FE Report
The securities regulator has moved to formulate rules on merger and acquisition for listed companies by amending the existing one to secure investors' interest following international practices, officials said.
In this connection, the Bangladesh Securities and Exchange Commission (BSEC) has formed a three-member committee to complete the formulation of rules on companies' merger and acquisition.
Presently, acquisition is completed following permission of the securities regulator, whereas merger is completed as per the Companies Act subject to approval of court.
Banks and non-banking financial institutions (NBFIs) have to take permission from the central bank before placing proposal of merger before the court.
Arif Khan, a BSEC commissioner, said the regulator has moved to formulate a complete set of rules, considering its necessity for the listed companies.
There is a chapter on merger and acquisition in the Securities and Exchange Commission Rules, 2002.
"Presently, the listed companies willing to merge are exempted from complying with the securities rules, as the rules are incomplete and not up to the mark."
Arif Khan said the BSEC committee is looking into as to how the proposed rules on merger and acquisition can be formulated by avoiding any contradiction with the Companies Act.
"International practices will also be followed while formulating the rules. The formulation of rules on merger and acquisition is expected to be completed by next month."
The companies usually go for merger and acquisition to boost profit by reducing costs, such as those of distribution and administrative expenses.
For the first time in the country the merger of BEXIMCO Pharmaceuticals and BEXIMCO Infusion came into effect in 2005.
Later, BEXIMCO Textiles, BEXIMCO Denims and BEXIMCO Knitting merged themselves in 2006.
Besides, Olympic Industries acquired Tripti Industries in 2008, whereas Keya Detergent and Keya Soap got merged in 2010.
mufazzal.fe@gmail.com
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