The stockmarket regulator looks optimistic about finding a way for the listings of MJL Bangladesh Ltd and MI Cement Factory Ltd, though the premier bourse has turned down requests for the twin listings.
The Securities and Exchange Commission will put the issue up for discussion after receiving the Dhaka Stock Exchange’s rejection letter formally.
“There should be a way out. The commission will scrutinise the DSE’s logic behind the listing refusal,” said a senior SEC official.
The regulator will have to weigh and consider the interests of all parties — investors, issuers and the market, the official added.
The two companies, however, left the listing issue to the SEC and DSE.
“Both the SEC and DSE have their own points. So, we left it to the SEC and DSE to resolve the matter. Whatever the decision, we are ready to accept it,” said Azam J Chowdhury, managing director of MJL Bangladesh.
The DSE on Thursday turned down the listing proposals of MJL Bangladesh and MI Cement in response to an instruction from the regulator that asked the exchanges to take necessary steps about the twin companies’ listing in line with the existing rules.
“The DSE board took the decision as the two companies’ proposal of compensation to the investors from their ‘share premium account’ conflicts with rules,” DSE Senior Vice-president Ahsanul Islam Titu had said.
The two companies had earlier said they would compensate the retail investors as per clause 57(2)C of the Companies Act, if their share prices go below the IPO prices within six months of trading.
Secondly, Titu had said, the compensation is not a practical issue in the context of our market, and it will be difficult to maintain a record of which investor has lost how much.
The listing of MJL Bangladesh and MI Cement faced a hurdle when the stockmarket regulator suspended book building system in January this year acting upon a government instruction.
The government later said the two companies can be allowed on condition of buying back by the sponsors if their share prices go below the IPO prices within one month of trading.
The Listing Committee of the DSE also sat on the issue on March 22 and came up with a conclusion that if the two companies cannot be listed in line with their compensation offer, it will be conflicting with the Companies Act.
Moreover, the committee observed, it will give rise to huge complexities also. The companies and the stockbrokers will face problems in managing lakhs of beneficiary owners’ accounts, if their share prices drop below the IPO prices.
If MJL Bangladesh and MI Cement cannot be listed within the stipulated time, the two IPOs will be scrapped as per listing rules.
Source: The daily star, 28 March, 2011