Bourses to get corporate finance wings

Star (July 14, 2011)

The bourses will set up separate corporate finance departments by this month in line with a directive by the stockmarket regulator to ensure corporate governance and bring more transparency among the listed companies.
The initiative, meant for making the bourses the primary regulator, will also help the investors in getting financial information or corporate disclosures more accurately.
Activities at the departments would start next month, as the Dhaka and Chittagong stock exchanges have agreed to follow the advice of Securities and Exchange Commission.
The regulator and the two stock exchanges yesterday sat at a meeting, presided over by SEC Chairman M Khairul Hossain, where the bourses agreed to set up corporate finance departments. The SEC commissioners, and presidents and chief executive officers of the bourses were present at the meeting.
The major task of the departments would be examining financial reports submitted by the listed firms, which are required to disclose financial statements in every three months.
There have been allegations that many listed companies inflate financial reports by showing higher earnings and profits, especially when they submit un-audited quarterly reports. But, when the reports are annualised and audited, huge anomalies are detected.
Another task of the corporate finance departments will be to check whether the listed companies are complying with the corporate governance guidelines set by the SEC.
The departments will also examine the existing listing rules.
Prior to the launch of the new wings, the bourses will have to appoint professional accountants and financial analysts so they can efficiently detect any financial jugglery in the statements.
The move will also lower the practices of financial manipulation and increase transparency and accountability, the regulator said.
“The corporate finance departments will report to the commission on their works and findings on a regular basis,” Saifur Rahman, the spokesman and an executive director of the SEC, told journalists after the meeting.
Presently, there is no corporate finance division at the bourses, and the work on corporate finance till date was done on a piecemeal basis.
“If we can address the corporate disclosures and corporate governance issues properly, the investors will get the highest benefit with the access to more accurate information,” said Fakhor Uddin Ali Ahmed, president of Chittagong Stock Exchange.
It was seen in many occasions that decision or information was leaked to the secondary market even seven days before board meetings of the listed companies, he said.
“The corporate finance departments at the bourses will not only look after the issue, but also see whether the listed companies are complying with corporate governance guidelines,” the CSE president said.
“If we find any irregularities, we will inform the SEC and the regulator will take actions,” he said.