BSEC bars cos from using more than one-third of IPO fund

October 30, 2014

Repayment Of Bank Loans
BSEC bars cos from using more than one-third of IPO fund
The Bangladesh Securities and Exchange Commission on Wednesday barred any company from using more than one-third of its initial public offering money for repayment of bank loans.
The capital market regulator decided to impose the condition in a regular commission meeting presided over by its chairman M Khairul Hossain, a BSEC news release said.
The commission following severe criticism from stakeholders imposed the condition in using IPO fund as almost all the company floated shares at the capital market for repayment of their bank loans, a BSEC official said.
Capital market expert in recent times raised their voice against the use of IPO fund for repayment of bank loans as most of the companies failed to sustain the profit growth after getting enlisted with the capital market for not using the IPO funds for business expansion.
The commission on the day also imposed a two-year bar for any listed entity for offering rights shares after getting approval for its IPO, the BSEC release said.
The commission decided that non-utilisation of IPO or rights issue or RPO fund would be another disqualification for offering rights shares, it said.
Besides, no companies would be allowed to issue rights shares within three financial years of re-listing with the stock exchange from the over the counter market or re-enlisting after delisting from the stock exchange, it said.
The commission also disallowed any entity or its agents to raise capital by issuing placement shares to any other individual other than the existing shareholders before getting BSEC’s approval for raising capital, the BSEC release said.
In case of issuing shares before the IPO, companies have to open separate bank accounts for depositing share money and the capital raised against allotment shares and all the transactions above Tk 5 lakh must be conducted through account payee cheques, it said.

-With New Age input

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