Capital Market in Bangladesh in 2023

Capital Market mostly refers to the country’s stock and share market. When the banking system cannot fully satisfy the market economy’s need for funds, the capital market steps in to complement it.

Through the capital market, corporations and governments can raise funding for long-term investments. Capital market consists of the stock market, bond market, and primary market.

The government monitors securities trading on organized capital markets; new issuance are approved by authorities of financial supervision and supervised by participating institutions. Thus, structured financial markets can guarantee investment opportunities that are sound.

Bangladesh’s capital market is among the smallest in Asia, but ranks third in South Asia. Capital Market in Bangladesh has two fully automated stock markets, Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE), as well as an over-the-counter exchange run by CSE.

In regards to Capital Market law in Bangladesh, It also includes a specific regulator, the Securities and Exchange Commission (SEC), as it enforces rules and regulations and monitors their effects on the capital market’s operation and growth. It consists of Central Depository Bangladesh Limited (CDBL), which is the sole Central Depository in Bangladesh to offer settlement services for dematerialized securities transactions on the CSE and DSE.

Characteristics of the Capital Market in Bangladesh:

Link between Investors and Investment Opportunities: The capital market is an integral part of the saving and investing process. The capital market moves funds from savers to business borrowers.

The capital market offers funds for long-term and medium-term investments. It does not address saving for periods of less than one year.

Steps to an Initial Public Offering for Capital Market in Bangladesh:

Proposals:

Underwriters submit proposals and valuations that describe their services, the optimal form of security to issue, the offering price, the number of shares, and the projected duration of the market offering.
Underwriter. Through an underwriting agreement, the corporation selects its underwriters and formally agrees to underwriting terms.
Team. Underwriters, attorneys, certified public accountants (CPAs), and Securities and Exchange Commission (SEC) expertise comprise IPO teams.
Documentation. The company’s information is prepared for mandatory IPO papers. The S-1 Registration Statement is the principal filing document for an initial public offering. There are two components: the prospectus and the private filing information.

1. The S-1 contains preliminary information regarding the anticipated filing date.
2. It will undergo several revisions during the pre-IPO process. The included prospectus is also regularly amended.

Marketing & Updates for Capital Market in Bangladesh:

The creation of marketing materials for the pre-marketing of the newly issued shares. Executives and underwriters promote the share issuance to evaluate demand and determine the ultimate offering price. Throughout the marketing procedure, underwriters are able to modify their financial analyses. This may involve modifying the IPO price or date of issuance as they deem suitable. Companies take the necessary steps to meet certain standards for public share offerings. Both exchange listing criteria and SEC standards for public corporations must be met.

Board and Operations. Establish a board of directors and quarterly reporting procedures for auditable financial and accounting data.
Stocks Issued The company’s shares are issued on its IPO day. The cash collected from the main issuance to shareholders is reported as stockholders’ equity on the balance sheet. Consequently, the balance sheet share value is based on the complete valuation of stockholders’ equity per share.

Some post-IPO provisions could be implemented. After the day of the initial public offering (IPO), underwriters may have a limited period of time to acquire more shares. Meanwhile, certain investors may experience periods of inactivity.

Positives and Negatives of an IPO
An IPO’s principal purpose is to raise funds for a company. It may also have additional advantages and downsides.

The corporation has access to investments from the entire investing public, which is one of the primary benefits. This improves the company’s exposure, prestige, and public image, which can boost sales and profitability.

Increased openness resulting from quarterly reporting requirements can typically help a firm obtain more favorable loan conditions than a private company.

Intermediates:

The capital market utilizes many intermediaries, including brokers, underwriters, depositories, etc. These intermediaries serve as the capital market’s working organs and are vital components of the capital market.
The operations of the capital market determine the capital formation rate in an economy.

The capital market offers appealing options to those with excess funds, encouraging them to participate more in the market and save more for profitable prospects.

Government Regulations and Statutes:

The capital market is unfettered but governed by government policy. These markets operate within the framework of government rules and regulations; for example, the stock exchange is governed by the government agency SEBI.

The (instruments) of Capital Market in Bangladesh include:

The capital market is the market for securities on which corporations and governments can raise long-term capital. The Capital Market is the portion of the financial system concerned with raising capital through the trading of stocks, bonds, and other long-term assets. Capital market is the market where investment products such as bonds, stocks, and mortgages are traded.

Steps to an Initial Public Offering in Bangladesh:

Proposals. Underwriters submit proposals and valuations that describe their services, the optimal form of security to issue, the offering price, the number of shares, and the projected duration of the market offering.
Underwriter. Through an underwriting agreement, the corporation selects its underwriters and formally agrees to underwriting terms.

Team of TRW for Initial Public Offering in Bangladesh: Underwriters, attorneys, certified public accountants (CPAs), and Securities and Exchange Commission (SEC) expertise comprise IPO teams.

Documentation for a Capital Market in Bangladesh for Initial Public Offering in Bangladesh:

The company’s information is prepared for mandatory IPO papers.

Marketing & Updates. The creation of marketing materials for the pre-marketing of the newly issued shares. Executives and underwriters promote the share issuance to evaluate demand and determine the ultimate offering price. Throughout the marketing procedure, underwriters are able to modify their financial analyses. This may involve modifying the IPO price or date of issuance as they deem suitable. Companies take the necessary steps to meet certain standards for public share offerings. Both exchange listing criteria and SEC standards for public corporations must be met.

Board and Operations:

Establish a board of directors and quarterly reporting procedures for auditable financial and accounting data.
Stocks Issued The company’s shares are issued on its IPO day. The cash collected from the main issuance to shareholders is reported as stockholders’ equity on the balance sheet. Consequently, the balance sheet share value is based on the complete valuation of stockholders’ equity per share.

Some post-IPO provisions could be implemented. After the day of the initial public offering (IPO), underwriters may have a limited period of time to acquire more shares. Meanwhile, certain investors may experience periods of inactivity.

Steps to an Initial Public Offering in Bangladesh:

Proposals. Underwriters submit proposals and valuations that describe their services, the optimal form of security to issue, the offering price, the number of shares, and the projected duration of the market offering.
Underwriter. Through an underwriting agreement, the corporation selects its underwriters and formally agrees to underwriting terms.
Team. Underwriters, attorneys, certified public accountants (CPAs), and Securities and Exchange Commission (SEC) expertise comprise IPO teams.
Documentation. The company’s information is prepared for mandatory IPO papers. The S-1 Registration Statement is the principal filing document for an initial public offering.

There are two components: the prospectus and the private filing information.

1. The S-1 contains preliminary information regarding the anticipated filing date.
2. It will undergo several revisions during the pre-IPO process. The included prospectus is also regularly amended.

Marketing & Updates in Capital Market in Bangladesh:

The creation of marketing materials for the pre-marketing of the newly issued shares. Executives and underwriters promote the share issuance to evaluate demand and determine the ultimate offering price. Throughout the marketing procedure, underwriters are able to modify their financial analyses. This may involve modifying the IPO price or date of issuance as they deem suitable. Companies take the necessary steps to meet certain standards for public share offerings. Both exchange listing criteria and SEC standards for public corporations must be met.

Board and Operations and Capital Market in Bangladesh:

Establish a board of directors and quarterly reporting procedures for auditable financial and accounting data.
Stocks Issued The company’s shares are issued on its IPO day. The cash collected from the main issuance to shareholders is reported as stockholders’ equity on the balance sheet. Consequently, the balance sheet share value is based on the complete valuation of stockholders’ equity per share.

Some post-IPO provisions could be implemented. After the day of the initial public offering (IPO), underwriters may have a limited period of time to acquire more shares. Meanwhile, certain investors may experience periods of inactivity.Capital Market in Bangladesh

An IPO’s principal purpose is to raise funds for a company. It may also have additional advantages and downsides.

The corporation has access to investments from the entire investing public, which is one of the primary benefits. This improves the company’s exposure, prestige, and public image, which can boost sales and profitability.

Increased openness resulting from quarterly reporting requirements can typically help a firm obtain more favorable loan conditions than a private company.

Positives and Negatives of an IPO:

An IPO’s principal purpose is to raise funds for a company. It may also have additional advantages and downsides.

The corporation has access to investments from the entire investing public, which is one of the primary benefits. This improves the company’s exposure, prestige, and public image, which can boost sales and profitability.

Increased openness resulting from quarterly reporting requirements can typically help a firm obtain more favorable loan conditions than a private company.

Capital Market Types in Bangladesh:

There are two different types of capital markets: primary and secondary. Primary Market: This is the market where shares, debentures, and other securities are sold for the first time in order to raise long-term capital. Consequently, the primary market is often referred to as the NEW ISSUE MARKET.
Primary Market Characteristics: It Is Related To New Issues. It Has No Specific Location. It Has Various Methods Of Float Capital: The following are the basic market capital-raising techniques.
i. Public Issue.
ii. Offer for Sale.

Secondary Market in Bangladesh:

The secondary market is the market in which previously issued securities are purchased and sold.
Transactions on the secondary market are often conducted via the stock exchange.
The primary function of the secondary market is to provide liquidity for securities. It Generates Liquidity. It Follows the Primary Market. It Occupies A Specific Position. It Encourages New Investments.

Legal services for the capital market in Bangladesh 

Tahmidur Rahman Remura Wahid TRW Associates, the Best Capital Market Law Firm in Bangladesh 

It is typical for an attorney who engages in general practice to have a passing familiarity with everything that piques their interest. However, specializing in something related to finance makes a practice unquestionably tough and hence takes a great deal of skill. 

Tahmidur Rahman Remura Wahid TRW Associates offers the most qualified Capital Market Attorneys in Bangladesh, as failure to do so may impair your future business opportunities. When obtaining a loan and analyzing the market in light of legal issues is necessary, the requirement for a skilled Capital Market attorney remains an open secret. Foreign investors that seek Capital Market attorneys in Bangladesh face an even greater challenge, as they are aware that a lawyer or firm without the required finance credentials could practice in this field of law.

Our fully committed finance department, in conjunction with our legal associates, guarantees the highest quality of work in Bangladesh.

What is an Initial Public Offering and Capital Market in Bangladesh? 

IPO stands for “Initial Public Offering.” It refers to the first time a privately held corporation offers stock to the general public. It is a method by which a private firm can broaden its investor base by issuing public stock. 

The ability to obtain more funds through an IPO makes an IPO a valuable growth tool for any private company. Moreover, it is a laudable purpose with numerous potential benefits, such as assisting companies considerably with fundraising, exposure, and the ability to utilize publicly traded stock as a payment method, among others.

Publicity is crucial for businesses since it increases their commercial opportunities. In addition, an IPO permits a company to engage in infrastructure growth and the purchase of new equipment, etc. Additionally, it might be a wonderful way to pay off any debts or past-due obligations. 

How to Make an Offering to the Public in Bangladesh:

To make a public offering in Bangladesh, the Securities and Exchange Commission (Public Issue) Rules, 2001 and the Securities and Exchange Commission (Public Issue) Rules, 2006 must be followed. Additionally, there are other norms and regulations that must be followed and observed (on the basis of applicability). Companies Act 1994; Income Tax Ordinance, 1984; Income Tax Rules, 1984; Bangladesh Accounting Standards; and Bangladesh Financial Reporting Standards. 

A Capital market, on the other hand, is a form of market where financial securities such as bonds, stocks, etc. are traded. Individuals and institutions participate in this type of commerce. The capital market serves as a conduit for transactions between investors and firms. In addition, the capital market is one of the best sources of capital formation in the economy and contributes to economic expansion.

The capital market facilitates the trade of securities, encourages a wide variety of productive asset ownership, and facilitates the settlement of transitions, among other things. 

Highlights of the Capital Market in Bangladesh:

Bangladesh’s capital market is expanding, but at a slower rate than many would prefer, with market development still in its infancy. Since the Securities and Exchange Commission (SEC) was established in 1993, there have been numerous market developments.

After the burst of the bubble in 1996, the capital market has received a great deal more attention, significance, and awareness. In contrast, the DSE general index reached its greatest point in 2010. After reaching its peak, the index began to rapidly decline, shattering all previous records for a decline. After that, BSEC took steps to protect investors, resulting in the infrastructure that exists on the market today.
The primary characteristics of the Bangladesh capital market are addressed in the following section:
Number of Securities Listed

Compared to our surrounding countries, Bangladesh has a significantly smaller number of publicly traded enterprises. Only 572 firms are listed on DSE (as of January 2018). Numerous economically successful enterprises have been shown to be able to go public and reap the benefits of utilising float capital.

Table: Number of listed securities in DSE

Source: DSE website

Organogram of DSE:

Capital Market Types in Bangladesh 

The Capital Market consists of two types of markets: primary and secondary. Primary markets deal with the trading of newly issued stocks and other securities, whilst Secondary markets deal with the exchange of existing or previously issued securities. In other words, whereas the Primary market focuses only on the trading of newly issued securities, the Secondary market focuses on the trading of previously issued securities. In addition, the capital market is divided into two significant segments: the stock market and the bond market. 

Primary markets are advantageous for both investors and new businesses, since investors can invest their excess funds and new businesses can extend their operations by raising additional capital. There are various methods for raising capital; for instance, many companies solicit investors to invest in their business by providing a prospectus. Investors purchase and sell shares on the Secondary market. In contrast to the Primary market, the Secondary market contains no new shares. 

There are two stock exchanges in Bangladesh: the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE). Dhaka Stock Exchange (previously known as the “East Pakistan Stock Exchange”) was launched on April 28, 1954, while Chittagong Stock Exchange was established in 1995.

Both stock exchanges aim to create a robust platform for entrepreneurs to raise funds, create investment opportunities, enhance market transparency, and invite foreign investors to participate in Bangladesh. The Securities and Exchange Commission (SEC) is the capital market regulator in Bangladesh. It administers rules and regulations and seeks to enhance the capital market. Central Depository Bangladesh Limited is the only central depository in Bangladesh (CDBL). 

Tahmidur Rahman Remura Wahid TRW’s Capital Market Lawyers in Bangladesh are well-equipped to handle sophisticated capital market matters. 

How to apply for an IPO in Capital Market in Bangladesh:

• Collect IPO application form from DSE or its broker offices Bankers to the issue.
• Fill it up, sign it.
• Submit the form along with the subscription money to the selected bank.
• Collect the banker’s acknowledgement.
• Wait for lottery.
• IPO distribution system
• Any of the three situations may arise
• Over- subscribed
• Under- subscribed
• Subscribed fully

Refund Warrant /Allotment of IPO:

• If your lottery application is approved, the issuer will transfer your shares to the B/O account you specify.
• If you do not win the lottery, your subscription fee will be refunded to you via check or warrant made payable to the applicant.
• The refund warrant must then be deposited for clearance with your bank. You will thus receive a refund. Consequently, there is no loss in the IPO.

We offer the subsequent services in regards to Capital Market in Bangladesh: 

– Assisting in the listing process with the DSE, CSE; – Issuing an Initial Public Offering (IPO); – Drafting a prospectus; – Ensuring compliance with the securities legislation governing the capital markets; – Ensuring that all corporate and regulatory permissions are received on time 

– Attending AGM; 

– Preparation of all transaction-related corporate documents and agreements; 

– Counseling on legal and regulatory issues; 

– Reviewing the company’s Memorandum and Articles of Association; – Determining whether the company is ready to be listed on an exchange; – Making any necessary legal amendments to the Company’s corporate documents. 

– Examining contracts 

– Drafting documents; 

– Negotiate agreements; 

– Legal counsel on a product’s rating;

– Due diligence

TAHMIDUR RAHMAN Remura Wahid TRW lawyers provides the services of the entire IPO (initial public offering) process, beginning with the evaluation and assessment of the benefits of an IPO and including the investigation of every potential alternative. With an experienced and skilled team, the company’s management can focus on the crucial aspects of the IPO procedure where their knowledge is important. 

Our team has traversed this path numerous times before and can assist you at each stage of the overall IPO Journey. It encompasses corporate back warning, review, exchange administrations, tax assessment, and various masters from around the organization. This enables us to provide superior assistance not only on technical and procedural difficulties, but also on the broader strategic and business considerations that any client would expect from a free financial lawyer. IPO services consist of: 

IPO Assistance We function as a coordinated part of the group to offer the correct level of assistance to augment anyone’s current abilities and assets. 

• Evaluation and lawful reconstruction prior to IPO 
• International Financial Reporting Standards specificity and speedy close, to meet the requirements of the trade. 
• Providing pertinent and necessary corporate governance advice and risk management transparency. 

Bangladesh’s capital market is one of the smallest in Asia and the third-largest in the region of south Asia. Together with the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE).

It also includes a separate regulator, the Securities and Exchange Commission (SEC), as it implements rules and regulations, monitors their ideas for effectiveness, and develops the capital market. TAHMIDUR RAHMAN Remura Wahid TRW’s professionals are well-versed in initial public offerings (IPOs) and relisting on both local and international securities exchanges.

TAHMIDUR RAHMAN Remura Wahid TRW Consulting International serves as detailed bookkeepers, conducting assessments of publishing associated budget summaries and advising on bookkeeping prescriptions and controllers’ remarks. As a significant component of pre-IPO administrations, our knowledge also facilitates the listing of any company. on a company’s posting arrangements, including its operational, financial, and management team.

TAHMIDUR RAHMAN Remura Wahid TRW Consulting International’s specialist team assists listed companies with respect to withholding tax exemptions, as well as retaining charge absolved disbursements, buybacks, and capital reductions. Also providing corporate governance assistance to the organization regarding appropriate financial reports and paperwork. Additionally, contract documentation, drafting, and negotiation are included in this service.

Are you intending to do Initial Public Offering in Bangladesh within the Capital Market in Bangladesh?

Get your Initial Public Offering in Bangladesh sorted out with the help of  Tahmidur Rahman Remura: TRW: The Law Firm in Bangladesh:

The legal team of Tahmidur Rahman, The Law Firm in Bangladesh: TRW, The Law Firm in Bangladesh are highly experienced in providing all kinds of services related in regards to Capital Market in Bangladesh. For queries or legal assistance, please reach us at:

E-mail: info@trfirm.com
Phone: +8801847220062 or +8801779127165

Address: House 410, Road 29, Mohakhali DOHS