Legal obligation to bring multinational cos to capital market stressed

The government should impose legal obligations for multinational companies operating in Bangladesh to get listed on the local capital market, experts said at a webinar on Tuesday.

Speaking at the discussion on "How to Increase the Depth of the Share Market in Bangladesh: The Potential Role of MNCs", they said more tax incentives are needed to make the companies interested in the capital market.

Associate Professor Dr Nasir Uddin, of Bangladesh Institute of Capital Market (BICM), was the keynote speaker while Professor Dr Mahmuda Akter, executive president of the institute, chaired the webinar.

Mohammad Rezaul Karim, executive director of Bangladesh Securities and Exchange Commission (BSEC), said multinational companies (MNCs) do not want to get listed on the capital market due to additional compliances following the listing.

"But in two ways it can be possible to make them interested in the capital market – by imposing legal obligation and by providing more tax incentives," he added.

Md Riyad Matin, managing director at BMSL Investment Ltd, said many multinational companies are doing business for a long period in Bangladesh but they are yet to get listed on the stock market.

The government should make it mandatory for the companies to get listed on the capital market.  

Dr Nasir Uddin said in his keynote speech the listed multinational companies have a very significant amount of reserve compared to their paid-up capital but the companies did not increase their paid-up capital after 1996.

On average, the MNCs have more than 10 times the reserves to paid-up capital ratio. These companies should be legally forced to increase their paid-up capital, he added.

Most of the companies offloaded their shares below 15% of their paid-up capital but it should be 25%.

He said, to increase the depth of the capital market, blue-chip and multi-national companies have to get listed on the capital market.

Speaking in the seminar, Dr Mohammad Abu Yousuf, joint secretary to the finance ministry, said in order to attract multinational companies, it is necessary to not only rely on tax policies but also on other benefits.

Suborna Barua, an associate professor of international business at Dhaka University, advised to go to the multinational companies by increasing the capacity of the merchant banks and creating efficient marketing teams.