The securities regulator is set to scrutinise fresh IPO (initial public offering) proposals for approval only after getting consent from the bourses in this respect, officials said.
The Bangladesh Securities and Exchange Commission (BSEC) will adopt the policy in a bid to avoid the criticisms of the exchanges over the regulatory approval to the IPO proposals.
"The exchanges will not be allowed to criticise the regulatory approval given based on their consent. They will also not be able to say that their observation is not considered while approving the proposal by the securities regulator," said a BSEC source.
He said the IPO proposals which are in the pipe line will be scrutinised for approval purpose as per the ongoing process.
"The upcoming regulatory decision will be applicable for the companies which are yet to submit their IPO proposals," the BSEC source said.
He said the securities regulator presently is scrutinising the proposed amendment brought to the DSE (Dhaka Stock Exchange) listing regulations which will clear the exchange's authority over the listing affairs.
"After approving the listing regulations, the premier bourse will get enough power to carry on its activities. But the demutualisation is not deregulation of the BSEC's power," said a BSEC official.
The securities regulator, however, has moved to approve the IPO proposals by taking consent from the exchanges following their dissatisfaction and criticisms made several times stating that their observations were not evaluated.
The exchanges earlier also claimed that the IPO proposals having flaws could have been avoided if the exchanges' observations were evaluated.
At a meeting held on July 8 last with the DSE board of directors, the DSE TREC (Trading Rights Entitlement Certificate) holders of expressed their deep concern over the regulatory approval to the IPO proposals which later raised questions.
At that meeting, the majority number of TREC holders said the DSE must raise its concern to the securities regulator before a company allegedly goes public with 'fabricated' financial disclosures and various 'loopholes'.
The DSE had a listing committee until November 2011 that was responsible for analysing the draft initial public offering prospectuses in brief and making recommendations to the regulator.
The body later was abolished as its observations allegedly were not evaluated by the securities regulator.
The BSEC source, however, said a company willing to go public will have to submit the IPO proposal to the securities regulator and both the exchanges as well.
"At first, the exchanges will evaluate the companies' fundamentals by conducting field visit or any other process require to deliver their consents in favor of approving the IPO proposal by the securities regulator," the source said.
He said after getting the exchanges' consent, the securities regulator will start its job required approving the IPO proposal.
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