Mohammad Mufazzal
The securities regulator has taken a number of key decisions, including a few relating to the amendment to book building method, rules of mutual funds and the prospectus of the Bangladesh Fund, officials said.
The Securities and Exchange Commission (SEC) Wednesday took the decisions at a meeting, chaired by SEC Chairman Professor M Khairul Hossain.
The SEC has decided in principle to stick to its proposed indicative price limit of an issue. The price, in any case, will not exceed 15 times of the weighted average of the earning per share of the preceding three years or of three times of the net asset value (NAV), whichever is lower.
The regulatory move on book building comes following widespread allegation about the abuse of the method, which was partly blamed for the recent stock market crash and the government ultimately ordered its suspension in January this year.
The regulator said the indicative price limit will reduce the maximum possible valuation of the share.
"Although conceptually there should not be any price cap under the book building method, we have considered this limit on the basis of our unique situation," the SEC said.
Mohammad Saifur Rahman, an executive director of the SEC, said stakeholders were divided over the issue of fixation of indicative price limit.
"Considering overall situation the policymakers of the SEC finally decided in principle to add a provision of indicative price limit to the final draft of book building method," Mr Rahman said.
The regulator has reduced its proposed six month lock-in period to four months for eligible institutional investors (EIIs) following stakeholders' opinions expressed at a meeting earlier held on book building issue.
Earlier, 15 days' lock-in period was applicable to the EIIs.
To avert price distortion, the SEC has said the indicative prices of a firm using such method should be supported by at least 20 EIIs, including at least three quotations from each of six categories: merchant banks, commercial banks, asset management companies (AMCs), stock dealers, insurance companies and NBFIs.
The regulator will also scrutinise the balance sheet of a company with the help of its panel auditors if specific allegations are made against its balance sheet.
Mr. Rahman said after taking public opinion on the draft of book building method, the regulator will publish a gazette notification and then the window of public offerings through book building method will be opened.
The newly recast SEC has also moved to amend some existing rules of mutual funds in an effort to boost mutual fund industry following a number of demands from the AMCs.
As per regulatory decisions, from now on the names of upcoming mutual funds will be entitled to the names of AMCs.
The SEC has increased the maximum limit of Tk 2.5 million for individuals in the private placement of mutual funds.
It has also reduced the lock-in period to six months from previously one year imposed on the private placements of mutual funds.
The IPO (initial public offering) quota for mutual funds has been fixed at 15 per cent, instead of previous 10 per cent.
The re-fixed public issue size of a mutual fund intending to go public will be 25 per cent, which was earlier fixed at 50 per cent.
The regulator has decided to fix minimum size of an open-end mutual fund at Tk 100 million, instead of previous minimum size of Tk 200 million in a move to encourage the flotation of such type of mutual funds.
As per another regulatory decision, AMCs will be allowed to work as institutional portfolio managers.
To accelerate the performance of mutual funds, the SEC will do rating of AMCs.
Mr. Rahman said the regulator will seek opinions on its decisions taken on the rules of mutual funds.
At Wednesday's meeting, the SEC also approved the prospectus of the country's largest ever open-end mutual fund -- Bangladesh Fund, which recently went public with a proposed size of Tk 50 billion.
The prospectus of other closed-end mutual -- Bangladesh Fixed Income Mutual Fund (BFIMF) -- was also approved at the meeting.
The BFIMF will go public with a size of Tk 5 billion and the tenure of the fund will be 10 years.
Race Asset Management is the fund manager of BFIMF.
The securities regulator has taken a number of key decisions, including a few relating to the amendment to book building method, rules of mutual funds and the prospectus of the Bangladesh Fund, officials said.
The Securities and Exchange Commission (SEC) Wednesday took the decisions at a meeting, chaired by SEC Chairman Professor M Khairul Hossain.
The SEC has decided in principle to stick to its proposed indicative price limit of an issue. The price, in any case, will not exceed 15 times of the weighted average of the earning per share of the preceding three years or of three times of the net asset value (NAV), whichever is lower.
The regulatory move on book building comes following widespread allegation about the abuse of the method, which was partly blamed for the recent stock market crash and the government ultimately ordered its suspension in January this year.
The regulator said the indicative price limit will reduce the maximum possible valuation of the share.
"Although conceptually there should not be any price cap under the book building method, we have considered this limit on the basis of our unique situation," the SEC said.
Mohammad Saifur Rahman, an executive director of the SEC, said stakeholders were divided over the issue of fixation of indicative price limit.
"Considering overall situation the policymakers of the SEC finally decided in principle to add a provision of indicative price limit to the final draft of book building method," Mr Rahman said.
The regulator has reduced its proposed six month lock-in period to four months for eligible institutional investors (EIIs) following stakeholders' opinions expressed at a meeting earlier held on book building issue.
Earlier, 15 days' lock-in period was applicable to the EIIs.
To avert price distortion, the SEC has said the indicative prices of a firm using such method should be supported by at least 20 EIIs, including at least three quotations from each of six categories: merchant banks, commercial banks, asset management companies (AMCs), stock dealers, insurance companies and NBFIs.
The regulator will also scrutinise the balance sheet of a company with the help of its panel auditors if specific allegations are made against its balance sheet.
Mr. Rahman said after taking public opinion on the draft of book building method, the regulator will publish a gazette notification and then the window of public offerings through book building method will be opened.
The newly recast SEC has also moved to amend some existing rules of mutual funds in an effort to boost mutual fund industry following a number of demands from the AMCs.
As per regulatory decisions, from now on the names of upcoming mutual funds will be entitled to the names of AMCs.
The SEC has increased the maximum limit of Tk 2.5 million for individuals in the private placement of mutual funds.
It has also reduced the lock-in period to six months from previously one year imposed on the private placements of mutual funds.
The IPO (initial public offering) quota for mutual funds has been fixed at 15 per cent, instead of previous 10 per cent.
The re-fixed public issue size of a mutual fund intending to go public will be 25 per cent, which was earlier fixed at 50 per cent.
The regulator has decided to fix minimum size of an open-end mutual fund at Tk 100 million, instead of previous minimum size of Tk 200 million in a move to encourage the flotation of such type of mutual funds.
As per another regulatory decision, AMCs will be allowed to work as institutional portfolio managers.
To accelerate the performance of mutual funds, the SEC will do rating of AMCs.
Mr. Rahman said the regulator will seek opinions on its decisions taken on the rules of mutual funds.
At Wednesday's meeting, the SEC also approved the prospectus of the country's largest ever open-end mutual fund -- Bangladesh Fund, which recently went public with a proposed size of Tk 50 billion.
The prospectus of other closed-end mutual -- Bangladesh Fixed Income Mutual Fund (BFIMF) -- was also approved at the meeting.
The BFIMF will go public with a size of Tk 5 billion and the tenure of the fund will be 10 years.
Race Asset Management is the fund manager of BFIMF.
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