Face value of new issues to be fixed at Tk 100

The government has recently decided that the face value of shares of the existing listed companies will remain unchanged while uniformity in the face value will be maintained for the newly listed companies to avoid any price distortion or confusion, sources said.

A meeting held at the Ministry of Finance with finance minister MA Muhith in the chair early last month decided to keep the face value of all upcoming new issues at Tk 100 in line with that of most listed issues.

However, the face value of the existing listed companies having different denomination will remain unchanged, it was also decided.

"The decision taken in the meeting and the parliamentary standing committee's recommendation made on November 25 are the same,' ANH Mostafa Kamal, the committee chairman, told the FE Saturday.

"The committee simply suggested a uniform face value and uniform lot only for the upcoming issues so that investors do not misread," he said.

However, he said it is not mandatory for the existing listed issues to have uniform face value. They can change their face value by taking permission from the High Court or through resolution adopted at their Annual General Meetings, he said.

A recent debate over such uniformity in face value created confusion among investors.

On November 11 last, the Securities and Exchange Commission (SEC) consultative body recommended that the regulator should set Tk 10 as the face value of all listed shares.

This committee also proposed giving a one-year period to fix the face value of all shares. But the Commission later backtracked on such recommendation.

"This indecisive attitude had given rise to confusion among the investors," Salahuddin Ahmed Khan, professor of economics department of the Dhaka University, said.

"Everything should be decided by the securities regulator taking public interest into account first," Khan, a former chief executive officer of the Dhaka Stock Exchange (DSE), said.

On uniformity in the face value of upcoming issues, he said, "It will help remove confusion about face value.

"But everything should be done in accordance with the securities rules and regulations," he said.

A broker at the Dhaka Stock Exchange (DSE) said retail investors are usually interested in shares with lower face value. "With the initiative, the investors will be able to make comparison between stocks easily," he said.

The investors often compare the prices of one stock with another without knowing the actual face value. For this, stock prices, even of weak companies, often go up abnormally, which affects the market ultimately, he said.

The Dhaka Stock Exchange has 198 securities with face value of Tk 100, 63 with Tk 10, two with Tk 1,000 and one with Tk 1.0.