FE Report
The Parliament Monday passed the 'Exchanges Demutualisation Bill, 2013' paving the ways to separate the bourses' management from the ownership to ensure transparency in the country's stock markets.
The bill was endorsed by the Parliament after the Finance Minister AMA Muhith placed it.
The independent law maker Fazlul Azim proposed to bring some changes in the bill, although his proposal was not considered eventually.
Demutualisation is the process through which a stock exchange now owned by members will turn into a company owned by shareholders and the company could either be listed on a stock exchange or closely held by its shareholders.
As per the demutualisation laws, the bourses will have to submit their demutualisation schemes to the securities regulator by July 29 this year. The regulator will approve the schemes by September 29 next.
"The demutualisation of both the bourses is expected to be completed within 150, 90 days for submitting schemes and 60 days for approving the schemes, days," said a senior official of the Bangladesh Securities and Exchange Commission (BSEC).
In the demutualisation scheme, a stock exchange will clearly specify the method of determining the value of its memberships, governance structure, fitness and properness of directors, structure of different committees, conflict of interest between business and statutory regulatory order (SRO) rules, the criteria for changing and achieving ownerships, limits on ownerships, separation of ownership from trading rights, future market entrants, business plan and action plan.
According to the laws, 60 per cent stakes of an exchange will have to sell to strategic investors, who are not involved with share trading.
"This amount of shares will have to be preserved in a separate account maintained by Central Depository Bangladesh Limited (CDBL) till the shares are told," the BSEC official said.
And the brokers will be able to hold the remaining 40 per cent stakes.
The chairman of a demutualised stock exchange will be selected from independent directors who will also be majority in the board.
Each of primary shareholders--existing members--will be allotted a trading right entitlement certificate (TREC) to carry on their business. The primary TREC holders will be allowed to handover their TRECs within only five years of the date of demutualisation.
The demutualisation date will be the day a stock exchange gets its registration as a new company from the Registrar of Joint Stock Companies and Firms (RJSC) or the date of approving the demutualisation scheme, whichever is later.
After the demutualisation, an exchange will be eligible to be listed with any exchange fulfilling the listing regulations.
The laws has said any exchange failing to comply with its provisions will be fined not less than Tk 1.0 million or the registration of that stock exchange can be postponed.
A penalty worth Tk 0.1 million will be imposed on a director, member, chief executive or the employees if the they are proved responsible for violating any clause of the laws
The Parliament Monday passed the 'Exchanges Demutualisation Bill, 2013' paving the ways to separate the bourses' management from the ownership to ensure transparency in the country's stock markets.
The bill was endorsed by the Parliament after the Finance Minister AMA Muhith placed it.
The independent law maker Fazlul Azim proposed to bring some changes in the bill, although his proposal was not considered eventually.
Demutualisation is the process through which a stock exchange now owned by members will turn into a company owned by shareholders and the company could either be listed on a stock exchange or closely held by its shareholders.
As per the demutualisation laws, the bourses will have to submit their demutualisation schemes to the securities regulator by July 29 this year. The regulator will approve the schemes by September 29 next.
"The demutualisation of both the bourses is expected to be completed within 150, 90 days for submitting schemes and 60 days for approving the schemes, days," said a senior official of the Bangladesh Securities and Exchange Commission (BSEC).
In the demutualisation scheme, a stock exchange will clearly specify the method of determining the value of its memberships, governance structure, fitness and properness of directors, structure of different committees, conflict of interest between business and statutory regulatory order (SRO) rules, the criteria for changing and achieving ownerships, limits on ownerships, separation of ownership from trading rights, future market entrants, business plan and action plan.
According to the laws, 60 per cent stakes of an exchange will have to sell to strategic investors, who are not involved with share trading.
"This amount of shares will have to be preserved in a separate account maintained by Central Depository Bangladesh Limited (CDBL) till the shares are told," the BSEC official said.
And the brokers will be able to hold the remaining 40 per cent stakes.
The chairman of a demutualised stock exchange will be selected from independent directors who will also be majority in the board.
Each of primary shareholders--existing members--will be allotted a trading right entitlement certificate (TREC) to carry on their business. The primary TREC holders will be allowed to handover their TRECs within only five years of the date of demutualisation.
The demutualisation date will be the day a stock exchange gets its registration as a new company from the Registrar of Joint Stock Companies and Firms (RJSC) or the date of approving the demutualisation scheme, whichever is later.
After the demutualisation, an exchange will be eligible to be listed with any exchange fulfilling the listing regulations.
The laws has said any exchange failing to comply with its provisions will be fined not less than Tk 1.0 million or the registration of that stock exchange can be postponed.
A penalty worth Tk 0.1 million will be imposed on a director, member, chief executive or the employees if the they are proved responsible for violating any clause of the laws
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