Public issue rules await more new provisions

Mohammad Mufazzal | Published: July 22, 2015 00:00:00 | Updated: November 30, 2024 06:01:00

The securities regulator is incorporating some provisions into the public issue rules under a proposed amendment in a bid to ensure more accountability and transparency of issuer companies and relevant stakeholders, officials have said.
One of the new provisions will require companies to get their financial statements mandatorily audited by any of the auditors from the panel formed by the securities regulator before going public.
The Bangladesh Securities and Exchange Commission (BSEC) has formed a 36-member panel of auditors for auditing financial statements of listed companies.
If the new provision is included in the public issue rules, the non-listed companies willing to go public will also have to get their financial statements audited by any of the panel of auditors.Â Â
"Our recent directive has said that only listed companies will have to get their financial statements audited by any of the auditors of the BSEC's panel. But now the new provision in the public issue rules will require the companies intending to go public to pick auditors of their choice from the panel for audit of their financial statements," said a BSEC official.
The official said the regulator was incorporating the new provision into the public issue rules to ensure the standard in audit of financial statements.
The BSEC came under fire on many occasions earlier over approval of IPOs (initial public offerings) of some companies, which allegedly presented window-dressed balance-sheets before the regulator.
Another new provision under the proposed amendment suggests an IPO quota for foreign institutional investors.
Presently there is a quota of 20 per cent for investors affected during the 2010-11 stock market crash. A quota of 10 per cent is reserved for non-resident Bangladeshis (NRBs), 10 per cent for mutual funds and the remaining 60 per cent for general investors.
Arif Khan, a BSEC commissioner, said the regulator was working to complete the amendment to the public issue rules by September next.
"Before approving the amendment, the regulator will sit with the stakeholders and also will seek public opinion. We hope the amendment is likely to be approved by September," Mr. Khan said.
Yet one more provision seeks to require the companies willing to go public to disclose the history of their changing capital structure.
"The companies will have to disclose how and when their capital structure was changed," the BSEC commissioner said.
The securities regulator also wants more responsibility of issue managers who certify different documents of companies willing to go public.
"That's why issue managers' involvement with utilisation of IPO funds will be ensured under another provision in the public issue rules. Issue managers will be punished, if they shirk the responsibility while managing issues," said Mr. Khan.
"Listed companies will be able to sell a portion of their shares to other listed and non-listed companies under this provision," Mr Khan said.
He also said the regulator would also include a provision providing for more disclosures by listed companies apart from opening more dedicated websites.
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