Partner selection
DSE replies to BSEC queries on Chinese bid
STAFF REPORTER
The Dhaka Stock Exchange (DSE) yesterday gave replies to the queries made by its regulator Bangladesh Securities and Exchange Commission (BSEC) about the violations of rules in its bid by a Chinese consortium, which the bourse has picked as its strategic partner though a tendering process. A member of DSE confirmed The Independent that they have sent a letter to the BSEC answering all of the queries. DSE held a board meeting on Saturday to discuss the BSEC queries. The bourse also consulted with its legal representatives and prepared the answers, said DSE sources.
Earlier, the regulator on Tuesday asked the DSE to clarify what the BSEC termed as violations of rules by the Chinese consortium of Shenzen Stock Exchange and Shanghai Stock Exchange
in its bid to be a strategic
partner of the DSE along with 25 per cent ownership of the bourse. The regulator made some objections over the Chinese proposal and sent a number of queries to the DSE for clarification.
Earlier, the DSE, in its board meeting, unanimously approved the proposal made by the Chinese consortium and had sent it to the BSEC for its approval in the last week of February
The BSEC committee, after evaluating the Chinese consortiums proposal said that a number of clauses of the proposal were in direct deviations of the countrys relevant laws.
The regulator said the Chinese consortiums proposal to execute the agreement under the UK law and settle any dispute under international arbitration law was in violation with the relevant laws in Bangladesh. The BSEC committee observed that despite holding 25 per cent shares, the Chinese consortium, if it became a strategic partner, would hold certain prerogative over the rest 75 per cent share holders.
Besides, the consortiums proposal to include a number of other issues including seeking of approval of the consortium to take any other strategic investor by the DSE also violates Bangladesh law, said the regulator
The regulator also figured out that the price offered (Tk 22 a share) was not a fixed price as the group share purchasing agreement says that if the DSE pays any dividend to shareholders or its net asset value falls, the purchase price must be subject to a negative adjustment.
The BSEC also raised question whether the DSE had made any independent assessment by expert on the value of the consortiums technical support worth $37 million offered by the consortium.
The BSEC also asked to define payment obligation of the DSE to the strategic partner as the group says the share sales under public offering must be first used to meet any payment obligation of the seller to the strategic investor.
Besides, the committee asked the DSE to explain whether the consortiums proposal to include
certain clause in the agreement allowing it to form technical committee and appoint the co-chief technical officer was in violation of the DSE demutualization scheme.
Talking with The Independent, a board member of the DSE said the bourse has categorically answered each of the BSEC queries. Without revealing details, the member said, the Chinese proposal is negotiable and they have already talked with the Chinese consortium.
He, however, said if the Chinese bid is finally not approved by the regulator BSEC, the DSE would have to go for a fresh bidding.
