Exchanges must mention rules in IPO observations
Stocks
The securities regulator has asked stock exchanges to mention specific laws and rules in their observations while reviewing documents on companies seeking to go for an initial public offering (IPO).
To get the authentic picture of a company, the Bangladesh Securities and Exchange Commission (BSEC) in a letter on Wednesday also directed the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) to follow Public Issue Rules-2015 properly.
The regulator earlier had a meeting with the DSE about the issue.
If stock exchanges found any violations in submitted documents on new issues, they will have to mention specific laws and rules, and cannot make any observations outside the laws.
Usually, a new issuer company has to submit its IPO documents to three organisations – BSEC, DSE and CSE. Stock exchanges then submit their observation reports to the regulator within 30 days.
Recently, the securities regulator has noticed that stock exchanges do not properly follow the rules related to a public issue, mutual funds, or any securities laws in reviewing IPO documents.
The stock exchanges come up with recommendations instead of observation reports.
The regulator suggested that stock exchanges should only give the findings of any violation of the rules by proposed companies.
According to the Public Issue Rules 2015, exchanges shall submit their observations, if any, on the proposed public issues to the commission mentioning specific violations of Bangladesh Securities and Exchange Commission (public issue) rules 2015, or Bangladesh Securities and Exchange Commission (mutual Funds) rules 2001, or any other securities laws as applicable, and applicable financial reporting standards within 30 days of receiving applications.
Provided any exchange fails to submit its observations within the stipulated time, the commission shall assume the respective exchange has not observed the submitted documents of the issuers.
In October last year, the premier bourse formed a high-profile committee to review the IPO proposals in a bid to ensure the quality of listings on the stock exchanges.
The committee scrutinises the IPO documents submitted on new companies.
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