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Going public is a major milestone in the life of a company, as well as a major transition. In going
public, the company gives others a chance to invest in the business and to share in its market
potential. However, doing so requires many changes in the way of managing the company.
Company will encounter different and more frequent reporting requirements for investors and
regulatory agencies. Companys announcements and press releases will generate greater
visibility and attention. And, above all, there are high expectations from shareholders, boards
of directors, regulatory agencies, media, investment bankers, stock exchanges, management and
employees. Many successful IPOs have involved companies with experienced and committed
management, who demonstrated a solid business history, proven products, significant assets,
strong earnings and the potential for further growth. In this paper we tried to find out the IPO
process in Bangladesh. We have divide listing procedure in two Parts according to their behavior,
one is work before Consent and another in work after consent. Before Consent Obtained from
SEC contains steps like Selection of Professionals, Completion of Valuation and restructuring,
Selection of Bankers to the Issue, Collection of NOC from Lenders, Credit Rating Report,
Agreement with CDBL, Approval from Sponsors, Refund warrant guarantee, Develop
Prospectus, Application Submission, Consent Obtained from SEC and in work after consent
from SEC steps are Submission of prospectus, Announcement for the investor, Provide full
prospectus ,Application for listing, Subscription period, Transaction rate, In case of under
subscription, Application to Stock Exchanges for Listing, Approval of listing, Marketing and
selling the deal

A milestone for any company is the issuance of publicly traded stock. While the motivations for
an initial public offering are straightforward, the mechanism for doing so is complex. In this
paper, we outline the process by which companies are brought to market in an initial public
offering. Our goals here are to delineate the specific steps that are required in an IPO, to
demonstrate the complex inter-relationships between the advising, marketing, pricing, and
trading functions of the IPO process, and to highlight the role played by the underwriter in a
public offering. Initial public offering(IPO), also referred to simply as a "public offering" or
"flotation," is whena company issues common stock or shares to the public for the first time.
They are often issuedby smaller, younger companies seeking capital to expand, but can also be
done by large privatelyowned companies looking to become publicly traded. In an IPO the issuer
may obtain theassistance of an underwriting firm, which helps it determine what type of security
to issue(common or preferred), best offering price and time to bring it to market. For the
individualinvestor, it is tough to predict what the stock or shares will do on its initial day of
trading and in the near future since there is often little historical data with which to analyze the
company. For minimize the risk and attract more investor to the market The IPO has three part as
mention in the following diagram. 10% Shares are restricted for mutual fund; another 10%
shares are restricted for Non Residence Bangladeshi (NRB); and rest of the 80% shares are
allocated for the general public.

We have used only secondary data source to conduct the study. The sources of secondary data
Secondary information was collected from different web site related to IPO listing procedure in
Bangladesh. We have collected much of the information through the internet and those are
mentioned in the bibliography page.

An initial public offering or IPO is a mechanism for companies to make available for the first
time shares of their stock. Its purpose is to either raise capital for a new company or to fulfill a
desire by an existing company to make their shares available to the public. Whether it is a new or
existing company, the IPO process follows a fairly straight forward path with precise steps along
the way.

There are some instructions a company have to follow to get consent from Securities Exchange
Commission. These instructions are mandatory for investors. Through this process Investor has
to organize all the relevant information. We have divide listing procedure in two Parts according
to their behavior, one is work before Consent and another in work after consent. In the whole
listing procedure, the works are separable like work before IPO consent and work after IPO
Works before Obtaining the Consent from Securities Exchange Commission:

1) Selection of Professionals: Assembling an experienced team to work with the

company through the IPO process is a critical factor in its success. It is imperative that

the company select advisers who have experience with IPOs, particularly with companies
in that companys industry and of their size. The IPO is a rigorous process and a

coordinated effort among the members of the team-company management, board of

directors, attorneys, independent auditors, underwriters and their counsel and other

advisers as necessary. The primary goal of the team is to complete a successful offering
that complies with the applicable laws and regulations. In below most important

(I) Selection of underwriters: Selecting an underwriter is one of the most important decisions
in preparing to go public. The underwriter is an investment bank that manages the entire process

of analyzing the company and coordinating the sale and distribution of stock at the conclusion of
the deal.

Selection of underwriters & completing underwriting agreement is another essential process of

IPO listing procedure. Underwriters are liable for successful float of all the shares. If the shares

under subscribed, then underwriter will have to buy and hold that particular amount of shares.

But, in case of Bangladesh Capital Market History, It never happens besides applications are
over subscribe more than 10times of offer. According to Public Issue Rules 2006
(i) The issuer making public offering shall appoint underwriter(s),
Having certificate of registration from the Securities and Exchange Commission or
allowed by the Commission to carry out underwriting on a firm commitment basis.
(ii) The issuer, in the event of under subscription, shall send notice to the underwriter(s)
within ten days of closure of subscription calling upon them to subscribe the securities
and pay for them in cash in full within fifteen days of the date of said notice and the said
amount shall be credited into securities subscription account within the said period.
(iv)The underwriting agreement shall contain a condition to the effect as mentioned in
sub-rule (2).
(v) The issuer shall, within seven days of the expiry of the period mentioned in sub rule
(2), send to the Securities and Exchange Commission proof of subscription and deposit of
the money by the underwriter.

(II) Audit of Accounts: Organization supposed to have Audit of their accounts by authorized
Auditor duly signed on each page, by the issuers chief executive officer/managing director, chief
financial officer and issue manager according to the Rule -3 of Public Issue Rules 2006. The
audited account shall not be older than 120 days of the end of the period for which the Financial
Statement is prepared. 10 copies of Financial Statement have submitted to SEC, one copy each to
DSE and CSE.
(III) Attorneys: Since companies attorneys are advocates for their position and because an IPO
is a highly technical legal process, the company will probably be working more closely with
them than with any other professional advisers during the offering process. Attorneys are heavily
involved in the disclosure aspects of the IPO and have primary operational responsibility for
insuring that offering complies with federal securities laws. In addition, the attorneys participate
in many of the discussions between the company and the investment bank or underwriters.SEC

legal work is complex and highly specialized, so it is extremely important that one have legal
counsel with prior SEC experience and who know the intricacies of working with the SEC.

2) Completion of Valuation and restructuring: Before the IPO, the underwriter

analyzes the company to estimate its value and determine the number of shares to offer in
the public market. Valuation is more an art than a science, and although the underwriters
follow a rigorous procedure in an attempt to factor in all relevant issues, the market sets
the actual price.
Another important process is changing organizations employee management and also
restructuring and obtaining Reports thereon. Listed Organizations all top level employee
usually has to follow by the Auditor.
3)Selection of Bankers to the Issue: Bankers Letter confirming opening of separate
account for IPO and accepting their appointment as such Rule -18 of Public Issue Rules
2006.Bankers to the issue will be the important stake holder and they will be responsible
for deposit and withdraw money of investors.
4) Collection of NOC from Lenders: Collection of No Objection Certificates (NOC)
from Lenders is a mandatory to get IPO approval. Lender should have to issue a letter
that if the Company change their existing capital structure then they will not have any
objection. If the company have loan from several banks, then it is necessary to collect
NOC from all the lenders.
5) Credit Rating Report: Generally it takes at least two months to complete the Credit
Rating after the Annual Audit is completed and credit report is mandatory for IPO listing
process. Rule 18 (21) of the Public Issue Rules 2006 says that the application for consent
shall be accompanied by some exhibits including Credit Rating Report. No issue
of shares at a premium or issue of right shares shall be made by a public company unless
the issue is rated by a credit rating company and declaration about such rating is given in
the prospectus or right offer document (Sec.3 of Credit Rating Companies Rule 1996).

6) Agreement with CDBL: Before submission of Application to SEC, it is mandatory to

complete agreement with Central Depository Bangladesh Limited (CDBL). CDBL
maintain online transaction of securities by taking some fees and they listed all the
investor in Stock Market. At present there are more than 1600000(sixteen lac investors)
in Bangladesh Capital Market. After completion of agreement now company will have to
take decision on depositing sponsors shares during Lock-in-Period with Custodial
Bank or with CDBL.
7) Approval from Sponsors: At this point of IPO process now it is necessary to take
approval from the sponsor and documentation the process, undertaking and information
from Sponsors/ Directors, Declarations, Due Diligence etc.
8) Refund warrant guarantee: Company supposed to have opened a separate Bank
Account for refund warrant purpose. It also called Mother Accounts for Refund Warrant.
Through this account Company has to refund warrant money to the investor, who will not
get the share.
9) Draft Prospectus: prospectus means any document prepared for the purpose of
Communicating to the general public a companys plan to offer for sale of its
Securities under these Rules. Before applying for IPO Company will have to drafting the
abridge version of prospectus and dealing with Printers on printing of Prospectus, Forms,
Refund Warrants, Letter of Allotment etc.
10) Application Submission: Application has to submit to SEC for consent to Issue with
approved Prospectus and deposit the Govt. Fees of BDT 10,000. If the application is
incomplete the SEC shall inform the applicant within 28 days of receipt of application
and if the issuer fails to remove incompleteness within 30 days of communication, it shall
file fresh application. (Rule -17 of Public Issue Rules 2006)

According to Public Issue Rules 2006; The following documents shall also be filed by the issuer
as exhibits to the application for consent to an issue of capital through public offering, namely:(1) Memorandum and Articles of Association- certified by the Registrar of Joint
Stock Companies and Firms (RJSC) and attested by the Managing Director/Chief Executive
(2) Certificate of Incorporation and Certificate of Commencement of Business certified by the
Registrar of Joint Stock Companies and Firms and attested by the Managing Director/ Chief
Executive Officer.
(3) Extract from the Minutes of Meeting of the Board of Directors for raising paid up capital
photocopy attested by the Managing Director/ CEO.
(4) Consent of the Directors to serve, in original, signed by all directors.
(5) Land Title Deed with current rent receipts -photocopy attested by the Managing Director/
Chief Executive Officer.
(6) If plant & machinery is reconditioned or second-hand a certificate from SGS or Lloyds
agency on its economic life and price competitiveness duly certified by the Chamber of
Commerce of the exporting country or the country of origin all in original.
(7) Loan agreements, if any photocopy attested by the Managing Director/ Chief Executive
(8) Bankers letter confirming opening of separate bank account for public issue purposes photocopy attested by the Managing Director/ Chief Executive Officer.
(9) Due Diligence Certificate (using format included in Annexure C) from the Manager to the
Issue - in original.
(10) Due Diligence Certificate (using format included in Annexure D) from Underwriter- in
(11) Due Diligence Certificate from Debenture Trustee, in original, as prescribed by the
(12) Agreement with (a) Investment Adviser, (b) Issue Manager, (c) Underwriter(s) and (d)
Debenture Trustee- photocopies attested by the Managing Director/
Chief Executive Officer..
(13) Bankers to the issues letter accepting their appointment as such photocopy attested by the
Managing Director/CEO.

(14) Joint venture agreement if any-attested by the Managing Director/ Chief Executive Officer.
(15) Tax Holiday Approval Letter from NBR attested by the Managing Director/ Chief
Executive Officer.
(16) Copy of return of allotment and particulars of directors certified by the RJSC and attested by
the Managing Director/ Chief Executive Officer.
(17) Bankers certificate/ bank statement showing deposit of an amount equivalent to the paid up
capital/ auditors certificate in that regard attested by the Managing Director/ Chief Executive
(18) Undertakings of the issuer company and its directors for obtaining CIB Report from
Bangladesh Bank attested by the Managing Director/ Chief Executive Officer.
(19) Copies of valid license from the regulatory authority, where applicable attested by the
Managing Director/ Chief Executive Officer.
(20) Deed of Trust (in case of debt securities) attested by the Managing Director/ Chief
Executive Officer.
(21) Credit rating report, if applicable attested by the Managing Director/ ChiefExecutive
11) Consent from SEC: if the application and information, documents are provided by
the applicant are reliable then SEC shall issue letter of Consent within 60 days of receipt
of complete application. If the application submitted by the applicant is fresh and correct
then usually it takes 45days to get IPO consent. According to Public Issue Rules 2006
rule 17:
(1)On receipt of an application for consent or recognition, as the case may be, to the issue or
offer of securities from an issuer, the Securities and Exchange Commission shall review the said
application to ascertain whether it is complete.
(2) In case the said application is incomplete, the Commission shall inform the issuer in writing
of the incompleteness generally within twenty eight days of receipt of the said application.
(3) If the issuer fails to remove the incompleteness within thirty days of communication thereof,
it shall have to file a fresh application.

(4) The Commission shall issue letter of consent, subject to such conditions as it may deem fit to

specify, within sixty days of receipt of a complete application, if such application is acceptable to
the Commission.

(5) If the application is not acceptable to the Commission, it shall issue a rejection order, stating
the reasons for such rejection, within sixty days of receipt of the complete application.

(6) The issuer, whose application has been rejected by the Commission, may apply for review to
the Commission within ninety days from the date of such rejection, and the decision of the
Commission thereon shall be final.

Works after Obtaining the Consent from Securities Exchange Commission:

1)Submission of prospectus: After getting approval from SEC the first step is to submit
the abridged version of prospectus in SEC for approval, usually before 10-15 days prior
to opening of subscription. And also have to submit signed copy of the Prospectus with
Registrar of Joint Stock Company (RJSC) on or before the date of publication
of prospectus in newspapers. (Section 138 of Companies Act 1994)
2) Announcement for the investor: Upon receiving the consent of the Securities and
Exchange Commission to the issue of capital under this Rules, the abridged version of the
prospectus, as approved by the Commission, shall be published by the issuer in four
national daily newspapers (in two Bengali and two English), within the time specified in
the letter of consent issued by the Commission. The full prospectus shall, however, be
posted on website of the SEC, stock exchanges, issuer and the issue manager. (Rule 5(1)
of Public Issue Rules 2006). A paper clipping of published Abridged Version of
Prospectus has to submit to SEC within 24 hours of publication in newspapers. Issuer
Company will have to submit a diskette containing the text of vetted prospectus to SEC,
DSE, CSE and Issue Manager and will have to post the full prospectus vetted by SEC in
Websites of Issuer, SEC, DSE, and CSE& Issue Managerwithin 3 working days of the
issuance of Consent Letter (Rule 6(2) of Public Issue Rules2006).
3) Provide full prospectus: Issuer Company will have to submit 40 copies of printed
prospectus to SEC and also submit printed copies of abridged version Prospectus and
application forms to Bangladesh Embassies by EMS of postal departments within
5working days from the date of publication of abridged version of prospectus in
4) Application for listing: At this point Applicant should apply to all Stock Exchanges
in Bangladesh and submit the vetted prospectus to the Stock Exchanges within 7 working
days from the date of issuance of the Consent Letter (Rule 17 of the Public Issue
5) Subscription period:

Subscription List shall be opened and sale of securities commence after 25 days of
publication of Abridged Version of Prospectus. (Rule - 5 of Public IssueRules 2006)
Subscription List shall be closed after remain open for 5 consecutive banking days. By
NRB be made to the Issuer Company within the closing date so as to reach the Company
by the closing date plus 9 days.
6) Transaction rate: To apply spot buying rate (TT Clean) in US $ and UK pound and
Euro of Sonali Bank for subscription of NRBs. Spot buying rate to be collected from
Sonali Bank on the date of opening of subscription.
7) In case of under subscription: In case of under subscription, Issuer shall notify the
underwriter to take up underwritten shares. The time limitation is within 10 days of close
of subscription date. Full payment is to be made by the underwriter of underwritten
amount within 15 days of Issuers notice.
8) Application to Stock Exchanges for Listing: For application for Listing issuer has to
submit it to SEC attested copies of applications filed with Stock Exchanges within
7working days of issuance of consent letter (Application shall be made by the Company
at least 10 days prior to issue of first Prospectus (Regulation 3 (2) of DSE Listing
9) Approval of listing: Granting of listing applications by DSE and CSE for issuing the
share. The Exchange shall decide the question of granting permission within a maximum
period of 6 weeks from closure of subscription lists. (Regulation 3(3) of DSE Listing
10) Marketing and selling the deal:
(I) the road show:
While the company awaits final approval from the SEC, companys investment bankers organize
the road show, an informational tour designed to publicize the upcoming offering to
professional money managers. The road show is important for both buyers and sellers because it

provides a venue for them to gather information. Buyers want to know more about the company,
and sellers want to gauge the level of interest among prospective buyers.
(II) Syndication:
After the registration statement is filed with the SEC, the underwriter organizes a group of other
investment banks to coordinate the distribution of stock to the investment community. This group
is called the syndicate, and each member is responsible for selling a certain amount of stock.
During the waiting period, the lead manager is in contact with the other syndicate members to
determine how much interest exists in the marketplace for offering. If market sentiment changes
during this period, the offering price is adjusted accordingly.

(III) Pricing the stock:

While the analysis that forms the basis for a stocks preliminary valuation is performed at the
beginning of the IPO process, the actual pricing of the stock is established immediately after the
SEC approves the registration statement. The stock price is based on the marketplaces initial
valuation and the degree of interest in offering. During the road show, the underwriter has a good
opportunity to gauge this interest.
(IV)Aftermarket trading:
Trading begins when the deal is priced on the day after the registration statement becomes
effective. The lead manager of the underwriting syndicate allocates the stock among the
members who, in turn, sell the stock to their clients. The allocation and initial stock sales are
based on interest expressed by members clients after reading the red herring or attending the
road show.

The first thing a company must do before issuing stock is file a registration with the Securities
and Exchange Commission (SEC.) Since the SEC has the power of nullifying any attempt to go
public After (and sometimes before) the registration statement is finished, companies engage the
services of one or more investment bankers. The role of any investment banker(s) is mostly two
fold. First, it is to distribute the companys prospectus to prospective buyers of the stock. The
second function of an investment banker or underwriter is to buy the companys shares and resell
them to the public. After SEC approval and usually a day or so before the actual public offering,
the company and the investment banker agree on a share price and the number of shares to be
sold. The offering is complete when the company receives the money and delivers the shares to
the. Underwriters do extensive research before committing to buy a companys securities. They
take on a calculated risk, essentially betting that the price per share they pay out to a company
will be less than what the market is willing to pay for it. Opportunities for huge profits -and
losses- exist in this environment.

1. Working report on IPO consent and listing procedure in Bangladesh,
2. Process of listing with DSE, see http://www.bdtradeinfo.com/business/listing_dse.asp

3. Ipo Process In Bangladesh, seehttp://www.oppapers.com/essays/Ipo-Process-InBangladesh/591709

4. Going Public Experts, see http://www.goingpublicexperts.com/?
5. IPO consent and listing procedure in Bangladesh see
http://www.sb.iub.edu.bd/intern_report_asaduz_zaman.pdf .