The Bangladesh Securities and Exchange Commission is likely to empower the stock exchanges to issue no-objection certificate for the proposed initial public offerings, a BSEC senior official told New Age. The BSEC will start its scrutiny process over a proposed IPO once the stock exchanges will issue NOC to the issuer company, he said. The Dhaka Stock Exchange and the Chittagong Stock Exchange will also send their observations over the company’s financial statements to the regulator with the NOCs, the official said.
The capital market regulator has taken the move as it has been facing strong criticisms from different quarters regarding IPO approval.
It is a worldwide practice that the capital market regulator by laws is not liable for any short of financial soundness of the companies it approves for IPOs, the BSEC official said.
The proposed amendment to the Securities and Exchange Commission (Public Issue Rules) 2006 will empower the bourse in this regard and will make the stock exchanges liable for any short of irregularities and violation of law committed by issuer companies, he said.
The official said the commission would finalise the proposed amendments for seeking public opinions next month.
Along with other stakeholders, the DSE recently criticised the BSEC’s role in IPO approval that was another reason for the regulator’s move.
The bourse at a recent board meeting decided not to enlist the companies approved by the BSEC if there are major inconsistencies and violation of rules by the issuer companies.
The bourse also decided to submit its observation on the proposed IPO with its board’s appraisal to the BSEC.
Presently, the DSE submits its observation on the draft prospectus submitted by the issuer companies without its board’s appraisal.
Following the DSE’s decision, the BSEC recently held a meeting with the DSE.
The capital market regulator at the meeting warned the bourse for taking such move as the stock exchange is bound to follow BSEC’s order by law, the BSEC official said.
‘We also informed the bourse that its step to challenge the regulator is a punishable act,’ he said.
The meeting also informed the bourse that it was also observed that 70-75 per cent of the bourse’s observations on draft prospectuses were unrealistic and illogical, he said.
The bourse, since its dispute with the BSEC regarding the bourse’s observation on Orion Pharma in 2011, closed the ‘expert panel’ department which was opened for preparing DSE’s observation on draft prospectus.
The BSEC official also said that presently BSEC only allows the companies to raise capital through IPO once those comply with its rules, regulations and guidelines.
Once the regulator will empower the bourses to issue NOCs based on its inspection report and observation on the companies’ financial statements, the bourses will be liable for any irregularity committed by the issuer companies, the official added.
-With New Age input
