MNCs must come to capital market: BSEC Chairman

Large multinational companies operating in Bangladesh must get listed on the country's capital market, said Bangladesh Securities and Exchange Commission (BSEC) Chairman Masud Khan. He said these companies will first be encouraged to voluntarily join the market. However, if they show no interest, there is scope to exercise legal authority in the public interest.

He made the remarks at the inaugural session of a two-day workshop titled 'Capital Market Products and Rules' for members of the Capital Market Journalist Forum at Suvarnagram in Narayanganj on Friday. The workshop is being held on September 4 and 5.

The BSEC chairman said there are many large local and multinational companies in Bangladesh. The desired development of the market is not possible unless these good companies are brought to the capital market quickly. The commission will try to bring several large and important companies to the market within the next six months to one year.

Addressing multinational companies, Masud Khan said, "You come voluntarily. But if you do not come voluntarily, we also have that weapon at hand." He said the commission has the authority under securities laws to order a specific company to get listed in the public interest. For this purpose, the definition of 'public interest company' will be determined through the law.

Urging large companies to get listed, Masud Khan said listing enhances a company's corporate image and allows for proper valuation. This valuation can help the company acquire or merge with other entities. If any partner wants to exit the business, shares can be sold easily.

Referring to family business succession disputes, he said in listed companies, those who do not want to stay can easily exit by selling their shares.

The BSEC chairman also said initiatives are being taken to introduce direct listing and hybrid methods to bring large companies to the market. The traditional IPO process takes longer, so direct listing opportunities are being increased for good companies. Under the hybrid method, a company can simultaneously raise new capital and list existing shares.

He also mentioned plans to introduce 'extended audit' to make the IPO process more transparent and faster. Not just verifying financial statements on paper, the reality of a company's land, machinery, inventory and receivables will also be verified. Auditors will provide certification after verifying the assets and financial information of IPO-applicant companies. This is expected to speed up DSE's IPO verification process.

Noting that Bangladesh's capital market is still largely retail-investor dependent, Masud Khan said institutional investment must be increased to make the market sustainable. Initiatives will be taken to expand investment opportunities in corporate bonds alongside the stock market for various funds, including provident funds.

Referring to pension funds and insurance companies as major investors in developed markets, he said Bangladesh must also arrange to bring these institutional investors to the market.

Regarding the removal of the floor price after taking office, the BSEC chairman said this has led MSCI to move towards withdrawing the special measures it had taken regarding the Bangladesh market. Regular review of Bangladesh's index and implementation of corporate events will resume from November, he said.