The Chinese consortium of Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) will invest Tk 9 billion in the country’s capital markets in October.
The move came in a bid to increase the share holders’ trust amid the ongoing liquidity crisis in the country’s stock markets.
To advance the Chinese investment, the government cut down the tax at source by 10 percent, fixing it only 5 percent for now.
The Dhaka Stock Exchange (DSE) authorities are now awaiting the National Board of Revenue’s the customs SRO (Statutory Regulatory Orders) on the sources tax for the consortium.
NBR officials said that issuance of the SRO is likely to delay as its Chairman Mossarrrof Hossain Bhuyan will be abroad till Sept 30.
Citing share holders showing interest on the Chinese consortium’s funds, DSE Director Rakibur Rahman said, “Share holders, who will receive the funds and make investment for three years, will be able to pay a 5-percent sources tax instead of 15 percent.”
At present, the number of DSE’s shareholders stands at 237.
The move on a 5-percent source tax will increase investment and trust among the share holders, claimed Rahman, a former DSE president.
Analyst Dr AB Mirza Azizul Islam echoed.
“The consortium’s involvement is likely to bring more Chinese investment in DSE. Besides, the strategic partnership will decrease market manipulation as well as will draw attention of more foreign companies,” said Islam, a former chief of the market regulator and an adviser to the 2007-8 caretaker government.
On Sept 3, the Chinese consortium credited Tk 9.62 billion in favour of DSE including 470 million as capital gain tax at a rate of 5 percent and another Tk 150 million as stump expenditure. Rest of Tk 9 billion will be invested in the DSE for the next three years.
On May 14, 2018, DSE signed a memorandum of understanding with the Chinese consortium to sell 25 percent of its shares to the consortium to make it a strategic partner of the bourse.
According to the Share Purchase Agreement (SPA), the consortium will hold 450,944,125 ordinary shares - of DSE at Tk 21 each in order to partner with the bourse.
The consortium will offer about Tk 3 billion for infrastructure and technological development, on top of the Tk 9.47 billion for the DSE shares.
According to the Stock Exchange Demutualization Act 2013, 40 percent of DSE shares are credited to DSE member accounts, while the remaining 60 percent has been kept in a blocked account.
After selling 25 percent of its shares from the blocked account to the Chinese strategic investor, the bourse shall float the remaining 35 percent through an initial public offering (IPO).