Insurers to pay Tk 20m fine for missing IPO deadline
Saturday, 15 November 2008
S M Jahangir
Non-listed insurance companies will have to pay nearly Tk 20 million as financial penalty during renewal of their operating licences for their delay in floatation of initial public offering (IPOs), sources said.
"Total fine to the tune of Tk 15 million to Tk 20 has fallen due with 21 to 22 insurance companies for their failure to go public," said an official.
The companies are required to clear their respective fines while renewing their annual operating licences, the official added.
Last year, all the non-listed insurance companies paid more than Tk 30 million (3 crore) in fines while renewing their operating licences, according to official sources.
Under the existing rule, all the insurance companies need to renew their licences by November every year for running their business for the next year.
According to sources, a significant number of private insurance companies have been buying extra time since July 2004, dealing a blow to an official move towards getting new issues listed with the capital market.
Earlier, the Chief Controller of Insurance (CCI) imposed a restriction on renewal of operating licences of those insurers, who would fail to comply with the IPO floatation guidelines within a given timeframe.
Under the restriction, the insurance companies, especially those failing to float IPOs, would no more be able to do business, official sources said.
The CCI, the regulatory authority of private insurance companies, also imposed the financial penalty at the rate of Tk 1,000 per day on insurance companies for any delay in flotation of IPOs.
Although the insurers concerned initially got an opportunity to renew their licences by paying a certain portion of the fines, the authorities are now strictly enforcing the provision in order to force the insurance companies to go public.
Citing a rule, an official said the private insurance companies are required to mobilise at least 60 per cent of their required paid-up capital through IPOs.
Presently, some 60 insurance companies -- 43 general and 17 life -- are in operation in the private sector in Bangladesh.
Of the total, around 36 insurance companies have so far got listed with the country's stock exchanges, sources said. On the other hand, three or four companies have submitted their proposals on IPO floatation to the Securities and Exchange Commission (SEC).
The floatation of IPO has been made mandatory for the insurance companies, aiming to make them operationally sound through raising their capital base.
Another important objective of the provision is to boost the country's capital market, sources said.
Under the new Insurance Ordinance-2008, life insurance companies require a minimum paid-up capital of Tk 300 million and general insurance companies Tk 400 million to run their operation.
Non-listed insurance companies will have to pay nearly Tk 20 million as financial penalty during renewal of their operating licences for their delay in floatation of initial public offering (IPOs), sources said.
"Total fine to the tune of Tk 15 million to Tk 20 has fallen due with 21 to 22 insurance companies for their failure to go public," said an official.
The companies are required to clear their respective fines while renewing their annual operating licences, the official added.
Last year, all the non-listed insurance companies paid more than Tk 30 million (3 crore) in fines while renewing their operating licences, according to official sources.
Under the existing rule, all the insurance companies need to renew their licences by November every year for running their business for the next year.
According to sources, a significant number of private insurance companies have been buying extra time since July 2004, dealing a blow to an official move towards getting new issues listed with the capital market.
Earlier, the Chief Controller of Insurance (CCI) imposed a restriction on renewal of operating licences of those insurers, who would fail to comply with the IPO floatation guidelines within a given timeframe.
Under the restriction, the insurance companies, especially those failing to float IPOs, would no more be able to do business, official sources said.
The CCI, the regulatory authority of private insurance companies, also imposed the financial penalty at the rate of Tk 1,000 per day on insurance companies for any delay in flotation of IPOs.
Although the insurers concerned initially got an opportunity to renew their licences by paying a certain portion of the fines, the authorities are now strictly enforcing the provision in order to force the insurance companies to go public.
Citing a rule, an official said the private insurance companies are required to mobilise at least 60 per cent of their required paid-up capital through IPOs.
Presently, some 60 insurance companies -- 43 general and 17 life -- are in operation in the private sector in Bangladesh.
Of the total, around 36 insurance companies have so far got listed with the country's stock exchanges, sources said. On the other hand, three or four companies have submitted their proposals on IPO floatation to the Securities and Exchange Commission (SEC).
The floatation of IPO has been made mandatory for the insurance companies, aiming to make them operationally sound through raising their capital base.
Another important objective of the provision is to boost the country's capital market, sources said.
Under the new Insurance Ordinance-2008, life insurance companies require a minimum paid-up capital of Tk 300 million and general insurance companies Tk 400 million to run their operation.