A government committee has drawn up 'strict' rules for floating of stakes in 21 state-owned enterprises, suggesting that the authorities must re-valuate the firms before their shares are put up for sale. The four-member body led by SK Sur, an executive director of the Bangladesh Bank, has said the firms cannot be offloaded until their assets and liabilities are assessed by competent chartered accountant firms. It submitted the suggestions to the finance ministry last week. The ministry, which has been pressing for quick floating of SOEs in an effort to stabilise the stock market, hasn't made any comments on the committee's advices. The Securities and Exchange Commission formed the committee late last year after the finance minister vowed to expedite offloading of more SOE shares in the wake of one of the worst crashes in the capital market. The body has been tasked to formulate uniform rules, regulations and standards the government enterprises must adhere to in their efforts to raise funds from the stock market. Official familiar with the issue said the committee has asked the government to follow Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) for valuation of the SOEs. According to the suggested rules, a SoE's fixed assets will include land, plant and machinery, buildings, intangible assets, long-term investments, inter-company balances and other fixed assets including vehicles, computers, power generating and office equipments, furniture and fixtures. The committee suggested that an audit firm or its partners should not be allowed to valuate a SoE if the firm or its partners hold any position in the government-owned company. It said the valuation should be done by using definite and reliable reference prices and the SoEs' land must be valued on of the current market price. Plant and machinery will be re-valued on the basis of their remaining life. SoEs' long-term and short-term investments, tax and contingent liabilities should also be valued complying with the BAS and the BFRS. Unrealistic items should be cancelled out subject to the board of director's consent to re-value the SoEs' trade and payables. In this case, law of limitations and Income Tax Act should be followed if the age of trade and other payables are more than three years. The committee's regulation also said during the valuation the quasi equities and government liabilities should be separated from deposit against share. A firm with a history of wrongdoings will not be allowed to do valuation until it completes tenure of punishment or penal.ty imposed under the securities or other laws. A firm, which has been appointed as an auditor or actuary in a SoE for the next three years, including the current year, will not be allowed to work as a re-valuer for that SoE.
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