Govt to review decision on mandatory requirement
Thursday, 24 December 2009
FE Report
The government is going to review its decision on the mandatory floatation of shares equivalent to 40 per cent of the paid-up capital of a company willing to go public, said Finance Minister AMA Muhith Wednesday.
"Yes, it has to be considered," he said after a meeting with officials of the Chittagong Stock Exchange (CSE) at his office.
The government is also trying to offload shares of the state-owned enterprises in the stock market to help increase its depth, he added.
"I have already made a list of SoE whose shares are to be offloaded. But the process takes time," the minister said.
The government has recently taken a couple of decisions on capital market including withdrawal of direct listing facility for private companies and slow approval of proposals for floating Mutual Fund IPOs.
The minister said the government is reluctant to allow too many mutual funds (MF) in the market because of the dearth of good shares.
"Total number of good scrips is limited in the market and if too many MFs chase the shares, the price will go up," he explained.
The minister said the CSE proposal to introduce internet based stock market transaction is very innovative and the government will extend help in this connection.
"It can be done as it is a good idea," he said.
Mr Muhith said CSE is the pioneer in introducing digital trading system and the DSE followed the suit.
The minister assured the delegation that in the future the government would take decisions on capital market after having consultation with the CSE.
"CSE has become an important stakeholder in the market," he said.
CSE president Fakhor Uddin Ali Ahmed said internet-based operation will be real time transaction and they expect to hold roadshow on the new system at the end of next month.
"If the system is introduced, investors do not need to go brokerage houses physically, rather they will be able to issue buy or sale orders through internet," he explained.
Mr Fakhoruddin said they requested the finance minister to allow more mutual funds in the market.
"MFs have huge demand in the market as they are operated by experts. Shortage of the funds push up the price of the stocks of MFs," he said.
He admitted that if more MFs came to market, there would be glut of liquidity but the liquidity could be absorbed through offloading of shares of state-owned companies.
The delegation said the government should withdraw bar on direct listing of private companies to attract reputed companies to the market, the CSE chief said.
"The government can amend the method if there is any loophole. But it should be allowed," he added.
The CSE proposed that mandatory 40 per cent IPO flotation system should be revised, Mr Fakhoruddin said.
"Mandatory limit should be 15 per cent for paid-up capital with Tk 500 million to Tk 5.0 billion, and above that the limit should be 10 per cent," he added.
The government is going to review its decision on the mandatory floatation of shares equivalent to 40 per cent of the paid-up capital of a company willing to go public, said Finance Minister AMA Muhith Wednesday.
"Yes, it has to be considered," he said after a meeting with officials of the Chittagong Stock Exchange (CSE) at his office.
The government is also trying to offload shares of the state-owned enterprises in the stock market to help increase its depth, he added.
"I have already made a list of SoE whose shares are to be offloaded. But the process takes time," the minister said.
The government has recently taken a couple of decisions on capital market including withdrawal of direct listing facility for private companies and slow approval of proposals for floating Mutual Fund IPOs.
The minister said the government is reluctant to allow too many mutual funds (MF) in the market because of the dearth of good shares.
"Total number of good scrips is limited in the market and if too many MFs chase the shares, the price will go up," he explained.
The minister said the CSE proposal to introduce internet based stock market transaction is very innovative and the government will extend help in this connection.
"It can be done as it is a good idea," he said.
Mr Muhith said CSE is the pioneer in introducing digital trading system and the DSE followed the suit.
The minister assured the delegation that in the future the government would take decisions on capital market after having consultation with the CSE.
"CSE has become an important stakeholder in the market," he said.
CSE president Fakhor Uddin Ali Ahmed said internet-based operation will be real time transaction and they expect to hold roadshow on the new system at the end of next month.
"If the system is introduced, investors do not need to go brokerage houses physically, rather they will be able to issue buy or sale orders through internet," he explained.
Mr Fakhoruddin said they requested the finance minister to allow more mutual funds in the market.
"MFs have huge demand in the market as they are operated by experts. Shortage of the funds push up the price of the stocks of MFs," he said.
He admitted that if more MFs came to market, there would be glut of liquidity but the liquidity could be absorbed through offloading of shares of state-owned companies.
The delegation said the government should withdraw bar on direct listing of private companies to attract reputed companies to the market, the CSE chief said.
"The government can amend the method if there is any loophole. But it should be allowed," he added.
The CSE proposed that mandatory 40 per cent IPO flotation system should be revised, Mr Fakhoruddin said.
"Mandatory limit should be 15 per cent for paid-up capital with Tk 500 million to Tk 5.0 billion, and above that the limit should be 10 per cent," he added.