The government of Bangladesh has lifted the long-standing ban on direct listing on stock exchanges after nearly 16 years, opening the door for government, private and multinational companies to list directly.
A notice was sent from Capital Market-1 branch of the Financial Institutions Division of the Ministry of Finance to Bangladesh Securities and Exchange Commission (BSEC) on Monday.
The letter, signed by Deputy Secretary Md Mamunur Rashid, said the ban imposed on 1 February 2010 on direct listing of government, privately owned and multinational companies was withdrawn by order, in the interest of sustainable development of the capital market.
The letter also said the decision was taken following a DO letter from the BSEC Chairman dated 19 August.
The ban was imposed through a memorandum issued on 1 February 2010 by the Policy Branch of the then Banks and Financial Institutions Division of the Ministry of Finance. The government lifted it after nearly 16 years.
Through direct listing, a company can be listed directly on a stock exchange under specific regulations, outside the conventional initial public offering (IPO) process. This can create new opportunities for companies to raise funds from the capital market and list.
The Finance Ministry letter said multinational companies have also been brought under this opportunity alongside government and privately owned companies. As a result, the path for large and established companies operating in the country to enter the capital market may widen.
Capital market stakeholders had long been demanding the introduction of direct listing. According to them, increasing listing opportunities will raise the number of good fundamental companies in the market and expand investment opportunities for investors.
However, details including how a company will be listed through direct listing, the share-selling process, pricing and protection of investors’ interests will be determined through BSEC’s relevant regulations.
A Finance Ministry official said, “The ban on direct listing was imposed through a memorandum in 2010 and has been withdrawn today. As a result, there is now no barrier to direct listing on stock exchanges.”
He said BSEC can now take steps to implement the direct listing process according to necessary policies and regulations.
