IPOs of small cap companies to be traded under separate board

The securities regulator has formulated rules for allowing the IPOs (initial public offerings) of small cap companies under separate trading board to be introduced in the exchanges soon, officials said.  
As per the proposed rules, the companies having post-IPO (initial public offering) capital worth below Tk 300 million will be listed under separate trading board of the bourses.
Following the stakeholders' demand, the regulator moved in early 2015 to introduce separate board for small cap companies as they are unable to raise funds from the market due to shortage of requirements including the existing paid-up capital.
As per the proposed rules, the retailers will not be allowed to apply for the shares of small cap companies.
"Only the institutional investors and high net worth individual investors will be eligible to apply for the shares of small cap companies," said an official of Bangladesh Securities and Exchange Commission (BSEC) preferring anonymity.
The BSEC official said the newly formulated rules for public offering of small cap companies are likely to be approved by the commission by this month.
The securities regulator Monday approved the revised rules for the companies to be listed with the exchanges' main board under the book building and fixed price method.
The minimum post-IPO paid-up capital of the companies of main board has been fixed at Tk 300 million, including the existing paid-up capital of Tk 150 million.
"The companies which will be listed under the separate board of small cap companies, will be shifted to main board if their paid-up capitals reach to Tk 300 million," the BSEC official said.
 Asked, about the reason of barring retailers from the share trading of small cap companies, the BSEC official said the investment in such kind of companies is comparatively risky.
"Retailers are also barred from the trading of the shares of small cap companies in the stock exchanges of other countries," said the official of the securities regulator.
The IPO approval procedure for the companies of main board will also be same for small cap companies to be listed under separate board.
 "The number of disclosures of the small cap companies may be less than the number of disclosures required for the companies listed with main board of the exchanges," the BSEC official said.
The BSEC official specifically said nothing about the method under which the small cap companies would go public.
"Book building method may be applicable for the small cap companies, as only the institutional investors and high net worth individual investors will be eligible for shares of those companies," the BSEC official added.
The securities regulator earlier formed a three-member body headed by BSEC executive director Md. Mahbubul Alam to prepare the draft rules examining the rules of other countries.
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