No more direct listing for private companies
Private companies cannot join the bourses under the direct listing system, a regulatory measure to protect the interests of investors as well as the capital market.
Direct listing is the process by which a company can be listed on a stock exchange without increasing existing paid-up capital or issuing new shares. Under the mechanism, a company can join a bourse just by offloading its existing shares to investors.
Bangladesh Securities and Exchange Commission in a regulatory notice last week directed the twin bourses not to allow any private company to be listed directly. Only the government companies or state-owned enterprises can apply the mechanism.
The regulatory directive comes after a private sector company, Aman Cement Mills, recently submitted a proposal to the premier bourse for direct listing, which was misused massively before the price crash of 2011.
A government probe committee had found that before offloading their shares in the market, some companies inflated their stock prices by misusing the bidding system under the direct listing.
The listing of companies with inflated prices affected the stockmarket, according to the probe committee report.
Khulna Power Company was the last private sector firm to join the Dhaka and Chittagong stock exchanges in March 2010 through direct listing; trading of its shares began in April that year.
Since the introduction of the direct listing system in 2006, five state-owned companies and five private sector companies joined the bourses by offloading shares.
The government entities are: Desco, Power Grid, Jamuna Oil, Meghna Petroleum and Titas Gas; and the private organisations are: Shinepukur Ceramics, ACI Formulations, Navana CNG, Ocean Containers and Khulna Power Company.
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