• Thursday, Aug 13, 2020
  • Last Update : 03:12 am

BSEC warns bourses not to give IPO observations based on suspicion

  • Published at 06:20 pm July 16th, 2020
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Earlier, the stock market regulator and Dhaka Stock Exchange (DSE) held a meeting at the BSEC office and came to the consensus that the bourse would not provide observations beyond the directions given in the public issue rules

The Bangladesh Securities and Exchanges Commission (BSEC) threatened to take legal action if the country's bourses provided observations about a company's initial public offerings (IPOs) based on suspicion, which did not violate rules mentioned in the public issue rules.

Earlier, the stock market regulator and Dhaka Stock Exchange (DSE) held a meeting at the BSEC office and came to the consensus that the bourse would not provide observations beyond the directions given in the public issue rules.

The BSEC, in a letter on Wednesday, directed both DSE and the Chittagong Stock Exchange (CSE) to follow Public Issue Rules-2015 properly.

According to the letter, a company cannot violate any securities rules, accounting standard and any other law of the land, and DSE can mention those violations in the observation.

DSE officials said that the IPO team sometimes noticed inconsistencies in financial statements - such as sales and profit mismatch - that has been mentioned in the IPO observation reports as necessary for further investigation.

The mismatch may not be verified without physical investigation, which is also not allowed by securities rules.

Usually, a new issuer company has to submit its IPO documents to three organizations – BSEC, DSE and CSE. 

The bourses then submit their observation reports to the regulator within 30 days.

Stakeholders of the market expected that the new BSEC commission headed by its chairman Prof Shibli Rubayat Ul Islam would not allow poor companies to come to the market, which was seen under previous chairman M Khairul Hossain.

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