Small Capital Board has become almost invalid

The small capital companies' board started its journey on April 30, 2019.

Finance Minister AHM Mustafa Kamal inaugurated the board. But no small capital company got approval for getting listed with the Dhaka and Chittagong stock exchanges after that.

So, the Small Capital Board has become almost invalid at the two exchanges.

So far only three companies applied to the Bangladesh Securities and Exchange Commission (BSEC) for qualified investor offering. But two of them withdrew their application later.

Also, issue managers are not interested in bringing small capital companies to the market as they pay low fees, sources said.

They said rules for small capital companies should be short and simple. Small entrepreneurs are not as much capable as the listed companies to comply with all of these rules.

However, the stock exchanges are now ready to start trading activities in the Small Capital Board.

Dhaka Stock Exchange Managing Director Kazi Sanaul Hoq told The Business Standard: "We want to give a waiver to small capital companies for getting listed with their board."

"Small capital companies get access to the stock market through issue managers. If the regulator approves any small capital company we are ready to start trading activities in the Small Capital Company Board."

Meanwhile, the Chittagong Stock Exchange Chairman Asif Ibrahim told The Business Standard the CSE small capital companies' board is ready for trading. "We will start trading if any company gets approval from the regulator."

AFC Capital Limited CEO Md Mahbub Hossain Mazumdar told The Business Standard small capital companies do not want to come to the market mainly for three reasons.

"Many laws and regulations have to be complied with for qualified investor offerings. It is not possible for small capital companies to comply with these many regulations." 

The managements of small companies think they will not get the expected price of shares as only qualified investors can do trade in the small capital companies, Mahbub Hossain said.

"Also, the fee fixed for the issue managers are making them reluctant to get involved."

Monalisa Ceramics BD Limited wanted to raise Tk1 crore by issuing 10 lakh ordinary shares through the Small Capital Board.

The company had applied to the CSE board. It wanted to use this fund to get machinery and equipment.

The company was supposed to borrow Tk2.80 crore from banks as a term loan for completing the projects. However, its management decided to withdraw its qualified investor offering.

Meera Agro Inputs Limited, a seed processing company, applied to the securities regulator for raising Tk5 crore through the DSE's Small Capital Board by issuing 50 lakh ordinary shares.

The company wanted to use the fund for land development, working capital and business development of existing projects. But it submitted a fake audit financial statement to the regulator, claimed a DSE source.

Before the securities regulator took any action, the company withdrew its qualified investor offering application.

Meera Agro sells seeds of rice, maize, cauliflower, cabbage, carrot, bitter gourd, tomato, watermelon, cucumber, chili, kohlrabi, and radish in the local market.

Nialco Alloys Limited have already submitted qualified investor offering to raise Tk10 crore to get machinery and to repay bank loans in fixed price method.

The regulator is scanning the company's documents for qualified investor offering proposals.

Nialco Alloys mainly manufactures high-grade bronze and brass ingots.

In November 2018, the BSEC gave final approval to the Bangladesh Securities and Exchange Commission (Qualified Investor Offer by Small Capital Companies) Rules 2018 with some changes and amendments.