Minimum investment limit raised to Tk 30 lakh

The Bangladesh Securities and Exchange Commission (BSEC) has increased the minimum investment limit to Tk 30 lakh from the existing Tk 20 lakh for investors to be qualified for trading on the SME board of the Dhaka Stock Exchange.

The decision will go into effect from November 1 this year, said a BSEC statement on Wednesday. 

“The minimum investment amount increased to attract more investments on the SME board,” said a BSEC official. 

On February 17, 2022, the securities regulator lowered the minimum investment limit to Tk 20 lakh from Tk 50 lakh for an investor to be qualified for trading on the SME board.

Before the changes to the rules, SME stocks had received a tepid response from investors since September 30, 2021, when the SME board was launched.

To give impetus to the trading of SME companies, the BSEC also canceled the registration required to begin trading on the board.

According to the BSEC directive, investors registered with the electronic subscription system of the exchanges at the time of qualified investor offers (QIOs) will automatically be eligible as qualified investors for trading on the SME platform.

The Central Depository Bangladesh will provide detailed information on eligible investors on the basis of the conditions to stock exchanges on a quarterly basis and will register and update such a list of eligible investors accordingly.

On September 30 last year, the country’s premier bourse launched its SME platform with six companies. At present, 15 companies are listed on the SME platform of the Dhaka Stock Exchange.

Four SMEs that shifted from the OTC market to the SME platform four months ago failed to attract investors as they have been struggling to improve their financial performances. The companies are Apex Weaving and Finishing Mills Ltd, Wonderland Toys Ltd, Himadri Ltd, and Bengal Biscuits Ltd.

In November 2018, the BSEC gave final approval to the Qualified Investor Offer by Small Capital Companies Rules-2018 with some amendments.

Retail investors are not allowed to buy shares in the SME platform as the market tends to be more volatile because of price volatility.

As per BSEC rules, SMEs must have at least Tk 5 crore and not more than Tk 30 crore in paid-up capital after raising funds through an initial public offering.

The SME sector contributes 60 per cent to India’s economy, about 70 per cent in China and Japan, but only 25 per cent in Bangladesh.