The securities regulator would allow companies to float an IPO (initial public offering) or a Repeat Public Offering (RPO) even after their direct listing.
The Bangladesh Securities and Exchange Commission (BSEC) said this on Thursday at a meeting with representatives of companies and conglomerates. The market watchdog convened the meeting to brief them on draft rules for direct listing and the benefits of listing on stock exchanges.
The existing draft rules for direct listing leave no scope for an IPO or RPO after a company's direct listing, which was why meeting participants from business entities brought up the issue.
They were told that a provision would be incorporated into the draft rules, allowing an IPO or RPO after direct listing, said Sumit Podder, secretary general of the Bangladesh Merchant Bankers Association, who attended the meeting.
Under the direct listing method, companies' sponsors transfer their shares without any public offering, and the funds are deposited into their own accounts. This mechanism lets sponsors of a company exit their investments while making room for general investors to buy ownership in the organisation.
As per the draft rules, buyers will have to bid prices above a floor price fixed at least 20 per cent below the reference price set by the issuer company.
At Thursday's meeting, some participants urged the securities regulator to change the term "floor price," since it is more associated with the price-controlling mechanism that had long been in place in the secondary market, keeping stocks stagnant and illiquid.
The draft rules have a provision to impose a one-year lock-in period on the shares to be transferred through direct listing.
The BSEC at the meeting ruled out the possibility that the lock-in period could be increased.
To enhance the depth of the capital market, the new commission led by BSEC Chairman Masud Khan has already approved the draft rules for direct listing.
The rules set eligibility criteria for direct listing, which include state-owned entities, ICT infrastructure service providers, foreign companies, and companies with an annual turnover or total assets of Tk 5 billion.
Representatives from Unilever, MetLife, Nestle Bangladesh, Banglalink, bKash, Incepta Pharmaceuticals, Healthcare Pharmaceuticals, Essential Drugs, and Nagad attended the meeting.
Representatives from several conglomerates, such as Meghna, PRAN-RFL, DBL, Abul Khair, Unique, Kazi Farms, and Confidence, were also present at the meeting.
Among the state-run entities, North West Power Generation Company and Karnaphuli Gas Distribution Company attended the meeting.
The securities regulator gave a presentation on the draft rules.
The BSEC chief explained how the listing of fundamentally strong companies creates a win-win situation for the market and the companies: while the market gains depth, the business entities gain reputation, brand value, proper valuation and tax incentives.
Apart from providing ease of liquidity for successors, the listing of a good company offers additional capital in the future, said Mr Khan.
Referring to the dual listing of Beximco Pharmaceuticals on local bourses and on a London Stock Exchange platform, the BSEC chairman said sponsors of companies with a good reputation would be able to sell shares on both local and foreign exchanges following such dual listing.
Apart from BSEC commissioners and top executives, representatives from the BMBA and the Bangladesh Association of Publicly Listed Companies attended the meeting.
