The Best Holdings Limited, operations partner of hotel Le Meridien Dhaka, alleged that the Bangladesh Securities and Exchange Commission (BSEC) has taken a controversial stand against other regulatory bodies including Bangladesh Bank and the Dhaka Stock Exchange (DSE).
A letter on December 17 addressed to the Chief Executive Officer of the Dhaka Stock Exchange and its Directors attempted to halt the approval of the infrastructure company, Best Holding Limited’s direct listing while questioning the authority of the DSE to exercise its power in such an instance.
Direct listing is a process which is regulated by the Dhaka and Chittagong Stock Exchange Listing Rules where the exchanges have been given the authority to grant exemptions or modify the rules on a case-by-case basis.
If such a transaction were approved, Best Holding Limited itself will not be getting any funds, rather the government banks who have invested in the infrastructure company will offload 5 percent of their investment shares of the company, a process allowed and required by Bangladesh Bank directive.
Insiders interviewed state that the BSEC authorities had been aware of the application of Best Holding Limited.
The abrupt special letter on a National Holiday to the Dhaka Stock Exchange came as a surprise to many.
Another regulator involved in this matter is the Bangladesh Bank which has issued a number of directives to promote banks to invest in infrastructure projects.
In its latest circular issued in July this year, Bangladesh Bank asked the infrastructure companies concerned to take necessary steps to allow banks to offload these investment shares thorough direct listing. However, so as not to pressure the share market the sales were limited to a small 5 percent of bank holdings in the first year.
This circular prompted the private infrastructure company Best Holdings Limited, with investments from several government banks, to take action to be listed in the Dhaka and Chittagong stock exchanges through the more direct listing process.
The government banks are also interested to liquidate some of their investments in these infrastructure projects by offloading 5 percent of their holdings in the first year.
The measure is supported by the finance minister who asked the regulators to make necessary changes in the existing rules and regulations and provide necessary exemptions to allow these infrastructure companies to be direct listed through the bourses.
A senior official in Bangladesh Bank commented anonymously on the matter; “Bangladesh Bank has been very favourable toward various BSEC requests for special treatment for capital market investments by banks urging banks to invest even more in the share market. However, when we have issued a directive to allow these banks to liquidate small percentage of their investments, the BSEC shows non-cooperation. This is not desirable nor does it demonstrate mutual cooperation.”
A DSE Director also was vocal about the matter. "We serve according to the desire of the government and have considered the matter carefully.”
He continued, “To us honouring the spirit of nation building and supporting the government directives is important. The listing rules allows DSE to use its discretion and provide necessary exemptions on a case-by-case basis.”
It is the law and set on a principle of independence of the stock exchange. Ultimately BSEC would have a say in the matter.
It was unnecessary to create an impression of non-compliance and tarnish the image of this institution and its respectable Directors."
It is also learnt that for investor’s protection, the Bangladesh Bank rules have made the Best Holding Company to form a fund to pay guaranteed dividends to public shareholders. This fund already has enough cash to provide investors healthy dividends for the next three years.
When the reporter approached the Small Investor Forum, its spokesperson commented, “We want the listing of good companies in the exchanges. The common investor has no opportunity to invest in infrastructure companies. I heard that the BSEC has allowed so many poor companies to be listed.”
“So, why there should be a problem with listing a company that government banks saw fit to invest in? This may be another attempt by some vested anti-development quarters to deprive us of good quality dividend paying companies and play our role in nation building.”
