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DSE to seek 5-yr tax exemption after demutualisation

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(Globalpost/GlobalPost)

Dhaka Stock Exchange (DSE), the country’s premier bourse, will seek a five-year tax exemption in an effort to make it a profitable and attractive organisation to investors after demutualisation, DSE leaders said here on Saturday.

“We’ll seek a five-year tax exemption in the next budget. We’ve a specific proposal on it,” DSE President M Rakibur Rahman told UNB at his office on Saturday.

He said they had a meeting with the Finance Ministry and will meet the Chairman of the National Board of Revenue (NBR) to discuss their budget proposals.

Rakibur also said the Finance Minister gave time to hold another meeting on the country’s capital market. Talking to this correspondent, DSE Director Ahsanul Islam said the demutualisation of the stock exchange is almost finalised. “It’ll just be implemented through enacting a law.”

Explaining their tax-exemption proposal, he said the DSE, now a non-profit organisation, will turn into a Private Limited and profitable company after the demutualisation.

“There’ll be 60 percent shareholders from outside after the demutualisation. We need to make it profitable and attractive to the new shareholders. That’s why we seek tax exemption to make a good start and attract the new investors,” the former DSE first vice president said.

Responding to a question, Islam said the amount of the tax will depend on which category the DSE will be kept in if the government determines to impose tax what it does on other private profitable companies. “It may be 37.2 percent to 42 percent.”

On the other hand, Rakibur Rahman said the Bangladesh stock market will earn global acceptance once it is demutualised. “We want that.”

He also said the claims of the Finance Minister that some people are intentionally making efforts to cause the market collapse. “It’s a wrong perception.”

On March 3, a bill, titled ‘The Exchanges (Demutualisation) Bill, 2013’ was placed in Parliament seeking to ensure transparency, efficiency and accountability in the capital market through separating the ownership of stock exchanges from the management.

Cultural Affairs Minister Abul Kalam Azad, in absence of Finance Minister AMA Muhith, placed the Bill in the House. The bill proposed that the majority directors will be elected from independent category and the members of a stock exchange will not be allowed to retain more than 40 percent of the issued shares.

Similar law is there in around 50 countries of the world, including neighboring India, Pakistan and Sri Lanka. Economists and experts have long been saying that the demutualisation of stock exchanges is a must to improve corporate governance in the bourses to protect public interests and boost the confidence of investors.

Though it is a huge job, they said, it will not be difficult to implement if the parties involved in the process have willingness. Demutualisation of a stock exchange transforms it from an entity owned by mostly brokerage-owning members into a for-profit company owned by shareholders and segregation of ownership rights and trading rights. It ensures a sound corporate governance, alternative business models and operational efficiency.

United News of Bangladesh

http://www.globalpost.com/dispatch/news/asianet/130415/dse-seek-5-yr-tax-exemption-after-demutualisation