Home ›› 10 May 2022 ›› Front
The securities regulator has planned to recognise immediate relatives, such as parents, spouses, children, dependents, or investment advisers, as the insiders of listed companies.
The Bangladesh Securities and Exchange Commission (BSEC) already drafted the Bangladesh Securities and Exchange Commission (Prohibition of Insider Trading) Rules, 2022, revoking the Prohibition of Insider Trading Rules, 1995.
Insider trading, also known as insider dealing, is the malpractice of selling or buying securities by the insiders of a company, which includes the employees, directors, executives and promoters.
To prevent such acts and promote fair trading in the market for the interest of common investors, the BSEC drafted the rules requiring companies to disclose information if they acquire assets worth more than 5 per cent of their existing assets, whether jointly or individually.
“The rules are drafted to bring further transparency to the capital market,” BSEC Commissioner Shaikh Shamsuddin Ahmed told The Business Post on Sunday.
“Our prime goal is to stop manipulating the market. We made major changes in disclosing material information by introducing ‘Principles of Disclosure of Material Information’ in the rules, which would compel the listed entities to publish a wide range of information about their business immediately.”
Here are the key takeaways from the rules drafted by the BSEC.
All market intermediaries and their directors, employees, and authorised representatives and related parties can be insiders of a listed company as they have access to the company’s PSI (Price Sensitive Information).
As per the draft rules, the listed company and asset management company must preserve three years of PSI and material information on their website.
The proposal of taking over another company, changes in company ownership and capital reorganisation, and decision on buying or selling of permanent assets must be made public immediately.
In the draft rules, the BSEC defines PSI. Information which may affect the share price or asset valuation of a publicly-traded company will be called PSI.
The company must disclose information about any local and foreign loan or investment agreement, loan disbursement and receivable, asset mortgage, and failure to repay any loan or liability to a bank or creditor, or LC recipient within three months.
Loan payment or advance loan payment or loan received between inter-company, subsidiary, or associate company or with the company’s director must also be made public.
In addition to the basic Balancing, Modernisation, Rehabilitation, and Expansion (BMRE), the company must reveal a capital investment plan or substantial change in the purpose of the company; a major change or development in technology, production, and installation; a change in the agreement, production, patent, services, or business; and realization of long-term unrealized funds.
Changes in chief executives, company secretary, board of directors, auditor, and credit rating company must be published as PSI.
