The Bangladesh Small and Cottage Industries Corporation (BSCIC) is getting the opportunity to get listed in the capital market.
In this regard, the 1957 law has been repealed, and a gazette on Bangladesh Small and Cottage Industries Corporation Act 2023 has been published on September 18.
This new act allows the corporation to get listed, and provides general investors the opportunity to buy 49 per cent of BSCIC shares. This corporation will have an authorised capital of Tk 3,000 crore, and paid up capital of Tk 2,637.22 crore.
The government will be able to increase and decrease BSCIC’s authorised and paid up capitals through gazette notifications. The government will be a shareholder of the corporation, and it will always hold at least 51 per cent of total available shares.
BSCIC’s shares will be considered authorised securities to fulfill the requirements of Trusts Act, Securities Act, Securities and Exchange Ordinance, Insurance Act, and Public Debt Act.
Insiders say BSCIC had an authorised capital of Tk 1 crore. According to the FY21 financial report, which is the latest one, the corporation had a capital and reserve of Tk 1,440 crore.
The presence of such a profitable government corporation in the share market will encourage investors, and make a positive impact. The Bangladesh Securities and Exchange Commission (BSEC) has been trying to bring such agencies on board for some time, insiders say.
The government too has been trying to boost the presence of good shares in the market. To this end, it approached state-owned companies on multiple occasions, and held inter-ministerial meetings.
However, there has been no progress in this regard despite the issuance of multiple deadlines, as chiefs of state-owned corporations have shown disinterest in getting listed in the share market.
Insiders say Finance Minister AHM Mustafa Kamal was optimistic about the state-owned corporations getting listed in the stock market. He had also made a decision regarding state-owned banks.
He later said the banks’ boards decided against the move.
The minister added that as the entities did not get listed in the stock market despite receiving recommendation from senior levels of the government, an amendment to the existing law will nudge them in this direction.
This is why the Bangladesh Small and Cottage Industries Corporation Act has been amended.
Sources from the Financial Institutions Division say the first decision to have state-owned companies listed in the share market came in 2005 from a meeting, chaired by the then BNP government finance minister M Saifur Rahman (now deceased).
Sixty-six companies and organisations were identified at that time. Later, between 2005 and 2010, five companies – including Power Grid Company of Bangladesh Ltd, Dhaka Electric Supply Company Ltd, and Titas Gas got listed in the stock market.
In 2010, the then Awami League government finance minister Abul Maal Abdul Muhith (now deceased) reduced the number of state-owned organisations eligible to get listed in the stock market from 66 to 26.
These companies were instructed to prepare for this venture within six months. Bangladesh Submarine Cables got listed during that period, and Bangladesh Shipping Corporation (BSC) released shares under the repeat IPO.
The others are – North-West Power Generation Company, Bakhrabad gas Transmission and Distribution Company, Gas Transmission Company, Jalalabad Gas System, Bangladesh Telecommunication Company, Sonargaon Hotel, Chhatak Cement Factory, Liquefied Petroleum Gas, Sylhet Gas Field, Pashchimanchal Gas Company Ltd, Bangladesh Gas Field, and Rupantarita Prakritik Gas Company Ltd.
Progoti Industries, Chattogram Dockyard, Karnaphuli Paper Mills, Bangladesh Insulator and Sanitaryware Factory, Biman Bangladesh Airlines, Teletalk, Bangladesh Cable Shilpa Ltd, and Telephone Shilpa Sangstha Ltd are also among these companies.
Under the banking sector, there are – Sonali Bank, Janata Bank and Bangladesh Development Bank Limited (BDBL). Besides, 10 per cent of Rupali Bank’s shares are already in the market, and the government wants to release another 10 per cent.
An announcement was made to release 25 per cent of shares from the above-mentioned four banks in phases, but such decisions are yet to be implemented.
Commenting on the matter, BSEC spokesperson and Executive Director Md Rezaul Karim said, “We, on multiple occasions, have written to managing directors of companies that are eligible for getting listed in the stock market. Some of them have shown interest.
“But none of these organisations have applied for a public offering. We are continuing our efforts to bring them on board. We have also reached out to the prime minister’s principal secretary, seeking steps in this regard.”
Providing more details, he said, “Not all state-owned organisations will be able to get listed even if they want it, because some of them have decreasing profits, low paid up capital, and lack the criteria to release shares. Work is underway to fix such issues.
“To bring good state-owned agencies to the stock market, their boards of directors will have to take the initiative. When these companies get listed, it will provide dividends to the investors. Besides, the government will not have to boost funding to such companies.”
At a recent meeting between the Dhaka Stock Exchange (DSE) and the country’s top asset management firms, officials and stakeholders discussed the initiative to bring state-owned organisations to the stock market.
The asset management firms recommended stronger steps to get state-owned organisations listed in the share market, which in turn will help bring back investor trust, and strengthen the sector.
