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Dhaka Tribune

Experts for mandatory listing of MNCs, disclosures' reliability

The stock market regulator also launched World Investor Week 2020 during the event, which will be observed until October 11

Update : 06 Oct 2020, 09:42 PM

Experts have suggested a listing of more Multinational Companies (MNCs) with stock exchanges in the interest of long-term stability in the capital market.

They were expressing their views at a webinar, "Investor Protection: Impact of Covid-19 on Business and Related Disclosures,” organized by the Bangladesh Securities and Exchange Commission (BSEC) on Monday evening.

The stock market regulator also launched World Investor Week 2020 during the event, which will be observed until October 11.

BSEC Chairman Prof Shibli Rubayat-Ul-Islam was the chief guest at the webinar.

BSEC Director Mohammed Jahangir Alam moderated the webinar, while Prof Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), was the keynote speaker.

Stock market analyst and honorary professor at Dhaka University's Economics Department Abu Ahmed said: “Some multinational companies are doing business in our country but they are not listed with bourses, although they are publicly listed in neighboring countries. They should be offered tax waiver facilities in the interest of our capital market.”

He said multinational companies had to get listed with the capital market for the latter's stability. The responsibility for luring them into the market lay with the authorities concerned.

MNCs have contributed the highest amount to market capitalization at the prime bourse. There are now 11 multinational companies at the DSE—whose market capitalization accounts for approximately 26%—out of around 322 listed companies.

Stock market analysts and stock brokers attributed this high performance of MNCs to management efficiency, business strategy, good corporate governance and ethical standards and transparency in financial statements.

The BSEC recently approved the prospectus for the initial public offering (IPO) of another MN company, Robi Axiata Limited, the second largest mobile operator in the country, to raise Tk523.79 crore.

MNCs like Unilever Bangladesh, Nestle, Standard Chartered Bank Bangladesh, Citi Bank and MetLife Insurance are yet to offload their shares.

Abu Ahmed also said there remained a big incentive for listing in the form of reduced corporate tax which is at present 25% for a listed company – 7.5% less than the normal tax rate at 35%.

He noted that around 90% of the companies with junk shares had gone public in the last 10 years.

The current market indices might rise further but would not last long if the blue-chip companies did not come forward, he opined, suggesting that sound policies be framed for mutual funds to increase investors' confidence.

BSEC working to protect interest of small investors

BSEC Chairman Prof Shibly said the recent steps taken by the commission to protect retail investors’ rights and regain their confidence had begun giving out positive outcomes.

“We are working on approving initial public offerings (IPO) of good and established companies. We have already cancelled IPO proposals of some companies based on our observations and those of the stock exchanges themselves,” he further remarked.

The BSEC Chairman said the regulator was working to protect the interest of small-scale investors.

Shibly Rubayat said the regulator would take action against the companies which had failed to comply with the 30% joint–shareholding rules.

The regulator has already cancelled the directorship of 17 individuals for non-compliance with the minimum 2% shareholding on their part.

The commission will soon introduce Sukuk bonds in the market, he said, adding that it would hold a road show on Sukuk in Middle Eastern countries to attract  expatriate Bangladeshis.

The stock market will reach a better place within two years, he hoped.

“Despite many efforts, I am getting support from small investors, but very little response coming from institutional investors,” he added.

CPD Distinguished Fellow Mustafizur Rahman, in his keynote paper, stated that the adverse impact of Covid-19  had brought new challenges for the economy.

"For a stable stock market, we need to enhance the reliability of disclosures, streamline merchant banks' roles, make disclosures - including price-sensitive information and critical buying practice - publicly available mandatorily, and take measures to deal with investors' complaints," he suggested.

It also needs to open an investors' desk by listed companies, make the software of stock exchanges interactive and incentivize a greater use of mobile platforms by investors, he added.

Prof. Mizanur Rahman, chairman of the Department of Marketing at Dhaka University, said share prices of many companies, which were previously listed with premiums, slipped below their face value within one year of listing.

He also laid importance on strong policy measures to restore investors' confidence in mutual funds.

Hussain Samad, consultant of the World Bank, Chairman of the Department of Marketing at Dhaka University, Prof Dr Mijanur Rahman, and others were also present at the webinar.

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