The Securities and Exchange Commission of Bangladesh has launched an initiative to tighten the subscription of IPO shares by eligible investors by increasing the minimum stock market investment to Tk 3 crore from the existing Tk 1 crore.
The minimum investment for approved pension funds, recognized provident funds and approved gratuity fund would be raised to Tk 1.5 crore from the existing Tk 50 lakh.
BSEC officials submitted the proposals to the commission last week.
The terms, if approved, will be set forth in the consent letter of each IPO prospectus.
The BSEC also decided to require stock exchanges to register the provident fund and the bonus fund as eligible investors after evaluating the funds’ audited financial statements.
Currently, exchanges only register them by seeing the certificate of fund registration issued by the National Board of Revenue.
In addition, the DSE must also ensure that the investments of the provident fund and the gratuity fund do not exceed the total size of the fund.
Now, provident funds worth Tk 1 crore can invest Tk 2 crore or more in the primary market after borrowing through other means.
The BSEC took the initiative as it observed that many eligible investors, who have no apparent role in the secondary market, were benefiting from the IPO quota facility, depriving the assets.
In addition, he found that many provident funds and gratification funds, which either exist in name or were only opened for IPO purposes, also benefit from the IPO quota facility. stock market and earn money.
Thus, enhanced supervision would prevent such eligible investors wandering out of the market, BSEC officials said.
According to the current IPO subscription requirement by eligible investors, each eligible investor who intends to submit an application must maintain a minimum investment of Tk 50 lakh for approved pension funds, provident funds recognized and approved bonus funds and other EIs of Tk 1 crore in the securities quoted at market price at the end of a business day which is immediately preceded by five business days from the first day of commencement of subscription to the ‘Initial Public Offering.
Exchanges should send the list of BO accounts that have applied for IPO to Central Depository Bangladesh Limited (CDBL).
The CDBL shall send a report to the exchanges based on the list of BO accounts provided by the exchanges regarding the holding of EI in listed securities and the exchanges will ensure compliance in this regard.
Eligible investors, including mutual funds, are granted a 25% quota in the IPO under the fixed price method and the bookbuilding method in accordance with the issuance rules public of the BSEC.
Eligible investors are investment bankers and portfolio managers, portfolio management companies, UCITS and UCITS, securities dealers, banks, financial institutions, insurance companies, fund managers alternative investment funds, alternative investment funds, market makers, issuers of listed securities, residents or non-resident Bangladeshis, and other institutions approved by the BSEC.