BSEC makes lock-in period stringent

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Lock-in period for pre-IPO share holders will begin from the first trading day of stocks in the bourses, instead of the current provision of prospectus issuance date, said a directive of the securities regulator on Wednesday.

The directive of the Bangladesh Securities and Exchange Commission (BSEC) was signed by its chairman Prof M Khairul Hossain, giving immediate effect.

The existing one-year lock-in provision is expected to be changed to three-year period soon, sources at the BSEC said.

The objective of the latest directive is to protect the interest of stock investors, they added.

BSEC forms two committees to amend the rules and notifications:

The Bangladesh Securities and Exchange Commission on Wednesday formed two separate committees to amend the rules on Initial Public Offering (IPO), placement shares, bonus shares and minimum 2% share holding by sponsors and directors.

The BSEC made the decision at a commission meeting held at its office in Dhaka. BSEC chairman M Khairul Hossain presided over the meeting, said a press release.

BSEC executive director Forhad Ahmed will lead the six-member committee on IPO, placement shares and bonus shares, while the other four-member committee to amend the regulations on minimum share holding by sponsors and directors  to be headed by Anworul Islam, executive director, BSEC.

The committees will make necessary recommendations by 14 working days.

As per a BSEC directive, to be a director in a listed company, one must have 2% share of paid up capital of the company. If an existing director holds less than 2% share, there will be a casual vacancy, which means he or she can no longer be a director.

The directive was issued on November 22, 2011. The order makes it mandatory for all sponsors, promoters, and directors of a company listed with any stock exchange to hold a minimum of 30% shares of the paid-up capital of the company jointly.

Recently a meeting of the BSEC with different stakeholders, including merchant banks and Dhaka Stock Exchange took a number of critical decisions to revive the ailing stock market.

The BSEC decided that no prior permission would be required from the BSEC for issuing shares under private placement, Saifur Rahman, executive director and spokesperson of the BSEC have said, referring to the meeting decision.

Furthermore, the meeting decided that placement shareholders would be treated as sponsor-directors of a company concerned and they would incur a 3-year lock-in, he said.

Besides, a minimum of Tk 50 crore needs to be raised through IPO, instead of current Tk 30 crore under the fixed price method while the minimum size of IPO under book-building method will be Tk 100 crore, in place of Tk 50 crore, the meeting also decided.

The regulator also decided to launch price bidding in line with the Dutch auction method where bidders acquire shares according to their own bidding price.

According to the decision of the meeting, the provision regarding the existing one-year lock-in period for placement shares will remain in force from the date of debut trading of the company's shares.

As per the decisions, the general investors’ quota for IPO shares has been increased by 10 percentage points.

In order to declare bonus shares, a company will have to explain how it will spend the money, he said.
Source: https://www.dhakatribune.com

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