Brokers seek rules for share buyback, merger

The DSE Brokers Association of Bangladesh (DBA) has urged the government to incorporate provisions allowing listed companies to buy back their own shares and undertake mergers and acquisitions in the proposed third amendment to the Companies Act, 1994.

The association made the recommendation in a letter, signed by its president Saiful Islam, to Commerce Secretary Md Ataur Rahman Khan yesterday. A copy was also sent to BSEC Chairman Masud Khan.

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The DBA argued that listed companies should have a legal avenue for share buybacks to make the capital market more dynamic, efficient and investment-friendly.

A share buyback allows a listed company to repurchase its own shares from the market, reducing the number of shares outstanding and potentially increasing earnings per share and shareholder value. Companies may undertake buybacks when they have excess cash but limited opportunities for profitable investment.

The DBA also proposed empowering the Bangladesh Securities and Exchange Commission (BSEC) to formulate and implement rules governing share buybacks and oversee such transactions to ensure transparency and good governance.

The association made a similar recommendation for mergers and acquisitions, saying listed companies currently face complex and lengthy legal procedures when undertaking such transactions.

As the statutory regulator of the capital market and listed companies, BSEC should have the authority to establish a clear and effective regulatory framework for share buybacks, mergers and acquisitions, the DBA said.

Such a framework would facilitate faster decision-making and more effective regulation while improving transparency and corporate governance, it said.

Modern rules governing these transactions would also make corporate restructuring and capital management easier for listed companies, while helping make the capital market more dynamic and protecting the interests of investors and other stakeholders, according to the association.

The association expressed hope that the government would consider its recommendations while finalising the third amendment to the Companies Act, 1994, as part of its efforts to develop and modernise the capital market and protect investors’ interests.