• Tuesday, Sep 17, 2019
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Public issue rules amended: Quota facility for general investors raised by 10%

  • Published at 09:38 pm July 16th, 2019
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File photo of Bangladesh Securities and Exchange Commission Office in Dhaka Syed Zakir Hossain/Dhaka Tribune

According to the final amendment, a company will not be allowed to apply for public issue without using 80% of its previously issued capital

The Bangladesh Securities and Exchange Commission (BSEC) has approved the final amendment to a number of rules tightening capital raising process through initial public offerings (IPO) and raising quota facility for the general investors by 10%.

According to the final amendment to the public issue rules, 2015, a company will not be allowed to apply for public issue without using 80% of its previously issued capital.

The issue of a company will be cancelled, if the total application is below 65% under the fixed price method.

The size of the public issue under the fixed price method must be minimum Tk50 crore after IPO while the size of the public issue under the book building method must be at least Tk75 crore.

The approval was given at a commission meeting presided over by BSEC Chairman M Khairul Hossain at its headquarters in the capital on Tuesday.

The commission also increased the existing one-year lock-in provision to a two-year period for private placement shareholders, to be calculated from the first trading day of the issue. 

The IPO quota facility for the general investors has been raised to 50% from existing 40% under the fixed price method while under the book building method it has been raised to 40% from 30%.

The quota facility for eligible investors has been cut to 50% from 60% under the book building method while it has been slashed to 30% from the current 40% under the fixed price method.

The name and price quotation of any bidder in book building method must not be displayed and the bidder must buy the amount of shares at the prices he/she quotes for. 

Under the book building system, the investors will buy the shares at the recommended rates at auction. Besides, the quantity and price of shares will be as per what the bidders will offer for them. 

Recently, the BSEC formed two committees to amend the private placement (pre-IPO placement) regulation and the book-building method.BSEC Executive Director Mahbub Alam led the four-member committee on amending the private placements regulation.

BSEC Executive Director Ruksana Chowdhury led the five-member committee formed for amending the book-building method.