Task force suggests direct listing of large corporations in share market

Muhammad Ayub Ali :

Under the current law of the Bangladesh Securities and Exchange Commission (BSEC), only government companies can be directly listed on the stock market through direct listing.
The Task Force on Stock Market Reforms has recommended that not only government companies but also multinational and large corporate companies to be allowed to list directly in the stock market alike our neighboring country Indian stock market.
The draft recommendations on initial public offerings (IPOs) submitted by the Task Force to the BSEC recently mentioned this.
The Task Force’s proposal recommends the direct listing of multinational companies and large companies with revenues of more than Tk 1,000 crore on a case-by-case basis to increase the supply of quality shares in the stock market.
Recently Bangladesh Association of Publicly Listed Companies (BAPLC) President and Managing Director of Berger Paints Bangladesh Limited Rupali Haque Chowdhury urged the concerned authority to list multinational companies of the country in the capital market.
There is a shortage of good companies in the capital market, and many multinational companies in the country are not yet listed in the capital market. For this, the way domestic and foreign companies come to the capital market or invest should be attractive,” Chowdhury opined.
We had a corporate tax gap of 15 percent. The company law should be reviewed for both listed and unlisted companies. I am not just talking about taxes. We have to level the playing field. Then if it is listed, it will benefit,” she said
However, the task force has suggested that the minimum share issue requirement be reduced to 10 percent.
In addition, a provision has been made for mandatory listing for companies with debt of more than Tk 1,000 crore. It has been proposed to impose a minimum paid-up capital of Tk 30 crore for the fixed price method and a minimum paid-up capital of Tk 50 crore for the book building method.
It has also recommended the inclusion of a provision for cross-border IPOs in the law to raise funds from outside the country.
The task force has recommended several legal changes to ensure fair value in determining market-based prices.
These include a proposal to reintroduce the Dutch auction method and increase the participation of eligible investors (EIs) in the bidding process.
The task force’s recommendations talk about reducing the time frame for IPO approval. It has proposed setting a time frame of five and a half months for fixed-price IPOs and six and a half months for book-building IPOs.
It has also recommended the introduction of an online dashboard to simplify the IPO application process.
Some additional changes have been proposed for small investors and high-net-worth individuals to encourage new investors.
The current investment prerequisite of Tk 50,000 has been proposed to be abolished and a 50 percent IPO quota has been recommended for general investors and EIs.
These recommendations are expected to work together as an effective mechanism to ensure the expansion and long-term stability of the stock market.