The securities regulator is likely to make it mandatory for the companies seeking to offer their primary shares with premium to go public using the 'book building' method.
The BSEC has initiated a process to bring about necessary changes to the public issue rules, making the book building method compulsory for the companies, which would demand premium while going public, officials concerned said.
The move comes following criticism of the BSEC's approval of offer prices of some companies under the fixed price method.
Officials said the regulator is now preparing a draft of the revised public issue rules. The rules will be finalised after soliciting public opinion on the same.
"The experts and stakeholders have criticised the regulatory body, stating that the companies are going public with unjustified offer prices. That's why BSEC thinks that the companies seeking premium should go public under the book building method," said a senior BSEC official.
He said the securities regulator does not have any role in fixing the offer price of a company under the book building method.
"If the amendment to the public issue rules comes into effect, the companies, interested to go public at face value only and without any premium, will be allowed to do so under the fixed price method," the BSEC official said.
The book building method is a process through which the offer price of an issue is determined on the basis of demands from institutional investors.
The securities regulator introduced the method issuing a guideline on March 9, 2010. Later, it was put on hold following a government decision on January 19, 2011.
It was alleged that capitalising on the loopholes of the method many companies, in connivance with auditors and issue managers, had siphoned off a substantial amount of money from the stock market through over-pricing.
As per the book building method now under suspension, there was a lock-in period of 15 trading days from the first trading on the security issued to the eligible institutional investors (EIIs).
As per the revised book building method, a 4-month lock-in period is likely to be imposed on the securities issued to the EIIs.
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