Bangladesh's stock-market regulator finally expressed its inability to approve Chinese consortium's bidding offers for being strategic partner of the country's premier bourse.
The securities regulator, however, asked the bidder to submit a 'revised' proposal on fulfilment of five conditions.
The Bangladesh Securities and Exchange Commission (BSEC) took the decision Monday in an emergency meeting on the issue of acceptance of the Chinese consortium, comprising Shenzhen Stock Exchange and Shanghai Stock Exchange, as strategic investor in the premier bourse's stakes.
The consortium earlier had qualified in a bidding called by the Dhaka Stock Exchange (DSE) to sell its 25 per cent stakes to a strategic partner.
"Based on the committee's findings, the commission decided to inform DSE that the commission is not in a position to approve the offers including the share-purchase agreement (SPA) of the consortium of Shenzhen Stock Exchange and Shanghai Stock Exchange," the BSEC said in a statement.
However, the commission has given an opportunity to the DSE for submitting a revised proposal.
"The commission has decided to give an opportunity to DSE for submission of a revised proposal upon fulfilment of following five conditions in the 'interest' of Bangladesh capital market," the BSEC statement says.
In this regard, BSEC executive director Mohammad Saifur Rahman said the DSE will have to submit the revised proposal of the Chinese Consortium fulfilling five conditions.
"After getting the revised proposal, the commission will take decision regarding acceptance of Chinese consortium as strategic partner of the premier bourse, DSE," said Mr Rahman, also the BSEC spokesman.
According to BSEC conditions, the share-purchase agreement shall not have any terms and conditions that may contradict laws of the land, and run against the interests of general shareholders of the DSE and the development of the capital market.
Another condition says there should not be any proposal to amend the existing provisions of the Memorandum and Articles of Association of DSE in order to accommodate the offer of the consortium.
"The offer along with the share-purchase agreement should be approved by general shareholders before submission to the commission for final approval," the condition reads.
The BSEC also asked the DSE to circulate the BSEC Committee's findings and subsequent withdrawal of the terns and conditions by the consortium to the shareholders with notice of the general meeting.
"The DSE shall submit the minutes of the general meeting along with final offer, revised share-purchase agreement and other related papers/documents of the consortium to the commission," says the last condition set by the securities regulator in ordering a fresh start.
Contacted, DSE managing director KAM Majedur Rahman said they would submit a revised proposal to the commission as per its instructions.
"We will take shareholders' approval for share-purchase agreement at extraordinary general meeting (EGM)," Majedur said.
Apart from distributing 40 per cent shares to the existing shareholders, the exchange has kept 60 per cent shares in block account as part of demutualization process.
Some 25 per cent shares that will be sold to the strategic partner are also kept in the block account.
The Demutualisation Act, however, says the matters relating to maintenance and transfer of the shares reserved in block account will entirely be fallen upon the board of directors.
Along with a technical offer for free, the Chinese consortium offered Tk 22 for each of 25 per cent shares of the DSE.
Another consortium led by National Stock Exchange (NSE) of India also took part in the bidding called by the DSE.