Share Buyback Ban in Bangladesh: DSE Brokers Urge Policy Review
The Dhaka Stock Exchange Brokers Association of Bangladesh (DSEBA) has formally approached the Ministry of Commerce through an official letter dated September 9, requesting a comprehensive review of the existing ban on share buybacks for publicly listed companies. The association argues that the current restriction, embedded within the proposed third amendment to the Companies Act, is hindering healthy market dynamics and preventing corporations from optimizing their capital structure in alignment with global best practices. Share buybacks are widely recognized internationally as a legitimate financial strategy that allows companies to return surplus capital directly to shareholders, thereby enhancing per-share earnings and improving overall market liquidity. By prohibiting this mechanism, Bangladeshi regulators risk creating an uneven playing field where local firms cannot compete effectively with their international counterparts in attracting institutional investment. The DSEBA contends that lifting the ban would not only boost investor confidence but also encourage greater participation from foreign portfolio investors who often view share buyback programs as indicators of strong corporate governance and financial health. Furthermore, the association emphasizes that implementing robust regulatory safeguards alongside any policy change would ensure transparency and protect minority shareholders from potential abuse. Market analysts suggest that permitting share buybacks could revitalize trading volumes on the Dhaka Stock Exchange, particularly among mid-cap and large-cap segments where liquidity has been declining. The proposal has sparked discussions among financial experts, with some advocating for a phased approach that includes mandatory disclosure requirements and cool-off periods between buyback announcements and executions. If adopted, such reforms could mark a significant shift toward modernizing Bangladesh's capital markets framework and aligning it with contemporary global standards.
Key Highlights
- DSEBA submitted formal request to Ministry of Commerce on September 9 to lift share buyback restrictions
- Association argues ban hinders capital optimization and contradicts global market practices
- Proposal suggests implementing regulatory safeguards to protect minority shareholders
- Analysts believe lifting ban could increase trading volumes and attract foreign investors
- Reform discussions include mandatory disclosure requirements and phased implementation approach
Source: citizensvoicebd.com
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