Chinese party withdraws most conditions

A Chinese consortium that got go-ahead to be a strategic investor of Dhaka Stock Exchange has withdrawn most of the conditions it had earlier included in its bidding.

It withdrew 16 conditions and changed three more to be eligible to buy 25 percent share of the premier bourse, after some of the provisions collided with local laws and were found not to be fitting for other shareholders of the DSE.

The consortium comprising the Shenzhen Stock Exchange and the Shanghai Stock Exchange made the changes after the Bangladesh Securities and Exchange Commission (BSEC) sought clarification about the conditions. One sticky provision was the price the Chinese consortium was willing to pay for per share.

It had offered Tk 22 per share. Many stock brokers had thought that the price was fixed. 

But the DSE said the price is not fixed. If the DSE distributes any dividend it would affect the price. 

In its clarification to the BSEC, the DSE said the price adjustment is a common practice. However, the potential strategic investor has agreed to waive the condition.

Another condition said the DSE would have to take approval from the consortium in case of winding up of the company, appointment of liquidator, sanction of scheme of liquidation or restructure, purchase of any intellectual property, valuation and offer price of share under the planned initial public offering and appointment of auditor.

The BSEC raised questions about the legal basis of the provisions, and the DSE conveyed the regulator's queries to the Chinese consortium.

Another condition had said the DSE would have to take permission from the consortium in case of borrowing more than Tk 10 crore, arrangements with creditors amounting to Tk 10 crore and investment of more than Tk 10 crore.

But the condition has been waived as well. The new threshold has been proposed at Tk 100 crore.

The consortium has retreated from another condition that had been seeking to make liability of directors unlimited and make it mandatory to take its permission while dealing with existing or potential asset of the company.

The consortium has also moved away from its demand to be appointed as co-chief technical officer as this violates the DSE's demutualisation scheme.

On the issue of governing law and jurisdiction, the consortium had wanted to follow the laws of England. Now, it has agreed to be governed by the laws of Bangladesh, if required, the DSE said in the clarification.

The withdrawal of the conditions raised question as it is being done after the opening of the bid, according to a senior official of the BSEC.

KAM Majedur Rahman, managing director of the DSE, however, said none of these conditions in question violate laws. “We are following the regulators' observation so that we can find the best strategic investor.”

BSEC officials said the consortium has agreed to withdraw or change them as many of the conditions do not comply with the law.

Meanwhile, the four-member committee of the BSEC, set up to analyse the proposal of the Chinese consortium, has been given five more working days to submit its report to the regulator after the expiry of the previous deadline yesterday.