The DSE Brokers Association of Bangladesh (DBA) has recommended incorporating provisions for share buybacks and mergers and acquisitions (M&A) by listed companies into the proposed third amendment to the Companies Act, 1994, aiming to make the country's capital market more dynamic, efficient and investment-friendly.
The association made the recommendation in a written proposal sent to Commerce Ministry Secretary Md Ataur Rahman Khan on Wednesday.
The proposal, signed by DBA President Saiful Islam, was also sent to Bangladesh Securities and Exchange Commission (BSEC) Chairman Masud Khan for his kind consideration.
In its recommendation, the DBA said listed companies should be given a clear legal avenue to buy back their own shares as part of efforts to improve the efficiency and dynamism of the capital market.
To this end, the association proposed incorporating necessary provisions on share buybacks into the proposed amendment to the Companies Act.
It also recommended empowering the BSEC to formulate, implement, supervise and monitor rules and regulations governing share buybacks and ensure good governance in such transactions.
The DBA made a similar recommendation regarding mergers and acquisitions involving listed companies.
It said existing complexities and lengthy legal procedures involved in M&A transactions should be addressed by providing the BSEC with the necessary authority to formulate and implement rules and regulations governing such activities.
According to the association, the BSEC, being the statutory regulatory authority for the capital market and listed companies, should have the authority to establish a clear and effective regulatory framework for important corporate actions such as share buybacks and mergers and acquisitions.
Such a framework would facilitate faster decision-making and ensure effective regulation, transparency and good governance, it said.
The DBA believes that introducing modern and effective rules and regulations for these areas would make corporate restructuring and capital management easier and more efficient for listed companies.
It also expects such measures to contribute to greater dynamism in the capital market while strengthening the protection of investors and other stakeholders.
Share buybacks can provide listed companies with a mechanism to manage their capital structure and potentially support their share prices, while a clear regulatory framework for mergers and acquisitions can facilitate corporate restructuring and consolidation.
However, the DBA's proposal puts emphasis on ensuring proper regulatory oversight of both activities by the securities regulator.
The association expressed hope that the government would give due consideration to its recommendations while finalising the proposed third amendment to the Companies Act, 1994.
It urged the authorities to incorporate the proposed provisions in line with the government's objectives and plans for the capital market, its development and modernisation, and the protection of investors' interests.
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