Robi Axiata Limited, the second-largest telecom operator of the country, may not need to issue shares to its employees against their deposits within the stipulated six months for an initial public offering (IPO).
The Financial Reporting Council (FRC) has given Robi the exemption from its directive that made it mandatory for IPO issuers to issue shares against "share money deposit".
Robi has shown the deposits against the employee stock purchase plan (ESPP) in the audited financial statement as a current liability and not as a part of equity.
An ESPP is a company-run programme in which participating employees can purchase company stock at a discounted price.
But, according to the FRC February 2020 directive, share money deposits must be converted into the company's capital within six months.
The companies must include the share money deposits while calculating earnings per share and dividend as soon as the money is deposited, even before the securitisation.
On condition of anonymity, a FRC official told The Business Standard, "It was a requirement of the securities regulator for the company. The company had applied to the FRC in this regard and FRC accepted the application, giving exemption from that directive."
But the Bangladesh Securities and Exchange Commission (BSEC) sources said the employees' shares of Robi will include as a private placement or capital raising, which is not covered by the BSEC.
Private placement is a sale of stocks, bonds, or securities directly to a private investor, rather than as part of a public offering.
So the pre-IPO placement share documents have to be submitted properly before getting approval for an initial public offering.
A pre-IPO placement is a sale of large blocks of stock in a company in advance of its listing on a public stock exchange.
The company sought the exemption from complying with rules so that it can issue shares to its employees after getting approval.
The company sold shares to its employee with the condition that if the company gets approval from BSEC, they will get the allotment then. Otherwise, the company will return the money to the employees.
According to public issue rules, an issuer company offers at least a quantity of securities equivalent to 10 percent of its paid-up capital (including intended offer) or Tk15 crore at par value, whichever is higher.
But the company issued below 10 percent share for the public.
Shahed Alam, chief corporate and regulatory officer of Robi Axiata Limited, told The Business Standard, "We are currently awaiting BSEC's approval for our application."
"As of now, we are happy with the development in this regard," he added. "We are hopeful that we will soon get the nod from the commission."
Earlier, Robi applied to the BSEC for raising Tk523 crore from the capital market through issuing new shares in an IPO.
Robi will issue 523.8 million new shares at a face value of Tk10 each.
Of the new scrips, 387.7 million shares will be offered to the public, which will represent 7.4 percent of the company's post-IPO number of shares.
On the other hand, its employees and directors will be offered to buy 136.1 million shares under an ESPP, which will represent 2.6 percent of the post-IPO number of shares.
The IPO proceeds will be utilised to fund Robi's capital expenditures and enhance its profile as a leading telecom operator.
The company commenced operations in 1997 as Telekom Malaysia International (Bangladesh), under the brand name Aktel. In 2010, it was rebranded as Robi and the company changed its name to Robi Axiata Limited.
After the merger with Airtel Bangladesh in 2016, the company emerged as the second-largest telecom operator and retained the same name.
This merger helped the company see profits last year, after several years of losses.
Malaysian telecom giant Axiata Group Berhad holds 68.69 percent of Robi Axiata's controlling shares. Other shareholders in the entity are Delhi-based Bharti Airtel and Tokyo-based NTT DOCOMO.
At the moment, Robi's main competitor Grameenphone is the only telecom operator listed on the Bangladeshi stock market.