Investors demand removal of BSEC chairman

Regulator rewrites IPO rules

Holiday Report
Amidst growing despair among small investors who believe the stock market is heavily biased to the interest of big business, which in turn has eroded people’s confidence in the bourse, the regulator at last decided to rewrite the IPO rules to give some edge to small investors.
The bourse returned to positive trading from Monday last after a week of continued plunge in DSE price index triggering violent protest in front of the DSE building at city’s Motijheel district. The price index turned positive when the agitation geared stream.
Many believe that it was a purported move in the face of agitation and unless the fundamentals that now dominate market change, there is hardly any hope for lasting recovery of the bourse. Small investors are demanding the removal of the BSEC chairman Khairul Hossain wondering how he continued in the post when the stock market is bracing debacle time and again.
Capital market Investors Oikyo Parishad was scheduled to submit a memorandum o Prime Minister Sheikh Hasina on Thursday seeking her intervention to bring normalcy in the bourse. Their first demand is to seek resignation of the BSEC chairman who is in the post since 2008.
He outlived stock market debacle of 2010 and subsequent market manipulations regularly almost every year by dishonest syndicates. Small investors lost investment on every such occasion. Market falls, but he does not, they said blaming him for working for powerful business quarters.
In this background Bangladesh Securities and Exchange Commission (BSEC) on Tuesday approved a number of amendments to public issue rules 2015, bringing some changes to the initial public offering (IPO) system. It hoped the change will bring far reaching impact on the bourse.
It include the lock-in period for placement shareholders was increased from one to two years. For alternative investment funds, it will be one year. Lock-in period is the time the sponsor and placement shareholders have to hold their shares of a company.
Moreover, the lock-in period of sponsors of the issuer company will be counted from the date of commencement of trading. Previously it was from the prospectus issue date.
The amendments were brought about in response to appeals of stock exchanges seeking to bring back investors’ confidence amid a drastic fall in the market in the past few months.
Another change is that issuers would have to raise at least Tk 30 crore or 10 percent of the paid-up capital, whichever is higher, when the company goes for IPO through the fixed-price method.
If the company wants premium and goes for IPO under the book-building method, the issuers would have to raise at least Tk 75 crore or 10 percent of the paid-up capital, whichever is higher.
In the book building method, the eligible investors’ quota has also been brought down to 50 percent from 60 percent and general investors’ quota (excluding non-resident Bangladeshis) raised to 40 percent from 30 percent.
For fixed price method, the quota for eligible investors has been cut to 30 percent from 40 percent while general investors’ quota (excluding NRBs) enhanced to 50 percent from 40 percent.
Moreover, eligible investors would have to keep a certain amount of investment in the secondary market to enjoy quota advantages in an IPO lottery. The BSEC will set the amount in the consent letter of every IPO.
If an eligible investor does not have that particular amount of investment in the secondary market, he will lose the IPO quota facility.
During bidding under the book-building method, bidders will get shares at their bidding price and the amount demanded. The bidder must buy the amount of shares at the quoted price.
The rules also instructed that the stock exchanges will have to send observations on an IPO-seeking company to the regulator, if there was any, within 30 days after receiving the listing application from the issuer.