The Dhaka Stock Exchange (DSE) will form an expert panel for scrutinising all the prospectuses of the public offer by companies, interested to be listed with the capital market, said the premier bourse of the country in a press release on Thursday evening.
Without satisfying the DSE-formed expert panel, no company will be allowed to be in the market in future, assured the Bangladesh Securities and Exchange Commission (BSEC).
A three-party meeting held at the BSEC building on Thursday discussed the worsening situation of the capital market and the necessary steps to overcome it.
The BSEC team, headed by its Chairman Dr M Khairul Hossain, noted important observations and suggestions from the representatives of the stock exchange and its brokers.
The DSE was represented by its board members while the DSE Brokers Association (DBA) team was headed by its President Shakil Rizvi.
After the meeting, Minhaz Mannan Emon, a director of the DSE said: "The DSE and the DBA expressed their concern over the capital market situation and the regulator assured a joint effort to overcome it."
"The decisions taken at the meeting will help recover market confidence," said Minhaz.
The investors rejected the audited prospectuses of most of the companies listed in the last several years.
What companies had disclosed in the prospectus for initial public offering (IPO) proved false. It is being reflected on the companies' business performance after listing and spiralling down stock prices, the DSE members explained to the BSEC officials.
The regulator later assured a stricter IPO approval process and the DSE's new expert panel is going to be a part of it.
The panel will include top auditors of the country and examine every single aspect of an IPO prospectus. If any discrepancy is observed, the DSE board, with permission from the regulator will further investigate the applicant companies.
The BSEC expressed its readiness to be very prompt about this.
To protect the market from irrational overpricing of newly-listed securities, the DSE representatives also proposed a circuit breaker for those scrips from day one of the debut.
They also suggested a stricter lock-in period for the pre-IPO shares issued in private placement if they are held by any promoter of the company, directly or indirectly.
In recent years, the exchange and the regulator had been often in disagreements over the merit of IPO approvals.