BSEC – A study on its background, objectives,
problems.
Imparted By:
Group 8
Member Profile
S.L
Member Name
01
02
Arif Hossain
Sabina Yeasmin
03
04
05
Most. Hajera Begum
Md. Rakib Hossen
Umme Hafsa
06
07
SM Tanvir Morshed
Noaye Noaye
08
09
Md. Amirul Islam
Md. Hafizul Islam
Identification
Number
16 AIS 050
16 AIS 035
16 AIS 023
14 AIS 018
16 AIS 034
16 AIS 072
16 AIS 062
16 AIS 047
16 AIS 017
2
Presented By:
Arif Hossain
16 AIS 050
3
Topics to be covered
Purview of BSEC
Purview of Stock Exchanges
Corporate Governance Guidelines
Issue Management Guidelines
Margin Rules
Listing Regulations
4
Purview of BSEC
BSEC stands for Bangladesh Securities and Exchange
Commission.
The Bangladesh Securities and Exchange Commission (BSEC) was
established on 8th June, 1993 as the regulator of the country’s
capital market through enactment of the Securities and Exchange
CommissionAct 1993
The Commission consists of a Chairman and four Commissioners
who are appointed for fulltime by the government for a period of
four years and their appointment can be renewed only for further
one term, but the condition is that agecan not exceed 65
5
Purview of BSEC
Mission of the BSEC isto:
Protect the interests of the investors in securities.
Develop and maintain fair, transparent and efficient securities markets.
Ensure proper issuance of securities and compliance with securities laws.
The Commission's main functions:
Section 8 of the Securities and Exchange Commission Act, 1993 provides details of the
functions of BSEC, some of them are as follows:
Regulating the business of the Stock Exchangesor any other securities market;
Registering and regulating the business of stock-brokers, sub-brokers, share transfer
agents, merchant bankers and managers of issues, trustee of trust deeds, registrar of an
issue, underwriters, portfolio managers, investment advisersand
4
other intermediaries in the securities market;
Purview of BSEC
Registering, monitoring and regulating of collective investment scheme
including all forms of mutual funds;
Monitoring and regulating all authorized self regulatory organizations in the
securities market;
Prohibiting fraudulent and unfair trade practices relating to securities trading in
any securities market;
Promoting investors’ education and providing training for intermediaries of the
securities market;
Prohibiting insider trading in securities;
7
Purview of BSEC
Regulating the substantial acquisition of shares and take-over of companies.
The Commission, keeping the Bangladesh Bank informed, may seek
information regarding bank account from any bank, insurance company and
financial institution or other authority, as the case may be, so far as it relates
to the transaction of security.
Undertaking investigation and inspection, inquiries and audit of any issueror
dealer of securities, the Stock Exchanges and intermediaries and any self-
regulatory organization in the securities market.
Conducting research and publishing information.
regulating the activities of clearing corporation established for settlement of
transaction of securities including derivatives etc.
8
Presented By:
Sabina Yeasmin
16 AIS 035
9
Purview of BSEC
Most of the functional authority of BSEC derives from The Securities
and Exchange Ordinance, 1969, some of them are asfollows:
S-2A. Control over issue of capital:
(2)
No issuer, or no company, whether incorporated in Bangladesh or not, shall,
except with the consent of the Commission,(a) make an issue of capital in Bangladesh;
(b) make in Bangladeshany public offer of securities for sale;…..
(4) While giving consent under sub-section (1) &(2) Commission shall not fix the price
of the issue.
S-2CC. Power to impose Conditions: Notwithstanding anything
contained, 1994 or in any other law for the time being in force, or in any contract
or any Memorandum and Articles of Association of any company, any consent or
recognition accorded under section 2A, section 2B or section 2C, whether before or
after the commencement of this section, shall be subject to such conditions, if any, as
the Commission may, from time to time,
7
Purview of BSEC
S-9: Listing of securities
S-17. Prohibition of fraudulent acts, etc.: No person shall, for the purpose of
inducing, dissuading, effecting, preventing or in any manner influencing or
turning to his advantage, the sale or purchase of any security, directly or
indirectly
S-20: Prohibitory order,
S-20A. Power of Commission to issue directions in certain cases,
S-24 Penalty: (1) Whoever contravenes the provision of section 17 shall be
punishable with imprisonment for a term which may extend to five years, or
with fine which shall not be less than five lakh taka or with both,
S-25B. Power to establish Special Tribunal,
S-32ARegulation of business of Commodity Futures Contract,
S-33 Power to make rules,
S-34 Power to make regulations.
8
Purview of BSEC
List of some major Acts, Ordinance, Rules, Regulations:
The Securities and Exchange Ordinance, 1969
The Bangladesh Securities and Exchange Commission Act, 1993
The Securities and Exchange Rules,1987
Margin Rules, 1999
The Securities and Exchange Commission (Issue of Capital) Rules, 2001
The Securities and Exchange Commission (Public Issue) Rules, 2006
The Securities and Exchange Commission (Rights Issue) Rules, 2006
9
Purview of Exchange
Section 2(m) of the Securities and Exchange Ordinance, 1969
reads as follows:
“Stock Exchange” means any person who maintains or
provides a market place or facilities for bringing together
buyers and sellers of securities or for otherwise
performing with respect to securities the functions commonly
performed by a Stock Exchange, as that term is generally
understood, and includes such market place and facilities.
13
Presented By:
Most. Hajera Begum
16 AIS 023
14
Purview of Exchange
The major functions of the Exchangeare:
Listing of Companies (As per Listing Regulations).
Ensuring compliances of Listed Securities
Providing the screen based automated trading of listed Securities (As per Automated Trading
Regulations)
Index Management
Settlement of trading (As per Settlement of Transaction Regulations).
Approval to the transaction/transfer/gift of share outside the trading system of the exchange
(As per Listing Regulations).
Market Administration &Control.
Market Surveillance.
Research &Information and Publications &Public Relations.
Monitoring the activities of listed companies (As per Listing Regulations).
Investors grievance Cell (Disposal of complaint bye laws 1997).
Investors Protection Fund (As per Investors’ Protection Fund Regulations, 2014).
Announcement of Price sensitive or other information about listed companies
through online
15
Purview of Exchange
Major Act, Rules and Regulations of the Exchanges:
Demutualization Scheme
The Dhaka Stock Exchange (Board and Administration) Regulations, 2013
The Dhaka Stock Exchange (Listing) Regulations, 2015
The Dhaka Stock Exchange (Trading Right Entitlement Certificate)
Regulations, 2013
The Dhaka Stock Exchange (Settlement of Transactions) Regulations, 2013
The Dhaka Stock Exchange (Settlement Guarantee Fund) Regulations, 2013
The Dhaka Stock Exchange (Short-Sale) Regulations, 2006
The Dhaka Stock Exchange Automated Trading Regulations, 1999.
Dhaka Stock Exchange (Investors’ Protection Fund Regulations), 2014
The Dhaka Stock Exchange (TREC Holder’s Margin) Regulations, 2013
16
Corporate Governance Guidelines
Corporate governance broadly refers to the mechanisms, processes and
relations by which corporations are controlled and directed. Corporate governance
essentially involves balancing the interests of the many stakeholders in a
company - these include its Board of Directors, shareholders, management,
customers, suppliers, financiers, government and the community. Corporate
governance includes the processes through which corporations' objectives are set
and pursued in the context of the social, regulatory and market environment.
Corporate governance became a pressing issue following the 2002 introduction of
the Sarbanes-Oxley Act in the U.S., which was ushered in to restore public
confidence in companies and markets after accounting fraud bankrupted highprofile companies such asEnron and WorldCom.
BSEC vide its notification dated February 20, 2006 first introduced Corporate
Governance Guidelines in Bangladesh for the Listed Companies which was
subsequently amended broadly on August 7, 2012.
17
Corporate Governance Guidelines
Earlier the conditions under Corporate Governance Guidelines was on ‘comply
or explain’ basis now these are imposed on 'comply' basis.
Major Conditions:
1. BOARD OF DIRECTORS:
1.1 Board's Size
The number of the board members of the company shall not be less than 5 (five)
and more than 20 (twenty):
Banks and non-bank financial institutions, insurance companies and statutory
bodies need to follow guidelines of primary regulators.
1.2 Independent Directors
At least one fifth (1/5th ) of the total number of directors
18
Presented By:
Md. Rakib Hossen
14 AIS 018
19
Corporate Governance Guidelines
Independent Director means adirector:
who either does not hold any share in the company or holds less than one
percent (1%) shares of the total paid-up shares
Not a sponsor of the company and is not connected with the company’s any
sponsor or director or shareholder who holds one percent (1%) shares
family members also should not hold one percent (1%) shares
No relationship, whether pecuniary or otherwise with the company
Not a member, director or officer of any stock exchange
Not a partner or an executive or was not a partner or an executive during the
preceding 3 (three) years
Not be an independent director in more than 3 (three) listed companies
Not been convicted by a court as a defaulter in payment of any loan to a bank or
a NBFI;
Not been convicted for a criminal offence involving moral turpitude.
20
Corporate Governance Guidelines
The independent director(s) shall be appointed by the board of directors and
approved by the shareholders in the Annual General Meeting (AGM).
The post of independent director(s) can not remain vacant for more than 90
(ninety) days.
The Board shall lay down a code of conduct of all Board members and annual
compliance of the code to be recorded.
The tenure of office of an independent director shall be for a period of 3 (three)
years, which may be extended for 1 (one) term only.
21
Corporate Governance Guidelines
1.3 Qualification of Independent Director (ID)
Independent Director shall be a knowledgeable individual with integrity
who is able to ensure compliance with financial, regulatory and corporate laws
and can make meaningful contribution to business.
The person should be a Business Leader/Corporate Leader/Bureaucrat/
University Teacher with Economics or Business Studies or Law
background/Professionals like Chartered Accountants, Cost & Management
Accountants, Chartered Secretaries.
The independent director must have at least 12 (twelve) years of corporate
management/professional experiences.
In special cases, the Commission may relax.
18
Corporate Governance Guidelines
1.4 Chairman of the Board and Chief Executive
Officer:
The positions of the Chairman of the Board and the Chief
Executive Officer of the companies shall be filled by different
individuals.
1.5 The Directors’ Report to Shareholders:
The directors of the companies shall include some additional
statements in the Directors' Report prepared under section
184 of the Companies Act, 1994
23
Presented By:
Umme Hafsa
16 AIS 034
24
Corporate Governance Guidelines
CHIEF FINANCIAL OFFICER (CFO), HEAD OF INTERNALAUDIT AND COMPANY
SECRETARY (CS):
2.
1.

Appointment
The company shall appoint a Chief Financial Officer (CFO), a Head of Internal Audit
(Internal Control and Compliance) and a Company Secretary (CS). The Board of
Directors should clearly define respective roles, responsibilities and duties of them.
2.2 Requirement to attend the BoardMeetings
The CFO and the Company Secretary of the companies shall attend the
meetings of the Board of Directors.
25
Corporate Governance Guidelines
3. AUDIT COMMITTEE:
The company shall have an Audit Committee..
The Committee shall assist the BoD in ensuring that the financial statements
reflect true and fair view ….
The Committee shall be responsible to the Board of Directors.
3.1 Constitution of the AuditCommittee
At least 3 (three) members
At least 1 (one) independent director
All members of the committee should be “financially literate” and at least 1 (one)
member shallhave accounting or related financial management experience
Casual vacancies shall be filled up within 1 month
The company secretary shall act as the secretary of the Committee
The quorum of the Committee meeting shall not constitute without at least 1
(one) independent director.
26
Corporate Governance Guidelines
3.2 Chairman of the Audit Committee
Chairman of the Audit Committee shall be an independent director.
Chairman of the audit committee shall remain present in the AGM.
3.3 Role of Audit Committee:
Monitor choice of accounting policies and principles.
Monitor Internal Control Risk management process.
Oversee hiring and performance of external auditors.
Review the annual financial statements before submission to the board for
approval….
3.4 Reporting of the AuditCommittee
Report on its activities to the Board of Directors
3.4.2 Reporting to theAuthorities
Report to the Commission three times or completion of a period of 6 (six)
month
Reporting to the Shareholders and GeneralInvestors
22
Corporate Governance Guidelines
4. EXTERNAL/STATUTORYAUDITORS:
5. SUBSIDIARY COMPANY:
6. DUTIES OF CHIEF EXECUTIVE OFFICER (CEO) AND CHIEF
FINANCIAL OFFICER (CFO):
7. REPORTINGAND COMPLIANCE OF CORPORATEGOVERNANCE:
The company shall obtain a certificate from a practicing Professional
Accountant/Secretary (Chartered Accountant/ Cost and Management
Accountant/Chartered Secretary) regarding compliance of conditions of
Corporate Governance Guidelines of the Commission and shall send the same to
the shareholders along with the Annual Report on ayearly basis.
The directors of the company shall state, in accordance with the prescribed
format, in the directors' report whether the company has complied with these
conditions.
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Dhaka Stock Exchange Ltd.
30-Jul-15
Issue Management Guidelines
ISSUE MANAGER’S INVOLVEMENT IN
GENERAL PROCESS OF LISTING THROUGH IPO
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Signing agreement with the prospective issuer
Site visit for assessment of public offering
Select Method of Public Offering
Prepare Draft Prospectus
Apply to BSECfor Public Offer
IPO Approved by BSEC
Publish vetted Prospectus in Newspapers
Apply to the Exchange for Listing
Collect Subscription
Conduct Lottery
Allotment and Refund
Listing Approval by the Exchanges
Credit Share/Units
Commencement of Trading
29
Presented By:
SM Tanvir Morshed
16 AIS 072
30
LISTING
Listing
is
the
process
of
acceptance of
qualifying security for trading on a registered stock exchange.
Mode of Listing:
Listing through Initial Public Offering (IPO)
Fixed Price Method
Book Building Method
Offloading of Shares of the companies through Direct Listing
31
a
Requirements for IPO
Eligible for Book-building method
The company must have at least Tk. 300 million net-worth;
Shall offer at least 10% shares of paid up capital (including intended offer) or Tk. 300 million whichever is higher;
Shall be in commercial operation for at least immediate past five years;
Shall have profit in three years out of the immediate last five completed accounting/financial year;
Shall have no accumulated loss at the time of application;
Shall get its financial statements audited a firm of chartered accountants from the panel of auditors of the
Commission;
Shall be regular in holding annual general meeting;
The Commission if deems appropriate for the interest of investor or development of capital market, may exempt
or relax any of the above requirements.
Eligible for fixed price method:
Minimum paid up capital (existing + proposed) requirement for initial public offering (IPO) shall be Tk. 30 (Taka
thirty) crore;
Minimum size of IPO shall be Tk. 12 (Taka twelve) crore, but that shall not be less than 10% (ten percent) of the
total paid up capital (existing + proposed);
No issuer of a listed security shall utilize more than 1/3rd (one-third) of the fund raised through IPO for the
purpose of loan repayment;
Margin Rules
Margin Rules, 1999 covers margin loan facility provided by
the Stock Brokers and Rule 36 of, 1996 and schedule
thereof covers the margin loan facility provided by
Merchant Banker (Portfolio Manager).
Rule 3(12)(c) defines margin in the following manner:
“margin” means the aggregate amount of cash and market
value of securities deposited by a client into his margin
account, but shall not include securities which are bought
and carried in the margin account;
33
Margin Rules, 1999
Rule 3(2) Margin account arrangements must be evidenced in the form of a written
agreement executed between the member and the client.
**Rule 3(5) Whenever the equity in a client's margin account falls below 150% of the
debit balance, the member shall request the client to provide additional margin to bring
the equity to not less than 150%. Such additional margin must be satisfied by deposit of
cash or marginable securities within three days from date of notice. The member shall not
permit any new transactions in the margin account unless the resulting equity in the
account would be not less than 150% of the debit balance.
Rule 3(6) Amember shall not permit the equity in a client's margin account to fall in any
way below 125% of the debit balance. Once the equity falls below this level, the member
shall have absolute discretion and without notice to the client to liquidate the margin
account including the marginable securities deposited to bring the equity to not less than
150% of the debit balance.
** BSEC has extended suspension period of effectiveness of Rule 3(5) of Margin Rules,
1999 till December 31, 2015 vide an Order dated June 30, 2015
Types of Margin (Deposit)
The margin deposited (pledged) by client with the stock
broker shall be in the form
a. Cash,
b. Securities issued by the Government or its agencies,
c. Marginable securities
d.Other instruments as the Commission may from time
to time prescribe.
35
Presented By:
Noaye Noaye
16 AIS 062
36
Margin Guideline
Marginable Securities are all except the following:
1.
Z-category Securities
2.
Anyexisting listed security of which the P/E ratio exceeds 40.
The members of the stock exchanges shall not extend credit facilities to their
approved clients beyond 0.5(zero point five) times of client’s margin/client’s
deposit (i.e. credit facilities shall be on 1:0.5 basis) under the Margin Rules,
1999.
All corporate benefit, such as dividend, bonus, rights etc. entitled according to
book closure/record date will be added with portfolio value.
The stock brokers shall not provide margin facilities to any member of the Board
of Directors of its own company, officer and staff employed in the company
management, their parent, spouse, son, daughter, sister, brother, son-in-law,
daughter-in-law and other relatives.
37
Listing Regulations
Regulation No.
Title
Regulation
Company Secretary
Regulation- 2
(d), (e),
(i), (r)
Definitions
Compliance Officer
Material Change/Information
Sponsor
Primary recommendation along with checklist
within 20 days.
Regulation-3(1-3)
35
Recommendation by Ask clarifications from issuer or its directors,
officers, issue manager(s), auditors, valuer(s).
Exchange to the
Commission
Final recommendation along with a declaration
within seven days.
Listing Regulations
39
Listing Regulations
POST LISTING CONTINUOUS COMPLIANCES
Regulation No.
Title
Regulation
Regulatio
n 15
(1)
Auditing of
Financial
Statements
Financial statements shall be audited by any firm
of chartered accountants which is in the panel of
the Commission.
Tenure: No auditor shall be appointed for a
consecutive period exceeding three years.
Regulation
15 (2), (3) &(6)
Statutor
y
auditors
Financial statements shall not be audited by any
firm of chartered accountants or auditor which or
who is convicted for any securities or exchange or
financial related offence.
40
Presented By:
Md. Amirul Islam
16 AIS 047
41
Listing Regulations
30-Jul-15
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Dhaka Stock Exchange Ltd.
Listing Regulations
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Listing Regulations
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Listing Regulations
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Listing Regulations
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Listing Regulations
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Presented By:
Md. Hafizul Islam
16 AIS 017
48
Listing Regulations
Dhaka Stock
30-Jul-15
Exchange
Ltd.
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Listing Regulations
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Listing Regulations
51
Listing Regulations
52
Listing Regulations
48
Listing Regulations
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Listing Regulations
50
Listing Regulations
51
Listing Regulations
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Listing Regulations
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GO-LIVE OF LATEST MATCHING ENGINE OFDSE
30-Jul-15
Dhaka Stock Exchange Ltd.
59
THANKYOU