DHAKA, Nov 19, 2025 (BSS) - Capital market stakeholders have recommended significant amendments to the proposed "Bangladesh Securities and Exchange Commission (Public Offer of Equity Securities) Rules- 2025".  The recommendations aim to make Initial Public Offerings (IPOs) more dynamic, transparent, and aligned with international standards. The consultation meeting was jointly organized by the Dhaka Stock Exchange (DSE) and the DSE Brokers Association of Bangladesh (DBA), and was held today at the DSE Tower in Nikunja in the city.  Attendees included representatives from the Capital Market Journalist Forum (CMJF), Bangladesh Merchant Bankers Association (BMBA), Bangladesh Association of Publicly Listed Companies (BAPLC), Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Dhaka Chamber of Commerce and Industry (DCCI), and the Bangladesh Association of Pharmaceuticals Industries (BAPI). Experts participating in the consultation stated that certain restrictions in the current draft might limit the market's natural price discovery process.  They suggested revisions concerning valuation, book-building, EI allocation, lock-in periods, and IPO procedures, based on market realities and international experience. They mentioned that company valuation should not be restricted by the industry average Price-Earnings (PE) ratio or market PE.  Instead, valuation should be independent, based on factors such as company growth, margin, competitive position, management efficiency, and future potential, they added. Participants deemed the mandatory provision requiring an indicative price from 75 Eligible Investors (EIs) as ineffective and unnecessary.  They recommended adopting an auction-based method where price determination is normalized and shares are allocated based on individual bids. To ensure better liquidity and promote corporate growth, stakeholders proposed several changes regarding fund usage and restrictions. In the meeting, participants proposed allowing up to 50% of IPO funds to be used for debt repayment. This is justified because entrepreneurs often take bank loans for pre-determined investments during the long gap between expansion planning and the IPO stage, which should be partially repayable using IPO funds. The strict prohibition on changing paid-up capital or ownership structure within two years prior to the IPO was viewed as potentially hindering investment growth.  Experts suggested allowing limited private placement opportunities, possibly coupled with lock-in conditions. The current maximum limit of Taka 1,000 crore in post-IPO paid-up capital for companies using the fixed price method was criticized as creating obstacles for large companies, leading to a recommendation for its withdrawal. The six-month lock-in provision for EIs was identified as a factor that could reduce liquidity and create artificial price instability in the market. Experts recommended lifting this lock-in provision in phases. Experts advised revoking two provisions that may disrupt the normal market flow: the mandatory minimum secondary market investment requirement of Taka 50,000 for IPO participation, and the circuit breaker rule applied during the first three days of listing. Furthermore, experts proposed introducing a 'Direct Listing' opportunity’ to incentivize large domestic and multinational companies.  They also advised encouraging large corporate entities with liabilities exceeding Taka 1,000 crore to raise capital through both bonds and equity from the market. DSE Chairman Mominul Islam provided context for the necessary reforms, noting that in the region, after India, the financial markets of Pakistan and Sri Lanka are more consolidated and in a better position compared to Bangladesh. Mominul Islam stated, “Our target is that in the next five years we should be able to reach the level of Pakistan and Sri Lanka”.  He emphasized the urgency of finding solutions to the capital market's problems—opening the 'doors and windows'—before the new rules are finalized. Participants expressed hope that the acceptance of these key amendments will increase the number of quality company IPOs, enhance investor confidence, and result in a market that is more sustainable and investment-friendly.