Muhith backs SEC move on minimum face value of share
Wednesday, 28 April 2010
FE Report
The face value of a listed company share might be set at minimum Taka 10 as part of a move to bring the much-needed reforms in country's bourses, Finance Minister AMA Muhith said Tuesday.
His comments came following a recent Securities and Exchange Commission (SEC) move on restricting a company to float share at a face value less than Tk 10.
"The SEC has sent a proposal to the ministry in this regard, which is under con-sideration." Mr Muhith said while addressing a press briefing at his ministry.
"Tk 10 could be the lowest face value unit of a share," he said.
The minister said the central bank has already given approval to some banks to float shares at a face value as low as Tk 10.
Mr Muhith said the country's share market is highly speculative, which warrants a total reform.
"There has to be change," said the minister adding that the reforms would not come easily.
The minister said: "We have to follow Indian example in this regard as the neighbouring country has set up a national stock exchange to have a more regulated industry."
The country's stock market is new so many of its rules need scrutiny, he said.
The minister, however, informed that fixing Tk 10 as the lowest face value would not be mandatory for the listed companies. "They can set it at Tk 10 or above."
The SEC recently approved a proposal on restriction of floatation of shares having face value below Tk 10 by any company.
This decision, however, will be applicable for the forthcoming initial public offerings (IPOs), according to the SEC.
The issue surfaced after the Grameenphone's initial decision to raise a total of US$125 million including $65 million through IPO offering the face value at Tk 1 for each share.
The country's largest mobile operator later fixed its share face value at Tk 10.
DSE, the country's premier bourse, also maintains that the face value should be a minimum of Tk 10, as this will create a scope for manipulating prices of shares having face value less than Tk 10.
The face value of a listed company share might be set at minimum Taka 10 as part of a move to bring the much-needed reforms in country's bourses, Finance Minister AMA Muhith said Tuesday.
His comments came following a recent Securities and Exchange Commission (SEC) move on restricting a company to float share at a face value less than Tk 10.
"The SEC has sent a proposal to the ministry in this regard, which is under con-sideration." Mr Muhith said while addressing a press briefing at his ministry.
"Tk 10 could be the lowest face value unit of a share," he said.
The minister said the central bank has already given approval to some banks to float shares at a face value as low as Tk 10.
Mr Muhith said the country's share market is highly speculative, which warrants a total reform.
"There has to be change," said the minister adding that the reforms would not come easily.
The minister said: "We have to follow Indian example in this regard as the neighbouring country has set up a national stock exchange to have a more regulated industry."
The country's stock market is new so many of its rules need scrutiny, he said.
The minister, however, informed that fixing Tk 10 as the lowest face value would not be mandatory for the listed companies. "They can set it at Tk 10 or above."
The SEC recently approved a proposal on restriction of floatation of shares having face value below Tk 10 by any company.
This decision, however, will be applicable for the forthcoming initial public offerings (IPOs), according to the SEC.
The issue surfaced after the Grameenphone's initial decision to raise a total of US$125 million including $65 million through IPO offering the face value at Tk 1 for each share.
The country's largest mobile operator later fixed its share face value at Tk 10.
DSE, the country's premier bourse, also maintains that the face value should be a minimum of Tk 10, as this will create a scope for manipulating prices of shares having face value less than Tk 10.