Member of Dhaka Stock Exchange. An Efficient Trading Platform. Detail Analysis of DSE Stocks.

The Dhaka Stock Exchange (DSE) is incorporated as a Public Limited Company. It is a Self-Regulatory Organization and its activities are regulated by:

-         Articles of Association

-         Rules and regulations and bye-laws of the exchange

-         Companies Act 1994

-         Securities and Exchange Ordinance 1969

-         Securities and Exchange Rules 1987

The DSE has 230 (members) who are also the shareholders of the Exchange. The members are licensed by the Securities and Exchange Commission (SEC) for conducting trading as Stock Dealer or Broker. All Brokerage houses have been corporatized in 2006.

 

Through continuous reforms, Dhaka Stock Exchange has emerged into a modern Exchange.

 

The day to day affairs of the DSE is run by a highly qualified and trained executive team who works independently under policies set by the Board of Directors.

 

The DSE Board comprises of 25 members of whom 12 are elected through direct election from the 230 shareholders of DSE. The remaining 13 Board Members are Ex-Officio. They include 12 members representing a distinguished personality from different key economic and social arena of the country. The CEO of the Exchange is also a Director of the Board.

 

-         One Executive Director of Bangladesh Bank and Managing Director of Investment Corporation of Bangladesh.

-         One member representing investors in listed securities.

-         One member representing listed issuer companies; and

-         the remain 10 (ten) members selected from the elite and other distinguished persons who are not associated either with the Exchange or with any of its members of the exchange.

 

A highly qualified and trained team of Executives reporting to the CEO runs the day-to-day affairs of DSE. The management team runs independ­ently under policies set by the Board of Directors. A Head of IT, Secretary and Deputy Finance Controller assist the CEO in managing day-to-day affairs of the bourse.

 

-         Listing of securities and ensuring compliance by the issuers.

-         Trading provisions for listed securities through efficient trading platform (Online screen based trading system).

-         Real time online market Surveillance of Trading and regular monitoring and compliance inspection of  Trading operations.

-         Settlement and Clearance of executed trades.

-         Updating existing Regulation and promulgating new rules and regulation.

DSE Publishes Monthly Review to keep investors community informed on the overall development in securities market. DSE has an arbitration system to resolve disputes or claims against members through a panel of judges comprising 5 retired district judges. Investors Protection Fund which is contributed by the Brokers of the Exchange for the benefit of investors and managed by a board of trusty who are independent body from outside the Exchange.

 

 

 

 

The listed companies are required to submit

-         Yearly Audited Financial Statement within four months from the year end.

-         Half-yearly un-audited financial statement within one month from the date of half year ends.

-         Disseminating Price Sensitive information within 30 minutes of making any price sensitive decision or Occurrence of price sensitive event.

 

It is mandatory to follow the following standards in preparation of the accounts

-         International Accounting Standards (IAS)

-         International Standards for Auditing (ISA).

 

The Listed Securities Including Mutual Funds, Debentures and Bonds in the DSE number 298 as on December, 2006. Apart from 310 listed compa­nies including 137-A Category, 32-B Category, 1-G Category 94-Z Category and 4-N Category Companies, there are 13-Mutual Funds, 8-Debentures and 34-Bonds in the Stock Exchange. The Listed Companies are divided into 18 sectors. Of them 1-Bank, 2-Investment, 3-Engineering, 4-Food & Allied Products, 5-Fuel & Power, 6-Jute, 7-Textile, 8-Pharmaceuticals & Chemicals, 9-Paper & Printing, 10-Services & Real Estate, 11-Cement, 12-Information Technology, 13-Tannery, 14-Ceramics, 15-Insurance, 16-Debenture, 17-Miscellaneous and 18-Bonds.

 

 

The prime bourse of the country introduced "Group A" and "Group B" from July 2, 2000 based on its financial strength and performance to give clear information to investors for taking informed decision. DSE has further categorized the securities by introducing "Group Z" which came into effect from September 26, 2000. The Stock Exchange introduced another company category "Group G" on June 30, 2002. The categorization helps a lot the investors in choosing companies before making investment decision. N Category- the newest one was launched through an order of SEC on July 3,2006.

 

“A’ Category Companies: Companies which are regular in holding the Annual General Meetings and have declared dividend at the rate of 10 per­cent or more in a calendar year. (Mutual Funds, Debentures & Bond are being traded in this Category)

 

“B’ Category Companies : Companies which are regular in holding the Annual General Meetings but have failed to declare dividend at least at the rate of 10 percent in a calendar year.

 

“Z’ Category Companies : Companies which have failed to hold the Annual General Meetings or failed to declare any dividend or which are not in operation continuously for more than six months or whose accumulated loss after adjustment of revenue reserve, if any, is negative and exceeded its paid up capital.

“G’ Category Companies : Greenfield Companies.

 

“N’ Category Companies : All newly listed companies except Greenfield companies will be placed in this category and their settlement system would be like B-category companies.

 

The all Share Price Index (DSI) comprises all listed securities of the exchange which has been calcu­lated since November 01, 1993 calculated on the basis of price movement of individual stocks using IFC method. Earlier a price average index was in practice which was not perfect.

 

DSE general index with a base-index of 817.62 points started on November 27, 2001. The index excludes companies of Z-category and is calculated on the basis of price movement of individual stocks. The entire market capitalization excluding the Z-category is taken into consideration in deriv­ing the general index.

DSE-20 index was introduced on January 01, 2001. The Index comprises leading 20 shares with a base index of 1000. The criteria taken into account in formulating the index were market capitalization, free float shares in public hands, minimum payment of 10 percent dividend for the last three consecutive years and 95 percent trading days liquidity in terms of trading during the last six months. Subjective criteria such as good corporate governance, regular holding of annual general meeting and sectoral representation were the other key factors for becoming eligible for inclusion in the Index.

 

 

 

 

A public limited company may apply for listing if it has minimum paid-up capital of Taka 20 (twenty) million and shall make a public issue which is subscribed by not less than 400 applicants. The applicant company among others shall furnish the following documents to the exchange:

 

·        Application for listing as per Form I;

·        Memorandum & Articles of Association;

·        Copy of the Certificate of incorporation;

·        Copies of all material contracts and agreements entered into or exchanged   with foreign participants, machinery suppliers and any other finan­cial institutions;

·        Copy of Consent order issued by the Commission;

·        Names of Directors along with directorship of other companies listed on the Exchange;

·        Statement of audited accounts for the last 5 years or for a shorter number;

·        A undertaking regarding full compliance of Exchange's Listing Regulations and other securities laws.

The unlisted companies are required to complete certain procedures to get listing. The present process/way of listing, in brief, may describe as follows:

·        Every company intending to enlist its securities to DSE by issuing its securities through IPO is required to appoint Issue Manager to proceed with the listing process of the company in the Exchange;

·        The Issue Manager prepares the draft prospectus of the company as per Public Issue Rules of SEC and submit the same to the SEC and the Exchange (s) for necessary approval;

·        The Issuer is also required to make agreement with the Underwriter (s) and Bankers to the Issue for IPO purpose; After receiving the draft prospectus, the Exchange examine and evaluate overall performance as well as financial features of the company which may have short term and long term impact on the market;

·        The Exchange send its opinion to SEC within 15 days of receipt of draft prospectus for SEC's consideration;

·        After proper scrutiny, SEC gives it consent for floating IPO as per Public Issue Rule;

·        Having consent from SEC, the Issuer is required to file application to the Exchange for listing its securities within 5 days of issuance of its prospectus;

·        On successful subscription, the company is required to complete distribution of allotment/refund warrants within 42 days of closing of sub­scription;

·        After 100% distribution of shares/refund warrants and compliance of other requirements, the application for listing of the Issuer is placed to the Exchange's meeting for necessary decision of the Board of DSE;

·        The Board of DSE takes the decision regarding listing/non-listing of the company which must be completed within 75 days from the closure of the subscription.

 

 

·        shall have minimum paid up capital of Tk. 100 (one hundred) million;

·        shall have no accumulated loss;

·        shall be in commercial operation for at least immediate last five years;

·        shall have profit in three years out of the immediate last five completed accounting / financial years with steady growth pattern;

·        is regular in holding Annual General Meeting (AGM);

·        have a credit-rating of BBB or above.

 

Foreign investors and the Non Resident Bangladeshis (NRBs) may invest in securities. To exercise the investment as NRBs/foreigners, one must enter into an agreement with a brokerage house of their choice along with anyone of the following institutions:

·        Authorized Dealer of Foreign Exchange

·        Custodial Bank

·        Merchant Bank (Portfolio Manager)

 

All NRBs/foreigners for the purpose of making investment must have a Beneficiary Owners (BO) account and a client account opened with any of the brokerage house as well as entering into agreement with the Authorized Dealer or Custodial Bank or Portfolio Manager and thus maintain the investment activities from abroad. List of Brokers together with regular market scenario, fundamental status of the companies listed on the Exchanges and many other relevant necessary information is available on the website of DSE (www.dsebd.org). List of Brokers of the Exchanges, Merchant Bankers or Custodial Banks is available on the web page of SEC (www.secbd.org).

 

·        Corporate tax rate (except banks, insurance & other financial companies) is 30% for listed companies, while is 40% for non-listed compa­nies.

·        Tax rebate @ 10% of tax payable is allowed if a listed company declares 20% or more dividend.

·        Foreign Private Investment (Promotion & Protection) Act 1980 ensures legal protection to foreign investment in Bangladesh against nation­alization and expropriation.

·        It also guarantees repatriation of capital and dividend and equitable treatment with local investors.

·        Adequate protection is available for intellectual property rights, such as patents, designs & trademarks and copyrights.

·        Tax holiday for 5 to 10 years depending on location or sector of Industries.

·        Special 15 years tax holiday for private power generation companies.

·        Facilities for repatriation of invested capital, profit & dividend.

 

 

·        Exemption of tax on interest on foreign loan.

·        Tax exemption on royalties, technical know- how & technical assistance fees.

·        Avoidance of double taxation on the basis of bilateral agreements.

·        Six month multiple visa etc.

 

Bangladesh has a liberal industrial policy in order to attract foreign investment.

There is limitations on equity participation i.e. up to 100 percent foreign private investment is permitted.

All industries are open to private investment. Industries earmarked only for public sector investment are :

·        arms, ammunition and other defense equipment and machinery

·        Production of nuclear energy,

·        Forest plantation and mechanized extraction within the bounds of reserved forests,

·        Security printing (currency notes ) & minting and

·        Railways & air transportation (except certain domestic routes and air cargo)

 

For obtaining industries facilities like procurement of land, electricity, gas and sewerage connection, importation of capital machinery and raw materials tax rebate, duty drawback facilities etc. are requested to be registered with the Board of Investment (BOI).

 

 

·        Non-Resident Bangladesh investors enjoy facilities similar to foreign investors

·        10 percent reserved quota for non-resident Bangladeshis in primary shares (IPO)

·        Foreign currency deposits in the Non-resident Foreign Currency (NFCD) account

The stock exchange has a clear and specific vision for the future.

Strengthens the bond market and making it vibrant through encouraging trades in 5 and 10 years government already listed with the exchange. It is also trying to encourage financial institutions to issue bonds to supplement share issue and municipal bonds beside the corporate bonds.

 

Bringing all major infrastructural companies specially those in power, telecommunication and energy companies and thus broading the market depth to US$ 15 billion by 2010 and daily average turnover from current average of 10 to 15 million to a level of 70 to 100 million dollar by 2010.

 

Bringing all securities under CDS within 2008.

 

Bringing all the corners of the country under trading network through the on going expansion and up gradation projects of DSE Bringing internet based traded trading creating provisions for investment and settlement from any where in the world Ensure greater degree of transparency in financial disclosure for better corporate governance

Making the market competitive in terms of regional securities market perspective through ensuring market friendly rules and regula­tory framework.

 

Initiate the process of creating derivative and future market by 2010.

 

Thus the Dhaka Stock Exchange is relentlessly trying to make the securities market an efficient reliable transparent organization that will be capable of meeting the challenges of economic reality of the country. The proposed DSE Tower is a strong testimony of the commitment and strength of the exchange which has a vision to make the capital market as the centre for economic development of the nation.

 Overview of DSE Tower

DSE has undertaken the construction work for its Second 14-storied building at Nikunjo with all the state of the art commercial facilities; it is expect­ed to be a landmark building. It will be a modern building with all modern amenities. It would not be out of place to mention here that this piece of land was specially allotted by the then Hon'ble Prime Minister in 1998. Dhaka Stock Exchange took over possession of the four bigah land on 25th November, 98 from RAJUK. Construction of DSE Tower is expected to be completed in three years.

 

The need for construction of DSE Tower at Nikunja was felt necessary to meet the growing demand of facilities from all the parties involved with this market, which by the existing one mat not be fulfilled. As the activities of the prime bourse is expanding rapidly in the last decade, this existing premise cannot accommodate all the facilities in its present establishment at Motijheel for which DSE appealed to the then Government for a big plot showing the justification. The Government was pleased and allocated the 4 bigah land in the name of Dhaka Stock Exchange Ltd.

 

Dhaka Stock Exchange on 30th April, 2006 signed an agreement with Development Design Consultants Ltd. for architectural and engineering consulting services for construction of multistoried DSE Tower. To mention, DSE Tower will be set up at 1.33 acres (58,064 sfts) of land. The projected building area will be 7,56,000 square feet.

 

 

 

 

The Tower will have its own Water supply with 4-inch deep tube well. Main power supply will be from DESCO with provisions of 5 Generators of different capacities to meet up the demand during power outage. The Tower will facilitate with 13 Lifts with different capacity at different location. The Tower will have cooling facilities with split and ducted split type AC. The entrance of the DSE Tower will be from south through 40 feet wide road. The left side entrance will be used by the DSE Officials, middle entrance by the members and the right entrance will be entrance will be reserved for the VIP's with VIP car parking facilities at the ground level.

 

All the three basements will be used for car parking. The first two floor provides room for banks and other financial institutions, sub­stations, lobby and basic amenities. There will be a mock trading hall and a media centre at the first floor. Second floor shall exclusively for the use of DSE office. Third to eleventh floors in full will be allocated for the members on trading purpose and part of twelfth & thirteenth floor(19,800 square feet) will be for the Auditorium. 17,478 square feet of the thirteenth floor will be allocated for Members' Club with facilities of TV lounge, Indoor Games, Health Club, Locker, Prayer, Kitchen and Dining.