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The Bangladesh Securities and Exchange Commission (BSEC) has begun a major review of the country’s initial public offering (IPO) framework to simplify the listing process, expand direct listing opportunities and encourage fundamentally strong companies to raise long-term funds through the capital market.

The securities regulator on Wednesday held a high-level consultation with market stakeholders to review the Public Offer of Equity Securities Rules, 2025, with a focus on making the IPO process more transparent, efficient and aligned with international best practices.

The initiative is part of BSEC’s broader reform agenda aimed at restoring investor confidence and reducing companies’ dependence on bank financing.

The meeting came a day after the commission announced a series of market reforms, including amendments to margin loan rules and the introduction of scrip netting.

Representatives from the Financial Reporting Council (FRC), the Institute of Chartered Accountants of Bangladesh (ICAB), the Dhaka and Chittagong stock exchanges, merchant bankers, brokers, auditors, issue managers, listed companies and other market participants attended the consultation.

According to a BSEC statement, Chairman Masud Khan said future regulatory reforms would be undertaken in consultation with stakeholders to build a stronger and more investor-friendly capital market.

During the meeting, participants reviewed every stage of the IPO process—from preparing financial statements and audits to issue management, regulatory approval and listing—to identify ways to shorten approval times without compromising investor protection.

The discussions also covered IPO pricing, direct listing, rights issues, the listing framework for public interest entities and measures to improve the efficiency of equity fundraising.

Participants stressed the need to strengthen corporate disclosures, reinforce due diligence and increase the accountability of issuers, auditors and issue managers to improve the quality of companies entering the market.

A key proposal under consideration is expanding the scope of direct listing.

Speaking at a programme last week, BSEC Chairman Masud Khan said the current IPO process is too lengthy and discourages quality companies from going public.

“Companies have to wait nearly one-and-a-half years and submit piles of documents for an IPO. Bank financing is much quicker. We have to simplify the IPO process if we want fundamentally strong companies to come to the market.”

Under the proposed framework, private companies would be allowed to list directly by offering 10 per cent of their shares, compared with the current provision that permits only state-owned enterprises to use direct listing by floating at least 25 per cent of their shares.

Market participants said reforming the IPO process is essential to improving the quality of listed companies and rebuilding investor confidence, noting that aggressive IPO pricing, weak post-listing performance and concerns over financial disclosures have discouraged many investors from participating in the primary market.

The BSEC said stakeholders’ recommendations would be taken into account in future policy and legal reforms.