24 insurance cos buying extra time to float IPOs
S M Jahangir | Thursday, 19 June 2008
Nearly two dozen private insurance companies are buying extra time for floating their initial public offerings (IPOs), dealing a blow to an official move for enlisting new issues with the capital market.
"About 24 insurance companies have been counting significant amount of financial penalty every year for their failure to float IPOs within the set timeframe," said an official.
Earlier, the Chief Controller of Insurance (CCI) had imposed a restriction on renewal of operating licenses of the insurers who failed to comply with the IPO floatation guideline within the stipulated timeframe.
Under the restriction, the insurance companies, especially those which could not float IPOs, would not be able to do any new business, official sources said.
The CCI, the regulatory authority of private insurance companies, had also imposed financial penalty at the rate of Tk 1,000 per day on insurance companies for their delay in the floating IPOs.
According to the CCI, the defaulting insurance companies had to pay more than Tk 30 million as financial penalty until June 2006 for renewing their operating licenses.
Besides, a similar amount of penalty has to be paid by the insurers concerned for the renewal of their licences for the next year, an official mentioned.
Although such financial penalty has been due with the relevant insurance companies since July 2004, the insurers initially got an opportunity to renew their licenses by paying a certain potion of the fine.
"Now the CCI is strictly enforcing the provision of financial penalty in order to compel the insurance companies to go public" said the official.
Citing the existing rules, the official said the private insurance companies are to mobilise at least 60 per cent of their required paid-up capital through IPOs.
But, nearly 50 per cent of country's insurance companies have failed to comply with the provision, he mentioned.
Presently, some 60 insurance companies -- 43 general and 17 life -- are in operation under the private sector in Bangladesh.
"About 24 insurance companies have been counting significant amount of financial penalty every year for their failure to float IPOs within the set timeframe," said an official.
Earlier, the Chief Controller of Insurance (CCI) had imposed a restriction on renewal of operating licenses of the insurers who failed to comply with the IPO floatation guideline within the stipulated timeframe.
Under the restriction, the insurance companies, especially those which could not float IPOs, would not be able to do any new business, official sources said.
The CCI, the regulatory authority of private insurance companies, had also imposed financial penalty at the rate of Tk 1,000 per day on insurance companies for their delay in the floating IPOs.
According to the CCI, the defaulting insurance companies had to pay more than Tk 30 million as financial penalty until June 2006 for renewing their operating licenses.
Besides, a similar amount of penalty has to be paid by the insurers concerned for the renewal of their licences for the next year, an official mentioned.
Although such financial penalty has been due with the relevant insurance companies since July 2004, the insurers initially got an opportunity to renew their licenses by paying a certain potion of the fine.
"Now the CCI is strictly enforcing the provision of financial penalty in order to compel the insurance companies to go public" said the official.
Citing the existing rules, the official said the private insurance companies are to mobilise at least 60 per cent of their required paid-up capital through IPOs.
But, nearly 50 per cent of country's insurance companies have failed to comply with the provision, he mentioned.
Presently, some 60 insurance companies -- 43 general and 17 life -- are in operation under the private sector in Bangladesh.