Listed firms must upload additional info to ease investment decision-making
Alongside publishing all the price sensitive information (PSI) in due procedure, listed firms will also have to publish the material information (MI) in their websites to help investors make informed investment decisions, the Bangladesh Securities and Exchange Commission (BSEC) said in the amended rules for insider trading prohibition.
"Material information" are types of information about the listed firms that are beyond the scope of PSI regarding the list the new rules categorically mentioned, but help investors get a clearer picture of the situation.
For instance, financial statements, financial results, corporate announcements including dividend announcements, corporate structure, capital structure, changes in business, expansion or liquidation – all are PSIs.
Rational investors in the Bangladesh capital market know it well that PSI alone is not enough for their informed investment decision making, as they have been deprived of most of the details beyond PSI by most of the issuers.
Within three months of the new rules' enactment, every issuer of listed shares and other securities or asset manager of funds must prepare and publish their own "Principles on Disclosure of Material Information and Price Sensitive Information" so that investors can learn about the types and extents of information they are entitled to avail.
For example, information or management comment regarding income, expense, cash flow, receivable, payable, liability, asset value, etc.
It also includes firms' asset mix of funds, provisioning against the orders of regulators or authorities, any changes in accounting treatment, proposals regarding takeover of any business or internal services.
Companies will also have to publish their comparative information of profits, cash flow, and asset value.
Changes in technology, production facility, new business contracts, patents, changes in auditor, credit rating agency, filing of any legal procedure, factors that can impact financial statement, taking or paying off big loans, mortgaging assets or getting them released, new loan contract or investment contract, any damage to asset or reputation, cancellation or amendment in previously decided projects, contracts, opinion of auditors — all should be informed to the investors, either in form of PSI or MI.
Every issuer must store all the PSI and MI statements in their website for at least three years.
BSEC Executive Director and Spokesperson Rezaul Karim said "The spirit is the same, the new rules elaborated the fields naming them categorically which one cannot avoid anymore."
Issuers have to publish their PSIs sooner through an online news portal, in two newspapers on the following day, and also the stock exchange servers.
Many non-compliant companies are yet to maintain their websites properly despite regulatory orders, and Rezaul Karim said, "They must do it to be treated as compliant ones."
Also, the new rules further elaborated who are insiders to prevent the use of undisclosed PSIs to benefit from illegal stock trading.
All the relevant regulators, auditors and service providers have been categorically named as insiders and Karim said, "Nothing wrong with being an insider, they just need not to use it for stock gains."
One, even not being an insider, would be punished if uses inside information from an insider, he said.
Insider trading is a major problem in the Bangladeshi capital market that lets unholy alliances benefit at the expense of average investors.
Also, the regulatory efforts, efficiency in prevention of insider trading are seriously questionable.