The Securities and Exchange Commission (SEC) has given a green signal to the proposal of Bank Asia to issue subordinated zero coupon bond worth Tk 110 crore.

The raised fund will be used to expand its investment in various sectors and consolidate its capital base in line with the Basel-II framework, said the SEC in a statement on Tuesday.

The six-year tenure bond will be non-listed, redeemable and non-convertible with 13 per cent maturity yield. Each unit price of the bond will be Tk 5,000.

A zero-coupon bond is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity. It does not make periodic interest payments. When the bond reaches maturity, its investor receives its par (or face) value. Infrastructure Development Finance Company is the issue manager, which will be amortised. The institutions can be subscribed to the bonds through private placement.

The SEC also approved the amendment of merchant banker and portfolio manager rules 1996 and capital issue rules 1987 after taking public opinions, said the statement.

Under the amendment of merchant banker and portfolio manager rules, paid-up capital of a full-fledged merchant bank will be Tk 25 crore, instead of the existing Tk 10 crore.

The paid-up capital of a merchant bank with only an underwriting licence will be Tk 2.50 crore, instead of the existing Tk 1 crore, while the capital of a merchant bank with only an issue management licence will be Tk 12.50 crore, instead of the existing Tk 5 crore.

Under the amendment of capital issue rules, the regulator will now conduct 'special audits' into the listed companies' financial statements in a bid to ensure transparency and accountability in their financial management.

If an issuer fails to get its financial statement audited and submitted to the SEC and stock exchanges within the stipulated time, the commission may appoint a firm to audit the issuer's financial reports.

Cost of acquisitions and constructions, valuation, including revaluation and physical existence and the title of the fixed assets will be checked during the period of special audit.

In line with the guidelines, the audit firms will also re-audit the authenticity of liabilities of a company, including direct confirmation for major amounts -- which is more than 5 percent of the total liabilities.

The Independent/Bangladesh/ 29th Feb 2012