Allow SMEs to have post-IPO paid-up capital below Tk 50cr

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The Bangladesh Merchant Bankers Association has proposed that the Bangladesh Securities and Exchange Commission should permit the small and medium enterprises to have post-IPO paid-up capital below Tk 50 crore.

According to existing rules, an SME will need to have at least Tk 5 crore and below Tk 30 crore in paid-up capital after raising fund via an initial public offering.

The BMBA has sent a letter to the currency markets regulator, making the proposal, BMBA officials said.

They said that the association requested the commission to consider the best ceiling at below Tk 50 crore for both fixed price method and book building approach to fund raising beneath the SME rules.

In addition to the capital raising, there are a few other complex issues in the rules that also ought to be amended for drawing attention of good companies.

The BSEC (qualified investor offer by small capital companies) Rules, 2018 was issued on January, 30 this past year no company has so far got listed beneath the rules as a result of complexities, merchant bankers said.

According to the securities rules related with the SME platform, any public limited company is permitted raise fund and get listed on the small capital platform.

The minimum capital of a company willing to raise capital through the book-building system should be Tk 10 crore before its listing on the SME platform, the guidelines said.

Regarding the paid-up capital of an SME company crossing Tk 30 crore, it must compulsorily apply for listing on the main board, the guidelines said.

The BMBA proposed that if the paid-up capital of an SME company reached Tk 50 crore, it will make an application for listing on the main board.

BMBA president Sayadur Rahman told MODERN that the association urged the commission to help make the change in the SME rules as the brand new public issue rules managed to get mandatory for companies to have minimum Tk 50 crore in post-IPO paid-up capital to get listed on the primary board, raising it from Tk 30 crore.

So, the firms whose paid-up capital is below Tk 50 crore should be given an opportunity to be listed on the stock exchanges, he said.

BMBA officials said that small companies were not showing interest to get listed on the SME board as they found complexities in the guidelines.

Cost and compliance are almost the same, and raising a tiny amount of fund isn't good for them, they said.

Although greater than a year passed, only two companies filed IPO documents with two stock exchanges and among the two applications was rejected because of fraudulent activities.

The officials said that the BSEC agreed to review their proposal and to ease various other rules to ensure that small companies became interested to be listed on the board.

On April 30, 2019, the country’s premier bourse Dhaka Stock Exchange launched ‘DSE SME Platform’ to facilitate the growth of small and medium enterprises.

Only qualified investors including finance institutions, merchant bankers, portfolio managers and people having minimum net worth of Tk 1 crore can submit their intention a subscription the issue proposed by the SMEs for fund raising.
Source: https://www.newagebd.net

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