies should be approved to ensure investors got better dividends and did not lose their money.

During the eight-year tenure of incumbent BSEC Chairman M Khairul Hossain, around  86 IPOs were approved, while around half of them were alleged to be of low qualities. It was alleged that a good number of low quality firms resorting to malpractices often showed higher profitability in their annual financial statements while applying for IPO approvals to the securities regulator during the last eight years.

Market insiders said although the commission knew about weak companies who provided forged financial statements for IPOs, kept approving those with vested interest.

After listing, it was found that the earning per share (EPS) of most of the firms started falling, suggesting that their earlier earnings reports were either overestimated, or fake, an expert said.

The agitating investors said that lack of regulatory control over the stock market, ‘filthy’ IPO approval with huge amount of placement shares, relaxed punishment of fraudsters, manipulators and errant companies shattered investors’ trust and confidence.

Bangladesh Pujibazar Biniogkari Oikya Parishad president Mizan ur Rashid Chowdhury said: “The BSEC chairman is working for the issuer companies and stock brokers, not for the investors.”

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