POST TIME: 8 March, 2018 00:00 00 AM
BSEC seeks March 15 deadline for observation on DSE proposal
Staff Reporter

BSEC seeks March 15 deadline for observation on DSE proposal

The Bangladesh Security and Exchange Commission (BSEC) has asked for an extension of the deadline to announce its final observation about the selection of a strategic partner for the Dhaka Stock Exchange (DSE). It now wants to announce the decision on March 15.

The regulator was supposed to make the decision yesterday. But officials told The Independent that the BSEC needs some time, as the DSE has not yet provided them with “the replies to all the queries” it has made.

The DSE had earlier sent its clarification letter to the BSEC. It contained the answers to the queries about the proposal for the appointment of a Chinese consortium. The bourse had recommended 25 per cent ownership of the consortium led by the Shanghai Stock Exchange.

After getting the BSEC’s queries, the DSE held a board meeting on March 3 to discuss those. The bourse prepared the answers in consultation with its legal representatives.

The regulator had earlier objected to the appointment of the Chinese consortium and said that its proposal to execute the agreement under UK laws and settle any dispute under international arbitration laws was in violation of the laws in Bangladesh.

The BSEC committee observed that despite holding 25 per cent shares, the Chinese consortium would hold “certain prerogatives over the remaining 75 per cent shareholders” if it became a strategic partner.

Besides, the consortium’s proposal to incorporate several other issues, including the seeking of approval to take in other strategic investors by the DSE, also violates Bangladeshi law, said the regulator.

The regulator also figured out that the price offered (Tk. 22 a share) was not a fixed one, as the group share-purchasing agreement says that if the DSE pays any dividend to shareholders, or its net asset value falls, the buying price must be subject to a negative adjustment.

The BSEC also raised questions about whether the DSE had got any expert to make an independent assessment of the value of the consortium’s technical support, worth USD 37 million, as offered by the consortium.

The BSEC also asked the payment obligation of the DSE to be defined to the strategic partner, as the group says the share sales under public offering must be first used to meet any payment obligation of the seller to the strategic investor.

Besides, the committee asked the DSE to explain whether the consortium’s proposal to include certain clauses in the agreement, allowing it to form a technical committee and appoint the co-chief technical officer, was in violation of the DSE demutualization scheme.

The Independent yesterday contacted the DSE. An official from the bourse said the ball is now in BSEC’s court. “We are waiting for their final observation about our proposal and subsequent clarifications,” said the official.