The Bangladesh Securities and Exchange Commission has declared forfeited Tk 5.7 crore in investments by general investors for dropping more than two applications using the same bank account for initial public offering shares of Sonali Life Insurance Company Limited.
A total of 25,389 applications worth Tk 37.94 crore became invalid for dropping more than two applications using the same account. Fifteen per cent of the total subscription amount was forfeited for the securities rules violation.
Around 3,67,250 applications were dropped for the IPO shares worth Tk 730.42 crore . Out of that, 3,41,861 applications were found valid and the remaining 25,389 applications became invalid, according to Central Depository Bangladesh data.
BSEC commissioner Shaikh Shamsuddin Ahmed told New Age that considering the introduction of a new IPO distribution system, the commission would pardon the investors who would appeal to the commission for a remission accepting their mistakes.
After the IPO of Sonali Life, the regulator would not tolerate such mistakes in the IPO application by any investor, he said.
He said that the regulator made the rules so that all investors get more IPO shares.
According to the IPO consent letter of the BSEC, the applicants who have applied for more than two applications using same bank account, their applications will not be considered for allotment purpose. In addition, 15 per cent of their subscription money will be forfeited and deposited to the commission. The balance amount will be refunded to the applicants.
Apart from the financial penalty, the investors did not receive any IPO share against their applications as it became invalid.
Earlier on December 31, 2020, the BSEC quashed IPO lottery system to allot IPO shares among the all applicants on pro rata basis.
The new system began with the IPO share subscription of Sonali Life Insurance.
Officials of a number of brokerage houses and merchant banks said that many of their clients did not receive any shares. To worsen the situation, a large sum of their investments was forfeited, they said.
Previously, investors used to get IPO shares through the lottery system, they said.
However, total 616 eligible investors invested for IPO shares of Sonali Life Insurance and all of them found to be valid.
As per the new system, the minimum value of application by a general investor for IPO subscription must also be Tk 10,000 and maximum value should be Tk 50,000.
Besides, investors must have at least Tk 20,000 in investment in the stock market to be eligible for participating in any IPO.
The BSEC has imposed the minimum investment bar on investors as many investors who did not have any investment on the secondary market opened many BO accounts only to win IPO lottery, BSEC officials said.
As per the data of Electronic Subscription System, IPO subscription of Sonali Life Insurance was oversubscribed by 36.45 times.
The shares will be allotted to valid 3.41 lakh applications on pro rata basis. Investors who invested minimum Tk 10,000 will receive 17 shares of Sonali Life Insurance proportionately.
Midway News Team
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