Listing of CSE's 35% shares on DSE declined
The Bangladesh Securities and Exchange Commission (BSEC) has rejected the Chittagong Stock Exchange’s (CSE) application to list 35% of its blocked shares on the Dhaka Stock Exchange (DSE). The rejection was mainly due to the CSE's proposal contradicting regulatory requirements.
The CSE sought approval from the BSEC on July 31 to offload its remaining 35% blocked shares and list on the DSE. However, the proposal was found to be in violation of the Exchanges Demutualization Act, 2013, as the CSE proposed a direct listing method, which is only applicable to state-run companies. Furthermore, the CSE attempted to issue 20% of shares through private placement and 15% through a public offer, a structure that conflicts with the demutualization act.
Additionally, the CSE application was incomplete, missing required supporting documents such as the information document (prospectus) and copies of the board of directors' meeting and shareholders' general meeting resolutions.
The rejection of the CSE's application could potentially impact the overall investment climate and market liquidity in the Bangladeshi stock market. The CSE will need to address the issues raised by the BSEC to reapply for the listing in the future.
The CSE Managing Director, M Shaifur Rahman Mazumdar, stated that the demutualisation process could be completed after more than a decade if the application was accepted. He expressed hope that the CSE would be able to address the concerns raised by the BSEC and resubmit the application.
It is worth noting that the Demutualisation Act requires a stock exchange to be listed either on its own board or on the board of another exchange, but there are currently no self-listing regulations for stock exchanges. This decision could set a precedent for future applications from stock exchanges seeking to list their shares.
Official comments have yet to be made by the relevant authorities regarding the rejection of the CSE's application. The BSEC has not yet announced a timeline for when the CSE may resubmit its application.
In conclusion, the rejection of the CSE's application was due to conflicts with the provisions of the Exchanges Demutualization Act, 2013, and the prohibition on the direct listing of shares of companies other than government-owned enterprises on the stock exchange. The CSE will need to address these issues and submit a complete application with all required supporting documents to reapply for the listing in the future.
The CSE had to shelve its intended investment in the Dhaka Stock Exchange due to regulatory contraventions, specifically the proposal for a direct listing method which is deemed applicable only to state-run companies. The business of demutualizing the CSE could stretch over a decade if the application isn't resubmitted in a corrected format to adhere to the requirements of the Exchanges Demutualization Act, 2013.
