During July 2000—June 2001 Research & Development Department of the Commission published and distributed the following Reviews and Reports of the Commission :-
Annual Report : FY 1999-2000
Quarterly Review : April-June, 2000
Quarterly Review : July-September, 2000
Quarterly Review : October-December, 2000
Quarterly Review : January-March, 2001
Parikrama” (SEC’s Bangla Newsletter) : July-September, 2000
Monthly activity reports of the Commission are regularly sent to the Ministry of Finance. Besides, R&D Department also sends different other reports, statements, information etc. to different agencies such as Bangladesh Bank, Investment Corporation of Bangladesh etc. as and when needed.
Investors’ Education Program:
SEC launched an Investors Education Program on 28.02.2001 to educate the general public about the capital market of the country. The program was completed on 18.04.2001. The training course includes – Functioning of SEC, DSE and CSE, Investment in the Secondary Market, Investment in the Primary Market, and Central Depository System (CDS). Altogether 48 participants in 3 batches took part in the program steps taken for.
MARKET DEVELOPMENT DURING FY 2000-2001
The substantial increase of average turnover, all share price index, and market capitalization during FY 2000-2001 in comparison to FY 1999-2000 indicates growth, stability, and strength of the capital market. During the FY 2000-2001 till 30th June 2001 capital amounting to Tk. 712.00 million was raised by 11 (eleven) issuer companies.
keep trend of reforms in the capital market and ensure good corporate governance
and accountability of the listed companies the adoption and application
of the International Accounting Standards and International Standards of
Auditing in the financial statements of the listed companies have been
made compulsory. The listed companies have been grouped into categories
on the basis of holding Annual General Meeting, declaration of dividends
and continuous operation of business. As a result demand for securities
of companies having good fundamentals has increased and it is expected
that the index will move to a satisfactory level. The rules and regulations
has been relaxed to allow the commercial banks to operate as merchant banks
and as a result institutional investment will be increased significantly.
To decrease trend of investment and finance for industrialization through
fund from commercial banks steps taken to frame regulation for issuance
of bond in the capital market under the assistance of the World Bank.
Steps taken by the Government during the FY 2000-2001:
Tax rebate at the rate of 10% for the listed companies for declaring dividend @ 25% or more;
Exemption limit of dividend income raised from Tk. 30,000/- to Tk. 40,000/-;
Tax rebate for investment in the secondary market and;
Investment allowance up to Tk. 2,25,000/- is allowed in place of Tk. 2,00,000/- if the investment is made in the initial public offering (IPO) of a publicly listed company.
The provision of tax deduction at source on bonus shares abolished.
Turst deed registration fee concerning bonds, debenture and mutual funds have been decreased and fixed at Tk. 2500/- instead of 2.5% on par value.
Steps taken by the Parliamentary Standing Committee on Ministry of Finance:
Constructive recommendation and approval in the framing and amendment of Securities Laws;
Encouraging institutional investments, and coordination with the market intermediaries;
Reforms under capital market development loan of the Asian Development Bank:
Reforming the Commission with full time members by abolishing part time memberships;
Delegation of Rules making power without taking government approval to the Commission upon taking public opinion;
Power to take stren action against violators of securities Laws;
Encouraging investment in the capital market through amendment of Trust Act and Insurance Act.;
Ensuring equal participation of the investors representatives in the board of the exchanges;
Separation of Administration from policy making council in both the exchanges.
Approval of Mutual Fund in the private sector;
of Central Depository Company.
Separation of the settlement system in the stock exchanges based on status of holding Annual General Meeting (AGM) and dividend payment by the listed companies;
Imposition of penalty in the event of non payment of declared dividends by listed companies;
Suspension/cancellation of licenses, penalty, and if necessary instituting criminal cases against listed companies/broker/dealer/merchant banks/auditors and related individuals for manipulation and violation of securities laws.
Pragmatic measure has been taken for application of International Accounting Standards as adopted by ICAB to improve the financial reporting of listed companies. To this end, the SEC has amended the Securities and Exchange Rules 1987 requiring financial statements of listed companies to be audited within 120 days after the end of the accounting year and submit to SEC and Stock Exchanges within 14 days. Amendments have also been made for financial statements be audited by a partnership firm of at least two Chartered Accountants having not less than 7 years of experience. New rule have also been made to ensure that financial reports transmit true and fair picture of the companies’ state of affairs and is prepared in compliance with internationally accepted accounting & auditing standards. The new provision also empowers the SEC to order special audits at the cost of the companies involved in unfair practices. This will ensure greater accountability of the listed companies.
The SEC has directed the listed companies under provision of the Securities and Exchange Ordinance, 1969 to ensure immediate publication of all price sensitive information, as defined in the wmwKDwiwUR I G·‡PÄ Kwgkb (myweav‡fvMx e¨emv wbwl×KiY) cÖweavbgvjv, 1995, in at least two widely circulated newspapers, one in English and the other in Bangla. The listed companies are also required to transmit to the SEC, and the stock exchanges all price sensitive decisions within 30 minutes of taking such decisions by the respective company’s board of directors.
Proposal for shifting of functions of monitoring listed companies to the Securities and Exchange Commission from the Registrar of Joint Stock Companies and Firms;
Formulation and amendment of IPO Rules, Right Issue Rules, Depository Act, Market Maker, Stock Exchange Members Margin Rules, Net Capital Rules, and Capital Issue Rules.
The listed companies have been reclassified into 3 different categories (A,B,&Z) by the DSE. ‘A’ group companies are those, which are regular in holding the current annual general meetings and have declared dividend at the rate of ten percent or more in the last English calendar year. B group companies are those, which are regular in holding the annual general meetings but have failed to declare dividend at least at the rate of ten percent in the last English calendar year. On the other hand Z group companies are those which have failed to hold current annual general meetings or have failed to declare any dividend or which are not in operation continuously for more than six months or whose accumulated loss after adjustment of revenue reserve, if any, is negative and exceeded its paid up capital. Trading under re-arranged group has come into effect on 17 April 2001. Settlement of Z group companies are on T+7 basis instead of T+1.
The Dhaka Stock Exchange has also introduced a new selective index of 20 companies having good fundamentals titled DSE-20 from January 2001. Earlier the CSE has also introduced a new selective under of 30 companies having good fandamentals titled ‘CSE-30’ from January 2000.
The SEC has taken step to end disturbances in the holding of annual general meetings (AGMs) of listed companies. To this end, the Commission on 24 October 2000 issued the following directives:
a) the issuer companies shall hold their annual general meetings in each year of the Gregorian calendar;
b) the issuer companies shall hold discussions in their annual general meetings strictly in conformity with the provisions of the ‡Kv¤úvbx AvBb, 1994 (1994 m‡bi 18bs AvBb);
c) no benefit in cash or kind, other than in the form of cash dividend or stock dividend, shall be paid to the holders of equity securities;
d) the issuer companies shall make full disclosure of all decisions, which when disclosed, may mean price sensitive information, as defined in the wmwKDwiwUR I G·‡PÄ Kwgkb (myweav‡fvMx e¨emv wbwl×KiY) cÖweavbgvjv 1995, by publishing the same, immediately after the decisions, in two widely circulated daily newspapers, one in Bangla and the other in English.
In order to encourage mutual fund in the private sector amendment is being made in the mutual fund rules. The main features are as follows:
The net worth requirement of asset management company has been fixed at Tk. 1.25 crore instead of Tk. 3.0 crore and paid up capital fixed at Tk. 1.50 crore;
Rate of sponsors contribution to the mutual funds will be decreased to 10% from the existuring 40%;
Registration and functioning of ICB Asset Management Company Ltd. ICB Capital Management Ltd. and ICB Securities Trading Company Ltd. will facilitate institutional investment;
Listed companies which do not hold Annual General Meeting (AGM) during a certain period of time, and do not pay dividend, or not in operation for long time will be categorized as an alternative way and their trading of securities shall be under Over the Counter System and they will also be brought under merger and acquisition. The SEC will direct the stock exchanges in this regard in due course. Merger and Acquisition Rules is under preparation. If the companies under this category fails to improve their financial position the Commission will reguest Bangladesh Bank not to sanction any loan to them.
The Commercial Banks are allowed to conduct merchant banking by opening a separate wing without establishing a subsidiary company. Prime Bank Ltd. and Arab Bangladesh Bank Ltd. has already been accorded license as merchant banker.
of shares of companies in the Gas, Power and Communication sector under
government ownership in the capital market will increase supply of shares
having good fundamentals. To this end, alongwith other measures the SEC
has taken initiative to sale government holding with the multinational
and other companies in the capital market.
Reforms in the capital market sector specially initiative for listing of profitable companies with good fundamentals, enhancing investors confidence by improving corporate governance, tax rebate for investors will make the capital market vibrant and development oriented. It is the prudent objective to industrialize the country through investment of general public in the capital market instead of bank loan based industrialization.