The securities regulator has made the submission of application for IPO (initial public offering) shares through merchant banks and brokerage firms mandatory from April 1 this year instead of applying through banks.

The Bangladesh Securities and Exchange Commission (BSEC) Tuesday took the decision while approving the revised IPO application process.

At Tuesday's meeting, the securities regulator has also approved the conversion of ICB AMCL Islamic Mutual Fund (MF), a closed-end MF,  into open-end scheme--ICB AMCL Islamic Unit Fund.

Dhaka Stock Exchange (DSE) started to receive IPO applications through merchant banks and merchant banks on the basis of pilot project from July 15, 2011.

From April 1 next no application for IPO shares will be received by banks.

For completing the investors' IPO application process, merchant bankers and stock brokers will charge Tk 5.0 per application and the service charge will have to be paid by applicants while submitting application.

For the purpose of new IPO application process, the merchant bankers and stock brokers will have to maintain separate bank account namely 'Public Issue Application Account'.

Within the subscription period, the applicants, other than NRBs and foreign applicants, will submit application/instruction for the public issue of the securities to stock broker and merchant banker where they maintain BO (beneficiary owner's) accounts.

Application/instruction for public issue may be submitted in prescribed paper or electronic paper containing Customer ID, Name, BO Account Number, Number of Securities applied for, Total Amount and Category of Applicant.

Applicant shall make the application money available in respective customer account maintained with the stock broker or merchant banker provided that no margin facility, advance and deferred payment is permissible to apply for public issue.

Non-resident Bangladeshis (NRBs) and foreign applicants will have to submit bank drafts in favor issuer for an amount equivalent to application money.

After verifying applicant's available fund and accumulating all buy instructions, the merchant bankers and stock brokers will block customer account for an amount equivalent to application money and deposit the amount in the 'Public Issue Application Account' maintained with their banks.

Application money submitted by merchant banks and stock brokers against their own portfolios will also be transferred to 'Public Issue Application Account'.

Stock brokers and merchant bankers then will prepare the list of applicants and send it to the issuer within three working days from the date of subscription closing.

After receiving verification information from the Central Depository Bangladesh Limited (CDBL), the issuer will prepare the list of valid and invalid applications and submit the report to the commission and the stock exchanges within 10 working days from the date of receiving information from the exchanges. With next three days of reporting to the commission and exchanges, the issuer and issue manager will conduct category wise lottery.

Within two working days of posting the lottery results on the website of company, commission and exchanges, the issuer will send category wise lists of successful and un-successful applicants to the respective stock exchange.

On the next working day, the stock exchange will distribute the information and allotment letters among the stock brokers and merchant bankers with an instruction of remitting the amount of successful applicants to the issuer's Escrow Account and unlock the amount of unsuccessful applicants.