Dhaka, Bangladesh (BBN)- The Securities and Exchange Commission (SEC) has eased some IPO rules under the book building method to encourage infrastructure, power and fuel companies to go public.
Non-listed companies in the three sectors with at least a year of commercial production and profits can now raise funds from the market, a SEC circular said, issued on Monday.
Previously, a company had needed at least three years of commercial operations and profits for a minimum of two years before being eligible to raise capital through the exchanges.
However, if a company wishes to float shares under the fixed-price initial public offering (IPO) method, the new, easier rules will not be applicable.
The relaxed rules will not apply to companies in other sectors, the SEC officials said, adding that infrastructure, fuel and power sectors are being prioritized for economic development.
The SEC has also made another amendment to the book building rules. It said the institutional investors that will participate in fixing the indicative prices of a company's shares will also have to participate in the final bidding to discover share prices. Previously, it was not mandatory for them.
Companies with a minimum of BDT 180 million in paid-up capital will be also be allowed to go public from now on, the SEC circular said. But the minimum size of the IPO should be BDT 120 million, meaning a company with at least BDT 300 million in paid-up capital, including the minimum IPO size, can go public.
A company with large capital will have to go for an IPO with minimum shares equivalent to 10 percent of total paid-up capital and IPO size.
BBN/SI/SSR-21Nov10-10:36 am (BST)