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BSEC takes a tough line on IPO scrutiny

FE Report | June 28, 2020 00:00:00

The securities regulator is scrutinising the IPO proposals very carefully for the sake of investors and the capital market.

"Companies willing to go public have no scope of getting the regulatory approval providing any false information with the IPO (initial public offering) proposal," said a top official of the securities regulator.

Talking to the FE, a top official of the Bangladesh Securities and Exchange Commission (BSEC) said they are scrutinising IPO proposals without looking at identity of the issuer companies.

In last week, the securities regulator fined Al Faruque Bags, its auditor and issue managers for non-compliances found in the company's IPO proposal.

Asked, the BSEC official said no company will get the regulatory approval if it fails to comply with the public issue rules.

He said the incumbent commission is working to approve the IPO proposals without taking into account the identity of issuers.

"Issuer companies, issuer manager and auditors must play due role for the interest of investors and the capital market," the BSEC official added.

The securities regulator in last week imposed a penalty worth Tk 1.0 million on Al Faruque Bags for violating rules in case of submitting IPO proposal.

As per existing rules, the auditor which will provide certificate on the issuer company's compliance with corporate governance code must be separated from the statutory auditor.

But Al Faruque Bags received certificate on compliance with corporate governance code from its statutory auditor-ARTISAN.

And the company mentioned the certificate in the IPO prospectus.

BMSL Investment and IIDFC Capital are the issue managers of the company and they provided due diligence certificate about the information included in the prospectus.

According the BSEC, the issuer company, auditor and issue managers breached the public issue rules in case of submitting the IPO proposal.

Along with fining the issuer company, the securities regulator fined the two issue managers Tk 0.5 million and auditor Tk 0.2 million.

Asked, BSEC executive director Mohammad Saifur Rahman said Al Faruque Bags may be the first company which has been fined for providing false information.

He said a company may have deficiencies in IPO proposal submitted to the BSEC and later those deficiencies are fulfilled as per the regulatory instruction.

"But it's really frustrating if a company provides false information at the very beginning process of going public," Rahman said.

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