BSEC moves to facilitate direct listing of large companies

The Bangladesh Securities and Exchange Commission (BSEC) has moved to introduce a separate regulatory framework for direct listing, allowing eligible large and established companies to enter the stock market without issuing new shares through an initial public offering (IPO).

The regulator approved in principle the draft Bangladesh Securities and Exchange Commission (Direct Listing of Securities by Stock Exchange) Rules, 2026 at its 109th commission meeting on Tuesday. 

The draft will be published for public consultation before finalisation.

Under the proposed rules, existing shareholders would be able to offer a portion (at least 10 to 20 percent of shares)  of their shares to the public through a stock exchange, rather than the company issuing fresh shares.

“Direct listing means listing existing shares on the stock exchange so current shareholders can offload them, without issuing any new shares through an Initial Public Offering (IPO),” said Md Abul Kalam, spokesperson for the BSEC.

The proposed framework identifies seven categories of eligible entities, including government-owned or partially government-owned companies, foreign-owned companies and firms with at least 10 percent direct or indirect government ownership.

Companies with at least 300 crore taka in paid-up capital engaged in BTRC-approved telecommunications and ICT-related activities would also qualify, along with scheduled banks, financial institutions and insurance companies operating for at least three years.

Companies with annual turnover or total assets of at least 500 crore taka would also be eligible, subject to other requirements of the BSEC, stock exchanges, Central Depository Bangladesh Limited and Central Counterparty Bangladesh Limited.

“We have defined seven specific categories of eligible entities...to clear up past ambiguities and encourage these major players to enter the capital market,” Kalam said.

He said the separate rules would also make the process more transparent by allowing public consultation.

Market practitioners said direct listing could provide an alternative for mature companies that do not need fresh capital.

Tanzim Alamgir, CEO of UCB Investment Limited, said established companies operating successfully for 10 to 15 years may have little need for additional borrowing or aggressive expansion.

“If a strong company has no outstanding loans and no need to raise fresh funds for expansion, why should it be forced to issue new shares to list?” Alamgir said.

Former DSE president and managing director of Shakil Rizvi Stock Ltd Md Shakil Rizvi said direct listing had historically been aimed at strong, well-capitalised companies that did not need fresh funds.

He said the mechanism had previously been largely limited to government-owned enterprises following abuses involving some private entities.

However, Rizvi cautioned about supply and price-discovery risks when trading begins.

“In a direct listing, there is only a single seller—the company or its existing shareholders—facing a market full of eager buyers,” he said.

“Until those shares are fully distributed among general investors, true price discovery remains a challenge,” Rizvi said, stressing the need for transparent pricing mechanisms and safeguards against artificial volatility.

BSEC eases approval requirement for Z-category shares

The commission decided to amend its May 20, 2024 directive to remove prior BSEC approval requirements for certain transactions or transfers involving shares held by sponsors or directors of Z-category companies, including cases related to debt obligations.

The change would also cover transmission of shares following a shareholder’s death and confiscation of shares arising from debt-related matters.

Dividend remittance timeline set

Listed companies will have to remit dividends to foreign shareholders within 30 days of receiving the Double Taxation Avoidance (DTA) Certificate from the NBR and within the relevant financial year.

Companies will also have to submit compliance reports to the BSEC and relevant stock exchange after completing the required procedures.

DSE gets approval for derivatives plan

The BSEC approved the DSE’s operational plan for introducing financial derivatives, covering regulatory, technological, clearing, settlement and risk-management arrangements.

The exchange plans to initially introduce index futures, with formal derivatives trading targeted for January 2028.