BSEC raises direct listing threshold for eligible firms

Bangladesh Securities and Exchange Commission (BSEC) has expanded the scope for companies to list directly on the country’s stock market without going through an initial public offering (IPO), opening the route to private companies, foreign-owned businesses and firms meeting specified financial criteria.

The stock market regulator issued a notification on Sunday announcing the changes.

Under the new rules, companies wholly owned by the government, or in which the government holds at least 51% ownership, will be eligible for direct listing. Companies with direct or indirect government ownership will also qualify if the government’s stake accounts for at least 10% of their paid-up capital.

Wholly foreign-owned companies, as well as those in which foreign investors hold at least 51% ownership, will also be eligible for direct listing.

Scheduled banks, financial institutions and insurance companies with net assets of at least Tk 5 billion, according to their latest audited financial statements, will qualify under the revised rules.

Other eligible entities include companies with annual turnover of at least Tk 10 billion, stock exchanges registered with the BSEC, depositories, clearing and settlement companies, and any other companies designated as eligible by the commission.

Since the direct-listing mechanism was introduced in 2006, five state-owned and five private-sector companies have listed their shares through the process.

The state-owned companies are Dhaka Electric Supply Company (DESCO), Power Grid Company of Bangladesh, Jamuna Oil Company, Meghna Petroleum and Titas Gas Transmission and Distribution Company.

The privately owned companies are Shinepukur Ceramics, ACI Formulations, Navana CNG, Ocean Containers and Khulna Power Company.

On 5 November 2009, the finance ministry decided that only state-owned companies would be allowed to issue shares through the direct-listing route. However, Ocean Containers and Khulna Power Company received listing approval in 2010 because they had applied before the decision was made.

Since then, the facility had remained restricted to state-owned companies. The latest notification broadens the scope of direct listing once again.