Dhaka Stock Exchange has put forward a set of fresh listing and trading regulation proposals for the proposed small capitalised board of the bourse to Bangladesh Securities and Exchange Commission, lowering the minimum trading requirement to Tk 1 lakh in one go.
Earlier, in March 2018, the bourse proposed that investors transact shares worth at least Tk 5 lakh in one go at the secondary trading of small and medium enterprises (SME) on the separate board, DSE officials said.
Market experts, however, are sceptical about the DSE’s plan of minimisation of volatility by setting the minimum trading requirement at Tk 1 lakh in one go as the companies which would be traded under the small capitalised board would have paid-up capital of Tk 5 crore-Tk 30 crore.
About settlement and disclosure of price sensitive information, the rules for the main board and the small capitalised board of the bourse would be the same.
However, the companies under the small capitalised board would only disclose half-yearly and annual financial reports. The companies under the main board disclose four financial reports in a year — first quarter, second quarter, third quarter and annual.
Like the main board, the proposed board would have four categories — A, B, N and Z. If any small capitalised company fails to provide dividend annually at the rate of at least 10 per cent, it would be downgraded from ’A’ category.
DSE officials also said that the exchange would announce the launch of SME board through a ceremony in March this year and would ask for applications from the aspirant companies.
The stock exchange is also expecting the trading at the board would start from June this year.
DSE managing director KAM Majedur Rahman told New Age that the SME platform would facilitate the small companies to raise funds from the capital market.
The companies can use the proceeds for business expansion and infrastructure development, he said.
The government issued rules for qualified investor offer by small capital companies on January 30 to give a chance of raising fund from the capital market for the public limited companies, whose paid-up capital ranges from Tk 5 crore to below Tk 30 crore, after raising capital.
According to the small cap board rules, ’For subscription under book-building method, the bidders, who are entitled to get securities, must be allotted the securities at their own bid price as per their intended quantity on highest to lowest bid basis, in a descending order of individual bid price till exhaustion of the issue.’
The rules for companies under the main board are different as investors are allotted shares at a cut-off price despite hitting higher or lower prices by the investors.
The bidding rule in the small cap board would minimise artificial price hike as the bidders have to buy shares at their own bidding rate.
Besides, in case of the paid-up capital of a SME company crossing Tk 30 crore, such company must compulsorily apply for listing with the main board, the rules said.
To run the separate board, DSE has recently initiated a project proposal named ’Ease of access to equity financing for small and medium enterprise’.
The bourse has estimated the total cost for the project at Tk 2.74 crore and it appealed for 50 per cent of the cost, which is Tk 1.37 crore, from Business Finance for the Poor in Bangladesh, a programme funded by British government,.
Under the project, DSE has targeted to list 20 SMEs in the first year and 30 SMEs in the second year. The listing would enhance the market capitalisation to Tk 300 crore in 2019 and Tk 500 crore in 2020.
The bourse and the commission are creating a separate board for small-capitalised companies at the stock market as part of their move for market diversification.