Fresh SEC move to amend direct listing regulations

Kayes M Sohel | Published: August 28, 2008 00:00:00 | Updated: February 01, 2018 00:00:00

The Securities and Exchange Commission (SEC) has taken a fresh initiative to amend the direct listing regulations following a setback in Titas Gas stocks sale and wild price fluctuation of Jamuna Oil share on the their debut trading.

The commission is seeking to bring some changes in the regulations against the backdrop of recent market experience, SEC sources said.

"We hail the SEC move to review the regulations as there are some loopholes," a market operator said.

The SEC has recently formed a committee having representation of different stakeholders to amend the direct listing regulations introduced about three years back.

Headed by SEC executive member Anwarul Kabir Bhuiyan, the committee includes SEC executive member Farhad Ahmed, executive member Mizanur Rahman, chief executive officer (CEO) of Dhaka Stock Exchange Salahuddin Ahmed Khan and CEO of Chittagong Stock Exchange AB Siddique.

Mr Bhuiyan, the head of the committee, told the FE that some changes would be brought in the regulations in line with the recent experience.

"The committee, in its first meeting recently, has already identified the merits and demerits of the regulations in the light of experiences gathered the trading of five state-owned issues under the regulations," he said without giving details.

The amendment will be made in such a way that interest of both the institutional and general investors as well as the market is protected, he added.

The final draft will be placed soon before the commission for approval and then it will be made public through gazette notification.

Titas gas failed to sell any single share on debut trading on July 6 this year, drawing sharp criticism from different stakeholders.

Per share of Jamuna Oil surged to Tk 952 against the face value of Tk 10.0 only on the debut day on January 9 last, but it abruptly dipped below Tk 350 per share in the following days.

The five state-owned companies- Titas Gas Distribution and Transmission Company Limited, Dhaka Electricity Supply Company (DESCO), Power Grid Company of Bangladesh (PGCB), Jamuna Oil Company and Meghna Petroleum Limited-made debut in the country's stock markets under direct listing since June 18, 2006.

On February 23, 2006, the capital market regulatory body approved direct listing regulations for the bourses to encourage the local and multinational profit-making companies to raise fund from the capital market.

For direct listing, companies need to fulfill certain financial and operational requirements. The applicant company must have minimum paid-up capital of Tk 50 million and must be free of accumulated losses.

A public limited company which will float its shares under direct listing regulations will have to sell all of its shares within 30 trading days aiming to minimise the manipulation risks.