BSEC retains lock-in provision

Decision comes into force today

FE Report | Published: May 09, 2019 10:38:24 | Updated: May 20, 2019 11:11:07

The lock-in period applicable to non-general shareholders will remain in place from the date of debut trading instead of issuing IPO prospectus.

Lock-in is a predetermined amount of time after an initial public offering where large stakeholders are restricted from selling their shares.

The decision was taken Wednesday at a meeting held at the office of the Bangladesh Securities and Exchange Commission (BSEC).

The regulatory decision comes into effect today (Thursday). The new companies will come under the coverage of Wednesday's decision.

The decision will also be applicable to the older companies, whose lock-in period has not expired yet.

The securities regulator formed two bodies to implement the market supportive measures, including amendment to the public issue rules.

The Commission formed the bodies following decisions taken last month in line with the instruction of Prime Minister Sheikh Hasina.

Last month, the securities regulator took the decision of amending public issue rules for both book building method and fixed price method.

Other decisions were changing the existing rules on private placement shares, bonus shares and minimum shareholding provision for sponsor-directors of listed companies.

"The commission has identified the areas of brining changes in different rules. Now, the BSEC has formed two bodies to finalise the proposed amendments justifying legal aspects," the BSEC said in a statement.

The six-member committee headed by BSEC executive director Farhad Ahmed will submit its report within two weeks.

The body will make the draft amendment to the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 reviewing the decisions regarding IPO size and quota.

On April 29, the securities regulator said the companies will not require securing the regulatory approval for raising capital through private placement.

According to the proposed amendment, the minimum size of IPO will be Tk 500 million under the fixed price method, whereas the IPO size will be Tk 1.0 billion under the book building system.

Another four-member committee headed by BSEC executive director Md. Anwarul Islam will submit its report within one week on new condition of issuing bonus shares.

The committee will finalise the draft required to revise the notification on holding minimum number of shares by the sponsor-directors of the listed companies.

Presently, the sponsor-directors of the listed companies will need to hold minimum 2.0 per cent shares individually.

And the sponsor-directors jointly will hold minimum 30 per cent shares compared to total paid-up capital. Otherwise, the companies are not allowed to issue rights shares.

On April 29, it was decided that the companies would have to explain the reasons for raising capital through bonus after listing.

"The companies will have to publish the necessity of issuing bonus shares as price sensitive information (PSI)," according to BSEC decision.


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