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BSEC revokes mandatory listing provisions for large cap companies

  • Published at 09:44 pm July 1st, 2019
BSEC revokes mandatory listing provisions for large cap companies
BSEC revokes regulations aimed at bringing large companies having paid-up capital above Tk50 crore in capital market Syed Zakir Hossain/Dhaka Tribune

The securities regulator, however, could not give any satisfactory answer when asked about reason for cancelling the provision in place since May 2010

Bangladesh Securities and Exchange Commission (BSEC) has revoked the mandatory listing provision for companies having paid-up capital above Tk50 crore, squeezing scopes for bringing in more large corporations in the stock market.

A BSEC notification, signed by its chairman M Khairul Hossain on June 20, canceled the provision.

The securities regulator, however, could not give any satisfactory answer when asked about reason for cancelling the provision in place since May 2010.

Experts and market operators have said the latest decision will further squeeze entries of local large companies in the capital market.

Former adviser to a caretaker government AB Mirza Azizul Islam has told Dhaka Tribune: “I can’t find the logic why the BSEC has withdrawn the rule of mandatory listing for large companies.” 

Azizul Islam, also a former chairman of BSEC, suggests raising the mandatory listing threshold  from Tk50 crore, instead of scrapping the rule.

Prior to the repeal of the rule, a private limited company was legally bound to turn his or her firm into a public limited company within six months of exceeding its paid-up capital of Tk40 crore, according to BSEC rule.

Once the paid-up capital of a company exceeded Tk50 crore, the company had to apply to the BSEC for floating its shares in the stock exchanges, the rule says further.

AFC Capital Limited chief executive officer Mahbub H Mazumder has told Dhaka Tribune the decision of the BSEC will reduce the scope of company listing at the bourses.

“The decision has stopped opportunities for listing good and large companies in the capital market. Only small firms with low quality may be interested now for stock market listing,” Mahbub says.

Mahbub, also a Bangladesh Merchant Bankers Association (BMBA) Executive Committee member, urges the government to give adequate incentives to attract companies for listing in the capital market. 

Earlier, in June 2015, the BSEC also exempted foreign companies and joint venture firms from mandatory listing.

BSEC Executive Director and spokesperson Md Saifur Rahman has told Dhaka Tribune that from now on the commission’s approval for issuing private placement is no longer required. 

He says all rules related to mandatory listing have been revoked in line with the latest decision on issuance of private placement.

 “The provision has been lifted because it has not been implemented for long,” said a BSEC official, requesting anonymity.

Clarifying the rationale for the latest decision, he says since the approval for fund raising from the Commission is no longer mandatory for non-listed firms, provisions for their mandatory entries in the stock market have thus been redundant.

Another senior BSEC official says they have long been trying to bring large non-listed companies having their paid-up capital above Tk50 crore, but failed to bring them as other agencies of the government have not played their due roles.